The past few days have been ‘taxing’ for Pawan Kumar Gupta, in a race against time to become compliant with the requirement for the coming national goods and services tax (GST).
A hardware and bathroom fittings supplier, he’s been zeroing on GST-ready commercial computers and hiring three new accountants, adept with the new intricacies, among other things. A checklist in hand, Gupta is making notes on the things that have to be done before July 1, when GST becomes a reality. Till now, he has spent around Rs 2 lakh in equipping himself for the transition.
National Sample Survey Office (NSSO) data from 2013 say there are around 57.7 million registered small and medium traders. Beside, at least 15 million retailers and hundreds of thousands of offline and online ventures would all come under the new tax net. The money they’d spend for this over the next two years would be over Rs 35,000 crore, say experts.
In the past eight months, the huge spending potential has created a new sector, of GST enablers. These include providers of computer hardware and software. And, legal, technical and personnel support and services. Every small entity is investing its money to comply with the new regime.
Unlike the value added tax (VAT), say experts, GST is fully computerised, with many layers only professional accountants can understand. So, the demand for computers and skilled personnel will rise.
Computer hardware industry companies are already rejoicing. “For the past couple of months, we have dedicated a huge team to work on only GST-ready machines. It is a huge opportunity. The next few quarters’ sales would be great for us,” said Harish Kohli, managing director (MD), Acer India. The company is one of the many entities to launch plug-and-play and GST-ready computers.
Competition is already on between hardware companies. “We are eyeing the lion’s share of the market and are prepared with our solutions. We have an outreach programme for traders. We believe we would see immediate returns for the next six months to one year,” said Pankaj Harjai, director of the small and medium business at Lenovo India.
Several others would also benefit from this massive shift. Beside hardware companies that would sell personal computers, scanners and printers, there are packaged software solution providers, both on premises and on the cloud. And, service providers such as tax practitioners, to help smaller entities to comply with the tax regime.
Marg ERP, an inventory and accounting software company, which has tied-up with Lenovo, believes its revenue could be upwards of Rs 500 crore over the next two years from its GST vertical. “We have been working on the solutions for the past nine months. All in all, we believe that it could be a Rs 35,000-crore market,” said Sudhir Singh, MD.
There are service providers to help improve compliance. “There are two broad objectives. The first is to ensure all citizens and businesses that need to file GST returns have a means and method of doing this. To that extent, they are making a portal and an offline tool to help all businesses. The second is a brilliant idea, to allow application providers like us (accounting, ERP, billing software, etc) to integrate with the GST Network system, to make the process of compliance much simpler,” says Tejas Goenka, executive director at Tally Solutions.
There would be demand for taxation experts to help firms migrate to and comply with the GST regime. “It is a huge opportunity for large players but the most important and priceless asset would GST accounting professionals. I believe the demand for such professionals is set to rise almost three-fold. With the level of compliance in GST, a single company would require multiple accountants,” said Mahesh Jaising, partner, indirect tax, at BMR & Associates.