With the rollout of GST (Goods and Services Tax) from July 1, 2017, government is eyeing an indirect push towards digital India movement. Various policies of the government will be reviewed once the biggest indirect tax reform floats in the market.
GST And Digital India Movement
After GST is implemented, all businesses will have to move their book keeping from manual to digital. The biggest reason being provisions of GST wherein businesses will have to upload every invoice on the GST website. This will, in turn, facilitate digital India movement. There is also a provision under consideration. The recipient of goods or service has to pay the invoice in definite period of time in order to avail the credit of the tax paid on invoice.
This step can help in reducing working capital cycle and early recovery of bills for businesses. Lesser working capital getting blocked in receivables may be utilized in regular operations of business and expansion.
Digital Books of Accounts – Control & Transparency
Currently majority of the small and medium sized businessmen do not prioritize digital format of books and accounts. Some of them do hire a part time accountant who comes once in a week and prepares the books of accounts either manually or in Digital format.
The biggest flaw in this practice is that the Small manufacturers and traders loose control over their stock and manufacturing process. If every piece of stock and service movement gets recorded in the system, it helps the stakeholders to perform periodic real time reviews and identify the potential gaps in their control system. Also the prices and profitability can be monitored regularly if they have the books ready at all times.
Demand for Accounting Platform Tally
With increase in digital books of accounts practices the demand for accounting softwares would increase. Tally has the most widespread usage among small and medium enterprise segment of the country whereas SAP, Peoplesoft etc. are used only by Large enterprises as these applications bring a huge cost burden on the business. Some online book keeping platforms have also emerged such as Zoho, Quickbooks etc. But we believe tally is the one who can win the race.
Demand for Full Time Accountants
Every business would prefer to have a full time accountant handling the billing process as there are multiple returns to be filed under GST every month. Chartered Accountants and tax practitioners will also have expanded scope of work for their clients as previously they use to file quarterly returns for indirect taxes but now it has gone upto 3-4 in a month itself. Outsourcing opportunities will also rise due to this reform. Big companies have started empanelling/hiring CAs for GST implementation.
Being one of the biggest Indirect Tax reforms, GST implementation will test the strength of the economy after demonetization and liquidity constraints prevailing in the country. We hope that this turns out to be a successful one and add few integers to the growth rate of the economy.