EY, PwC, Deloitte and KPMG helping Indian firms prepare for GST
Big Four professional services firms in India have set up large national teams that work overtime to support businesses transform their various indirect tax processes to meet the new common Goods and Services Tax (GST) being introduced in the country by April 2017. One of the Big Four firms, EY, has more than 800 experts on the job.
While a long time in development, the Indian central government recently launched a Constitutional amendment bill that would see the introduction of a nationwide goods and service (GST) tax. The aim of the bill, and new tax, is to create one overarching tax that replaces a range of state and central government taxes that produce considerable administrative burdens on businesses. The bill also aims to benefit consumers, create new revenues for government and improve overall economic growth. The new GST is dual-based, meaning that part of the tax goes to central government coffers and part of the tax goes to the state's treasury. The exact amount to be levied remains debated, with the official introduction of the tax set for April 2017. So far 17 state assemblies have ratified the Constitutional amendment bill.
While the new bill is likely to remove administrative burdens for businesses, the transition period is likely to create considerable havoc. The Big Four professional services firms, EY, PwC, Deloitte and KPMG, are said to be working overtime with an army of accountants, financial advisors and consultants to support Indian and cross-border businesses to get in compliance with the changes to the system. According to reports from one of the professional services firms, many businesses are waking up to a need to transform their indirect tax systems 'the night before' the changes are to be implemented.
The firms combined have a legion working on the GST transformation, with EY’s staff of roughly 800 people working full-time across the country to solve problems for business changing to the new system, while the other firms are reported to have between 500 and 800 staff in similar positions. The transformation can be relatively complex and can have considerable impact on businesses, from changes to IT software and processes to warehousing strategy, requiring both consultancy and tax accounting expertise.
Given the scale of the changes, and the large number of people and businesses the changes affect, the opportunities for professional services firms – as well as software and related companies – are considerable. Some companies are running up against bottlenecks, having too few sufficiently trained experts available to meet clients. Harishanker Subramaniam, National Leader Indirect Tax at EY, explains that the consulting firm has been expecting the change and has developed considerable capacity to deal with it, "We have been consistently working on building the team, including sector capabilities, for the last couple of years and are strongly placed. This year, we anticipate an increase of 25% in our current headcount for GST."
