The taxation landscape in India is constantly evolving. New tax rules 2023 brings in many updates that can be difficult to keep up with. The government must also constantly adapt to economic shifts, changes in geopolitical situations and technological advancements. Businesses must remain current with new laws and be prepared to alter existing processes to adopt these laws. Here are some suggestions on how businesses can gear up for tax law changes:
I) Hire a professional firm: It is advisable to seek guidance from a reputed accounting or tax advisory firm regularly. These professionals will alert you to changes in laws applicable to your business. They may further provide clarity in case of any ambiguity in the law.
II) Determine the effective date of amendment: Note down the date from which the amendment will take effect. It is advisable to establish a soft deadline well before the actual date to improve the ability to comply with the changes.
III) Ascertain type of tax: If the amendment relates to direct tax laws, it normally require adjustments after the financial year close unless it relates to TDS/TCS/advance tax or a monthly compliance formality. Amendments related to indirect tax laws, however, may require an immediate adjustment. For example, a change in the rate of GST may require an adjustment in the point-of-sale system.
IV) Assess the impact on various departments: The impact on various departments within the business needs to be evaluated and communicated accordingly. For example, suppose a particular type of expense attracts disallowance (for example, assets purchased in cash above ₹10,000 not eligible for depreciation). In that case, it must be communicated to all responsible for cash payments. If the change relates to TDS rates, the Accounts Payable department must be informed. If the change relates to GST rate, cashiers or persons responsible for raising invoices must be briefed.
V) Plan optimum tax strategy: In case of significant amendments, the business may need to plan and find a way to optimise the tax liability involved (while remaining fully compliant with the law). If necessary, management must consult external professionals and develop an effective strategy to tackle the issues involved.
Conclusion
When it comes to tax amendments, being agile and flexible is a valuable quality to develop. Businesses need to be as proactive as possible and be prepared for every eventuality. Most tax amendments in India are announced annually in the Union Budget in February, which is a crucial time for businesses to watch and act. Tax laws might keep changing but how we deal with those changes can determine how equipped we are to mitigate the tax risks involved. To know more about how well you can be prepared, contact BCL India the leading chartered accountant firm in Bangalore at info@bclindia.in
