CHENNAI: The Union Budget proposals to simplify tax compliance, while good for tax payer, is causing worry to a section of the Chartered Accountancy (CA) professionals. From pre-populating income tax returns, raising annual turnover limit to Rs 5 crore for quarterly GST returns, and offering free accounting software for return preparation, are a few budget announcements expected to affect business of small audit firms, as clients find it easier to do it themselves.
The small and mid-sized firms, which were already battling disruption from tech startups like ClearTax, IndiaFiling and others for services, say revenue has already seen around 25% hit in recent years, and is likely to fall further.
“The tech reforms [in the budget] will have an impact on the small and mid-sized firms, who are filing taxes for individual employees/professionals – people who may now find it easy to do it on their own,” K Vaitheeswaran, a Chennai-based tax lawyer and CA, said.
Srivatsan N, a partner at a mid-tier CA firm, said he has been reassessing his business model since proliferation of tech. “While elder clients may still come to us [after the new budget decisions], it will be challenging to get assignments from younger professionals and others belonging to a crop of new return filers,” he said. Another CA said business saw a good uptick in the period immediately after introduction of GST, but revenue has been dipping with recent rationalisation of provisions around GST, including raising threshold limits for compliance. “The latest changes will also impact how much we charge for our services,” he said.
“The institute has not done anything specific to prepare the students for the tech disruptions in the industry,” he added. Queries sent to the industry body, Institute of Chartered Accountants of India (ICAI), remained unanswered at the time of going to press.
Industry trackers said with the government adopting big data and analytics in their portals, the state is now also a direct competition to new-age tech firms. “The tech startups will also see some amount of disruption in their adoption, but it will take some time as the government’s systems stabilise,” Vaitheeswaran said.
ClearTax, for instance, says its product has had features such as pre-populated fields for successive returns filing, and they also undertake a variety of value-add services. “We see the government’s decisions as an evolution, and given the quality of our product, we are not worried,” a spokesperson for ClearTax said.
IndiaFiling founder Lionel Charles said the government’s move will bring in more new tax filers into the system, only growing their market. HR specialists TOI spoke to said the profession has been in flux the past few years with financial software taking away a bulk of accounting and reporting jobs. Ajay Shah, head-recruitment, TeamLease Services, said, companies today hire BCom/MCom grduates and train them on tech platforms to get the job done at almost 50% cost.
Pattabhi Ram, a CA and a teacher, believes audit firms are going through the same disruption faced by the manufacturing sector in the earlier years. “Those who are like that [firms undertaking tax work] will have to move up the value chain and act as a one shop stop that offers variety. We will see a merger of these entities or as is happening over the last ten years, no one is going to set up small firms.”
Source- The Hindu.