As the long wait for implementation of GST is over, companies are taking up their next best steps to get the loose ends tied up in time. While every small or large business entity is busy in complying with the GST regime, HR professionals are also engrossed in assessing the effect of GST on their transactions with the employees, reported by People Matters. For corporates, GST will be applicable on all amenities outside CTC (cost to company). As per the new GST bill, if an employee receives free goods and services beyond its stipulated sum then GST would be applied.
Arvind Usretay, Director- Rewards (India), Willis Towers Watson talks about challenges attached to the implementation of GST and changes in the compensation structure. He says, “Like in any change process, there are likely to be some teething challenges with GST too. However, most employers have made necessary arrangements for its smooth implementation. GST is a progressive step in simplifying the tax structures in India. Employers might need some support in clarifying as to what aspects of compensation (including fixed pay, variable pay, spot rewards etc.) and benefits (free meals, free transportation, car lease, crèche etc.) are impacted under GST. Going forward this may have some impact on how compensation and benefits are structured and communicated to employees.”
On shift of trends in compensation and benefits for India Inc., he adds, “Regulatory changes (like the GST) do impact compensation structures and preferences of employees. In the past when FBT was introduced, we had observed a tilt towards more cash over benefits. With GST too both employers and employees will evaluate their options to arrive at an optimal structure and the choices in benefits. We may also anticipate more specific and precise communication from employers to employees especially in the employment contracts. That said, base pay and differentiated benefits are likely to continue to be amongst top attraction drivers.”
Amongst several companies preparing for GST implementation, Via.com, Omni Channel Travel, Retail & Fintech Company has allotted a dedicated team of professionals to work on the GST implementation. They are taking help of consultancies to understand the details of the new law. Swaminathan Vedaranyam, Chief Executive Officer of Via, says, “We ensured that all issues which may impact our customers and business are dealt with. Also, we organized GST workshops to discuss with our customers various aspects of GST and its impact on how business will be conducted. The GST system is going to make the whole tax collection process more efficient and will drive greater degree of compliance. It will, therefore, create more opportunities for employment all around and clearly present areas where reskilling may be required. What we think is that - the whole process of reporting under GST and claiming credits are well defined. Therefore, companies will need to work with GST compliant vendors and ensure they have the right technologies for accounting, filing and reporting. The downside of this could mean significant losses around losing GST credits.
The implementation of GST could enhance the growth of Indian small-scale enterprises, not just by simplifying taxation, but also in terms of ease of doing business. Sashank Rishyasringa, Co-founder of Capital Float says, “GST will create a unified platform for transactions pan India that will come with an unprecedented amount of data points that will enable lenders like us to determine our customers’ creditworthiness more quickly. This, in turn, will help us disburse loans at a faster rate, to a wider range of borrowers. The GSTN will push for formal and rigorous invoicing for SMEs across all sectors, creating a cloud repository of all transactions. Though this may cause hardships in the short term, we believe it would be beneficial for them in the longer run. The flow of money for both lenders and borrowers would become faster and seamless. The e-commerce industry is a fast paced, involving transactions and compliance over multiple states. GSTN will help simplify these and allow sellers to receive credit faster in order to stay competitive."
Some feel GST is going to provide higher-rate of growth to startups, Amit Ramani, Founder & CEO at Awfis Space Solutions Private Limited, says “GST is a fundamental reform focused on the ease of doing business and making India a destination of choice for global investments. The simplified tax structure with improved governance will create a level playing field for start-ups and traditional businesses providing new age businesses with better prospects. The benefits of, all goods and services interchangeably being allowed to be set off as credit, process simplicity, and logistical efficiencies, will provide higher rate of growth for start-ups. At our company, as well we are extremely bullish and enthusiastic about GST implementation and look forward to supporting the infrastructure needs of the modern Indian workforce.”