Government of India has progressed one step forward to implement the much awaited reform in the Indirect tax regime i.e. Introduction of GST. It will undoubtedly biggest tax reform since independence. With this development, while the passing of the GST Constitution (122nd) Amendment Bill during the monsoon session is awaited, industry, professionals and other stakeholders will be able to provide their inputs and comments on the draft, which will form the basis for the eventual GST legislations. Both Institute of Chartered Accountants of India and Institute of Cost Accountants of India has invited for suggestion from members which will be compiled and submitted to the Government authorities.
Role of CA /CMA is prescribed in following section of Model GST Law in following sections :
Section 2 (33) “Cost Accountant” means a Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959 (23 of 1959);
CHAPTER-XI ACCOUNTS AND RECORDS
42. Accounts and other records
(4) Every registered taxable person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a Cost Accountant and shall submit to the proper officer a copy of the audited statement of accounts, the reconciliation statement under sub-section (2) of section 30 and such other documents in the form and manner as may be prescribed in this behalf
50. Special audit
(1) If at any stage of scrutiny, enquiry, investigation or any other proceedings before him, any officer not below the rank of [Deputy/Assistant Commissioner] having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the [Commissioner], direct such taxable person by notice in writing to get his records including books of account examined and audited by a chartered accountant or a Cost Accountant as may be nominated by the [Commissioner] in this behalf.
CHAPTER- XV INSPECTION, SEARCH, SEIZURE AND ARREST
64. Access to business premises
(2) Every person in charge of premises referred to in sub-section (1) shall, on demand, make available to the officer authorized under sub-section (1) or the audit party deputed by the Additional/Joint Commissioner of CGST or SGST or the Comptroller and Auditor General of India or a Cost Accountant or chartered accountant nominated under section 50, as the case may be,-
CHAPTER–XVIII APPEALS AND REVISION
86. Appearance by authorised representative
(2) (c) any chartered accountant, a Cost Accountant or a company secretary, who holds a valid certificate of practice and who has not been debarred from practice; or
126. Disclosure of information by a public servant
(h) any such particulars, when such disclosure is occasioned by the lawful exercise by a public servant or any other statutory authority, of his or its powers under any law for the time being in force; or
(i) any such particulars relevant to any inquiry into a charge of misconduct in connection with any proceedings under the Act against a practising advocate, tax practitioner, a Practising Cost Accountant, a practising chartered accountant, a practicing company secretary to the authority empowered to take disciplinary action against the members practising the profession of a legal practitioner, cost accountant, chartered accountant or company secretary, as the case may be; or
“Change is only permanent thing in life.”
Professionals need to adopt to the changes in the business and economic environment and this change definitely is welcome change for professionals. In this draft law CA/CMAs are given very vital role to play. Wherever there is requirement of experts CA / CMA is included for which CAs / CMAs should be proud of. But this pride comes with the responsibility to perform. The prosed legislature will bring sea changes in the existing Indirect tax structure for which we professionals are well verged with. This reform will provide huge opportunity to CAs / CMAs to perform role of facilitator between the Policy makers, Industry & Trade organization and consumers. The role CA / CMA can play in the proposed GST regime can be highlighted as under :
Representations to Policy makers pre GST:
As the proposed law is in draft stage with the knowledge of business process and taxations CA /CMAs can submit their representations. This representation can be help to industry and consumers to achieve convergence to new law as well as it may prevent hardship caused to industry and consumer. In the recent past Government has accepted and acted on many such representation made by Institute of Chartered Accountants of India and Institute of Cost Accountants of India.
GST - Registration :
Threshold limit Rs. 10 Lacs of aggregate turnover has been prescribed to taxable person located other than north east States. The threshold limit of Rs. 5 lacs will for a taxable person conducts his business in any to taxable person located of north east state including Sikkim.
It also will be noted that threshold limit will not be applicable to those taxpayers who make inter-state supplies, Casual Tax Payer, person liable to pay reverse charge, non-resident tax payer, person required to be paid TDS, Agent , Input Service Distributor, E-Commerce Operator , persons providing branded services through ecommerce, aggregator or any other persons as notified. Such person needs to obtain the registration.
The concept of a single/centralised registration for multiple places of business has not been provided.
Hence the Taxpayer base is going to be increased and business will need to take registrations under all State GST act wherever it is operating.
This will bring opportunity to professionals to approach tax payers to assist in getting registered under GST regime. This will provide opportunity to professionals to advice and consult the assesse in forming strategy right from inception. Although this activity is more of procedural matter but once the baby is born then nourishing can start and mother is always preferred guardian of child.
GST – Procedural Compliances:
Tax credits – Although the GST is meant for seamless flow of ITC, there are certain restriction on availing ITC. CA /CMAs can advise taxpayers about the eligibility of Input Tax Credit (ITC).
Maintaining ITC Register – ITC Register will be maintained in electronic form based on the transactions uploaded by assesse. Hence the transaction need to be uploaded in the prescribed form and periodical review of the same is required to confirm the availability of ITC.
Computation of accurate liability - The GST liability needs to be paid off on monthly basis. The liability will be outward tax payable less Input Tax Credit available. Short payment will attract the penal provision and excess payment will block funds. CA /CMAs can compute and intimate accurate tax liability to tax payers.
Returns – Tax payers need to file following returns:
- GSTR-1 Outward Supplies made by the Taxpayer (Monthly)
- GSTR-2 Inward supplies/purchases received (Monthly)
- GSTR-3 GST Return (Monthly)
- GSTR-4 Quarterly Return for compounding dealer (Quarterly)
- GSTR-5 Return for Non Resident Taxpayers (Annual)
- GSTR-6 Return for Input Service Distributor (Monthly)
Hence minimum returns to be filed for any assessee will be 36 in year as compared to 16 till now. It will bring the opportunity to CA/ CMAs to help taxpayers in compiling and filing the returns on time.
Matching of ITC -Tax Credit reconciliations
The ITC will be allowed only when the data in matched with the respective data filled up by suppliers or customers. Hence the reconciliation of Input tax credit as per our filling and as per other parties filling need to matched. Tax credit will not be allowed if the data is not matching. Such mismatched transaction will have to be rectified in the span of 2 months. CA/CMAs can help to identify such transactions and can inform the respective buyer /seller to amend their filling accordingly. This reconciliation will be big opportunity for professionals to undertake outsourcing assignments.
GST - Audit & Assurance
Model GST laws include name of CA / CMAs to conduct audit of the accounts and records maintained under section 42(4). However apart from the statutory audit CA/CMAs can undertake assurance services to tax payers in the form of internal audit of GST records and tax health checkup. The assurance service can be in different forms depending on the requirements as under :
Verification of Returns
CA/ CMAs can do the verification of records on monthly basis. Before the returns are filled tax payers in consultation with CA/CMAs can do the verification of the invoices and other records to get assured of the correctness of the information getting filled with Government authorities. This will preventive check to eliminate the possibility of getting mismatch of tax credit and will avoid duplication of work.
CA/CMAs can undertake internal audit of GST records. The internal audit can focus areas wherein there could be possibility of tax credit leakage. It may be in the form of excess computation of liability or short availment of tax credit. With the expertise in prevalent indirect taxes and knowledge of business process, CA/ CMAs can be preferred source of this kind of services.
CA /CMAs are authorized to conduct audit of GST under section 42(4) of the Model act. Every tax payer exceeding the prescribed threshold limit will be subject to such audit. Already CA/CMAs are recognized to undertake VAT audit under various State VAT Act, however for service providers there is no such requirement. Hence the number of taxpayers under audit will get increased and CA/CMAs will get opportunity to conduct such audit. This audit will not only give the opportunity but also will get recognition in the Society.
Section 50 (1) of the Model act prescribes that if GST officer of is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, direct such taxable person by notice in writing to get his records including books of account examined and audited by a Chartered Accountant or a Cost Accountant. CA/CMAs can help government officers to find out revenue leakage if any. Such special audit will be conducted on behalf of Governmental authorities. This will help to find out non-compliant tax payers and protect the revenue of Government.
Section 45 prescribes for scrutiny of the GST return. The proper officer may scrutinize the return and related particulars furnished by the taxable person to verify the correctness of the return in such manner as may be prescribed. The proper officer shall inform the taxable person of the discrepancies noticed, if any, after such scrutiny in such manner as may be prescribed and seek his explanation thereto. The assessments are extended to non-filers of return as well as unregistered persons.
CA /CMAs can help taxpayers to prepare the necessary explanations and submissions to the authorities facilitating quick competition of assessment proceedings.
GST - Authorised representative
Any person who is entitled or required to appear before a GST Officer appointed under this Act, or the First Appellate Authority or the Appellate Tribunal in connection with any proceedings under the Act, may, otherwise than when required under this Act to appear personally for examination on oath or affirmation, subject to the other provisions of this section, appear by an authorized representative.
(2) For the purposes of this section, “authorised representative” means a person authorised by the person referred to in sub-section (1) to appear on his behalf, being —
(c) any chartered accountant, a Cost Accountant or a company secretary, who holds a valid certificate of practice and who has not been debarred from practice; or
CA/CMA/ CS are authorized to act as authorized representative under section 86 of the Model Law. They can appear before GST Officer, First Appellate authority and Appellate Tribunal. Hence CA/CMA/ CS can assist the tax payers in the matters of litigation and appear as authorized representative till Appellate Tribunal level.
GST – Refund
Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application in that regard to the proper officer of IGST/CGST/SGST before the expiry of two years from the relevant date in such form and in such manner as may be prescribed.
The application shall be accompanied by—
(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant, and (b) such documentary or other evidence (including the documents referred to in section 23A)
CA/CMA/ CS can prepare the application in prescribed form along with the prescribed documents and evidences. Proper preparation of Application and requisite follow up can fasten the process of getting refund to the tax payer.
GST Advisory Services :
In additional to the procedural and accounting related services, CA/CMAs can provide Value Added services in the domain of GST. There will be requirement of expert like CA/CMAs to provides distinctive services like :
- Impact Study
- Contract Review
- Impact on Pricing Model
- Business Structure revamping
- Supply Chain Management
- Logistics and Distribution Systems
- Business process mapping under new tax regime
- Participation in development of Systems, process and controls
Systems Audit and systems development to be GST compliant:
GST will be highly IT driven initiative and systems will have to play important role in the successful implementation of GST. A systems audit involves a detailed analysis and evaluation of a complete system. There would be a changes required in the ERP or Accounting systems established. Those systems are to be made GST-compliant. CA/CMAs would be the facilitator to conduct the systems audit rigorously and do the transactions mapping in the systems.
Partners in Transitional period
CA/CMAs are well recognized in the prevalent indirect tax laws. They will be the best resource during this phase of change over to GST regime. CA/CMAs should provide the necessary guidance and support to the taxpayer to make them compatible to the GST. There could be various issues in this transition like
- Pending litigations
- Treatment of Tax credits on appointed date
- Contracts WIP
- De Registration and pending tax compliances
Corporate Training - Apprising the management about various intricacies of GSM Law. The training requirements will be different for levels of management. TOP management will be interested in impact of GST in Strategic Management like impact on various contracts, redefining the existing contracts, caring out business models, Business process mapping etc. Middle management will require training in terms of Compliances of GST Law.
Educating new tax payers
Educating small tax payer like traders and organizing training and workshops to assist them in compiling with GST requirements
Representations post GST:
It may take time for GST law to get settled. As it is new reform there could be hurdles in implementing GST effectively. In GST regime, there could be various disparities between the Centre and the States on account of various issues with reference to cross-border transactions, issues arise in respect of levy and administering of Destination State’s share of revenue, Time & Place of supply, dealing with inter-state movement of goods and services. Hence, for the resolution of the various issues in GST regime, there is a need to have dispute settlement mechanism in order to have smooth flow of structure. CA/CMAs are recognized to make representations before the Appellate Tribunals under the Indirect Taxation statutes in India. They would continue to make representations even in post-implementation of GST for smoother implementation of GST.
This list is not exhaustive , the opportunities can be even more than the mentioned above. Only thing is that the opportunity never knocks your doors, you have to find out where the opportunity is. CA/CMAs will have to build capacities to serve the trade and industries and all the stake holders.
It will be the great attempt to contribute effectively to the Nation for improving tax-literacy, financial inclusion, transparency, governance besides meeting the social and national requirements of India through implementation of GST.