The men who manage the finances of some of India’s best-known companies admit that the implementation of the crucial Goods and Services tax will be plagued with delays. In a survey conducted by Yes Bank nearly three fourths of the CFOs have said that the significant reform could be pushed behind to next fiscal amid political pandemonium.
The survey of more than 100 CFOs is crucial when seen in the backdrop of finance minister Arun Jaitley’s statement in New York last month. While addressing students at the Columbia University last month the Finance Minister had reiterated that GST was a top priority for his government but the Congress party had not allowed passage of the legislature by causing disturbances in Parliament.
Under the proposed GST regime, for goods and services supplied within a state, both the centre and state will concurrently impose GST. In addition for trade between states, an integrated GST will be levied by the centre. It is expected that the introduction of a GST will remove structural rigidities and provide a common market for goods and services.
Commenting on the findings of the survey Rana Kapoor, MD & CEO, Yes Bank told ET, “The much anticipated Goods & Services Tax will be a game changer for the Indian economy. The new tax regime can lead to efficient resource allocation within the economy, improve tax compliance and positively impact GDP growth.”
Over one third CFOs surveyed also felt that GST was the biggest challenge for them with respect to regulatory reforms, followed by change in the accounting standards from GAAP to Ind-AS from April next year. India is changing its accounting standards as Ind-AS as it is at par with International Financial Reporting Standards. A significant majority of CFOs surveyed said that their company was prepared to adopt the Ind-AS reporting standard.
77% of CFOs also believe that their company is well prepared to comply with mandatory audit rotation. The Companies Act 2013 makes it mandatory for audit firms to be changed after every 10 years. The rule is applicable from April 1, 2014, on a retrospective basis but provides a three-year window to comply with the provisions. Over 60% respondents also believe that the role of the Board has undergone significant change with the implementation of the new Companies Act, 2013.