GST A Reform in Indian ECONOMY

National Level Seminar

GST Impact on Auditing-Tax consultancy firm

Preetham Crystal Dsouza

MBA (finance) AIMIT

ST. Aloysius Institute of Management and Information Technology

1616146preetham@staloysius.ac.in 7795484553
Abstract:

Indian economy took a great step by adopting goods and services tax. At the time when biggest
tax regime took place, every organization was in dilemma of updating themselves into the new
tax regime (i.e. GST) but only organization crowded with people and giving solution hand was
audit/tax consultancy firm. Even the auditing firm had numerous impacts by goods and services
tax implementation. There was a need for every audit-tax consultancy firm to update themselves
on behalf of client organization and thereby the dual stress on firm took place.

The evaluation of companies accountability is mandatory; auditor plays a crucial role in

evaluating the accountability, performance and financial statement of the company and gives the
accurate result. Due to GST there will be changes in accounting system performance and
evaluating them. Implementation of GST has large impact on auditing/tax consultancy firm.
Taxes are the important source for the economic development of our country and evaluating
them is auditors duty hence the changes in indirect tax system directly affected the audit/tax
consultancy firm. There was a plenty of changes in goods and services tax after implementation
of the same but the auditing team has to update them every now and then. There was a need for
audit-tax consultancy firm to prepare for tomorrows changes. As compare to any other firm the
stress level audit-tax consultancy for GST is more, every organization which contributes to
economic development of the country has to come under Audit/Tax , so this service
sector(Audit/Tax consultancy firm) directly or indirectly contributes to the economic
development of the country. This paper concentrates on impact of GST on Audit-Tax
consultancy firm.

Keywords: audit/tax consultancy, GST, Goods and Services Tax, implementation and economic
development.
Introduction:

Auditing/tax Consulting Services has a broad mandate in India to serve all levels of
management from the financial and operational points of view. The examination evaluation
of companies accounts is mandatory, auditors plays important role in this. It is an essential
part of companies. Auditors/tax consultants use professional judgment when
assessing/assisting the clients. They provide professional services in the areas of
accounting, auditing, assurance, advisory, taxation, etc. Its auditors responsibility to
maintain knowledge about tax laws and perform required calculation for tax assessment.
Auditing/tax consultancy firms plays crucial role in development of Indian economy.
Thereby any changes in the laws policies will directly or indirectly affects the firm. Auditors
The new indirect tax regime goods and services tax, which is called as developing tool to
Indian economy, had several impacts on auditing firms. Generally any changes in tax laws of
state or central is effected one or other organization, but whichever organization deals with
the changes normally seeks advice or consult auditors especially Chartered Accountant
community to deal with it.
Hence goods and services tax made huge impact on almost every organization there was a
tremendous demand for auditors and tax consultants, along with the demand for work the
work load of this service sector has increased, there was a new opportunity for advancement
but the duration available for process of GST and regular changes in the policies increased
time pressure and deadlines. There were several inconveniences to auditors and tax
consultants with regard to the GST filing, registration etc. but they were successfully able to
precede with the GST processes even after facing several problems. After successful GST
filing before the first month due date they ever able to achieve more than what was
estimated.
It was a great challenging task for any auditors\tax consultants to deal with the misconception
of clients, public and organizations about GST. Through the implementation of GST there
were several taxes were subsumed and burden of different filing system is reduced. Another
advantage for auditing firm which is qualify to file GST is input tax credit, auditors tax
practitioners can claim the input tax credit. There were bundle of ups and downs in GST but
the auditing tax consultancy firms able to make it by updating themselves and their client
organization according to updated policies of GST.
Objectives:
Primary objective:
To study the various factors which affected organization by implementation of GST
Secondary objectives:
To understand the degree of cause and effect of GST to working environment of
auditing\tax consultancy firm.
To study the stress level of audit\tax consultancy team member compare to earlier tax
system.
To study the impact of GST on Auditing\tax consultancy firm.

Scope of the study:

The study done to evaluate GST impact on Auditing/tax consultancy firm is done in
Mangalore city. All estimation evaluation done according to the perception of audit tax
consultancy team members and few chartered accountants based on Mangalore city.

Literature Review:

Feb 2017.Roy Arunabha, post independence most crucial and significant tax reform
in India is Goods and Services Tax. Where it will subsume most of the indirect taxes
and it will lower the burden of heterogeneous indirect tax system. According to
author it is not first time in India. Country has faced indirect tax reform when
CENVAT and VAT are introduced to eliminate cascading effect of taxation. So it was
considered that as earlier the country can adopt this system of taxation as it eliminates
the cascading effect.
June 2017.Rica Bhattacharya, There is a huge registration of GST through GST portal
many of the companies and professionals are registering themselves into GST. It is
estimated that there will be more number of GST user than earlier system and job
demand for Chartered accountants, tax practitioners, cost accountants and even for IT
will eventually rise. For the positive impact of GST it needs to be well-planned.
 June 2017.ClearTax, There were few problems while registration of GST or
migrating from earlier indirect tax system to GST like validation error, pan card
details error, RC cancel, provisional id invalid, OTP errors etc
July 2017.Kapoor Pragathi, the huge demand for GST has made the professionals like
Chartered Accountants busy in their schedule, they are busy in consulting the
business clients. So there is a rise in consultant services. Because of multiple changes
in tax system the due dates were extended and again it is estimated that there will be a
postponement of GST filing for upcoming months.

Research Methodology:

Research design- the research design is exploratory and observation research method.

Data source:
Primary data
A sample of 50 will be taken for the survey sample will be include Chartered
accountants, Auditing team members, tax practitioners, staffs and article students.
Structured Questionnaires will be provided regarding the research subject to the
respondents.
General interview with Chartered Accountants and GST experts in order to gain
necessary information

Secondary data: Journal Articles and research papers done on similar subjects or topics.
Limitations of the study
The study is limited to Mangalore city and few players in Auditing Tax consultancy firm.
The regular changes in the GST policies may change the perception of the respondents
towards GST.
Finding from the study may not accurately represent all Auditing/Tax consultancy firms.
Data Analysis:

Category/experience wise distribution of respondents.

0.4 36%

0.3 CA 10%
22%
TAX practitioners 6%
0.2
10% Staffs 26%
8% 8%
0.1 6%6% Article students 29%
4%

0
less than 2yr 2yrs-5yrs 5yrs-20yrs more than 20

As per the above graph 10% of the respondents are Chartered accountants, 6%of them are
Tax practitioners, 26% of them are staff and 58% of them are Article Students.

Respondents perception towards GST

Perception towards GST

Impact of GST on Auditing
firm
4%
2%
Positive 42% Positive
96% 56% Negetive
Negetive
Nuetral

Interpretation: it is found that 96% of the respondents have positive perception towards
GST but when it is asked to impact on auditing firm by implementation of GST the 56%
came as negative and 42% positive.

Factors affecting the auditing/tax consultancy firms

 100%
90%
80%
70%
60%
50% 49
40% 42
30% 28 29
24
20%
10% 12
0%
Work load limited time lengthy process increase in fees convinient secured filing
system

Interpretation: 98% of the respondents agree that due to GST there is a increase in fees,
42% of them agreed that workload of firm is increased due to GST implementation.58%
are having perception that it is a convenient system, 24 out of 50 has agreed that it is a
secured system but majority of them have been not agreed, 56% of respondents agreed
that limited time is a negative factor which effects the firm and only 12% of the
respondents agreed that it is a lengthy process.

Inconvenience factor

inconvinience factors

Regular updates
22
GST process

information flow

72
limited time maximum
work burden

Interpretation: from the above table it is clear that 72% of the respondents feel that
regular update in policies has huge impact on auditing firm. 22% of the respondents feel
that limited time and maximum work burden is the inconvenience factor which affects
the firm most.
 Causes of stress due to GST

Causes of stress
80
70
60
50
40 76
30 64
52
20 42
30
10
0
lack of training work burden client time pressure delay in work
misconceptions and deadlines

Interpretation: as per the above graph 76% of respondent say that time pressure and
deadline is the reason for causes of stress. 64% of them believe that client misconception
is the source of increase in stress and 52% of them agreed that the lack of training is the
reason for the cause of stress.

Findings:
The study reveals that goods and services tax is better than earlier indirect tax system
The Goods and Services Tax system is more convenient than earlier tax system.
The study reveals that there are several negative uncontrollable impacts on auditing/tax
consultancy firm due to GST.
Need for regular update is one of the causes of inconvenience which affect the firm most.
There is a severe job stress level for auditing/tax consultancy firm due to implementation
of Goods and services Tax
There is a need for GST training programs which may increases the efficiency level of
employees.
Delay in work is a result of changes in policies, due to this there is increase in work
burden thereby work stress.
Suggestions
According to research the uncontrollable factor like changes in GST policies has major
impact on auditing/tax consultancy firm. Hence the firm has to concentrate on training
the staff and increase the efficiency level of staff. Time pressure and deadlines is another
factor which can be reduced by proper training, preparation and daily updating the
accounts which will be more convenient to deal with the due date rush. Most of the factor
which affects the firms is uncontrollable. This cannot be controlled by auditors or tax
practitioners so the major role at this point of view is the firm has to ready for any
changes in the GST policies they has to train the staff up to date, which is believed that
reduces the high volume of work burden and thereby decreases stress level.
On the other hand GST has few positive impacts on auditing firm. As there is increase in
work load and misconception among the clients, the consultancy and other job demand
will eventually increase, the firm has to appoint new staffs and concentrate on their
training.

Conclusion:
Auditing/Tax consultancy services are one of the most essential part in development of
Indian economy. It is a controlling tool of a country which regulates the flow/sources of
funds from public to the government by means of taxation and other mandatory policies.
Hence it is obvious that any changes in the taxation policies will directly affect the
auditing /tax consultancy firms. Goods and Services Tax act which is a most important
post independence tax regime had several negative and positive impacts on auditing/tax
consultancy firms. Most of the factors which affect the firm are due to improper planning
of GST or lack of precaution, so it is more important to this service sector is to come up
with the training programs and regular updating the staffs about Goods and Services Tax.
Every change in tax laws will take time to cope with nations current position, Goods and
Services Tax which is a great step towards development of Indian economy, it is believed
that in a long run Goods and Services Tax system will be successful.
Bibliography
Arunabha, R. (2017). GST in india: A laymans Guide. journal of commerce and management
thought , 219-233.

dsouza, C. r. (2017, oct). GST impact on AUditing firm. (D. P. Crystal, Interviewer)

pragathi, K. (2017). extended this year [Tax]. theeconomic times .

Problems Faced During GST Migration and Their Solutions. (2017, sep 08). Retrieved sep 29,
2017, from Clear tax: https://cleartax.in/s/problems-faced-during-gst-migration-and-their-
solutions

Rica, B. (june 2017). New tax regime to create need for 1.3 mn professionals India Inc rush to
get GST math right. the economic times (online) .