Startups Find Filing GST Returns A Herculean Task Amid Coronavirus Lockdown

Work from home is and should be the norm given the critical situation in India today. However, with this comes a few challenges for startups and even bigger corporates. One such challenge faced by companies is that the employees who take care of filing tax and GST returns and generating e-way bills are not able to access their office systems.

While the safety of the employees is the primary concern for the startups, they may face compliance delays due to this. The challenge is especially high for early-stage startups with limited access to financial tech applications.

Limited Resources And Complicated GST Process

The process of filing GST itself from consolidating bills of expenses and purchases from different teams, validating and entering on the accounting systems, calculating GST due from sales and more is complicated. And, it usually happens in the last week of the month and under the current situation, it could be difficult for a lot of companies.

“A lot of people use systems like Tally ERP which is not very ‘online’ or remote-friendly. Invoices are in the office, and people have not taken them home. In a lot of industries, there are policies that prevent people from carrying sensitive financial info out of their offices,” said Mohammed Iqbal, founder, WaterScience.

Another imminent concern could be liquidity itself, as a huge part of receivables collections also happens towards the end of the month. “How will you pay GST if you don’t have money in the bank?” asks Iqbal.

Bigger startups may have planned their work in such a way to ensure compliance is met with a bare-bones staff. However, not all businesses may have the means to operate from home. Companies that are not on a cloud-based software will face challenges. Additionally, employees at bigger companies may also not have the basic infrastructure at homes such as printers or even referral books which could cause a delay in statutory compliance. A penalty of INR 50 per day could be incurred for delayed filing.

“Small businesses that cannot operate from home and where the tax staff is required to be present at the premises to comply will likely suffer. For the smooth movement of goods and generation of e-way bills, some staff may be operating for a short period at the premises,” said Archit Gupta, founder and CEO, ClearTax.

The startup is helping its customers comply smoothly with cloud-based software that can be accessed anytime, anywhere. Once data is added the software can automatically generate reports and perform reconciliations. “Our team is helping customers resolve any issues they may be facing. These are unusual circumstances and we hope the government will look into these concerns,” Gupta added.

This being the last month of the financial year, all the financial accounting and taxation of the year is done. Sadly, this comes when GSTR-3B filing has been staggered by the government (20th, 22nd, 24th based on states/UTs).

The working class is also actually concerned about filings of the tax returns, however, there is absolutely no reason to be worried on this front, say some experts.

“The government has already provided online platforms to do all this without any hassles. Although corporates also ask employees to declare their savings before March-end, but this time around when there is a partial or complete lockdown kind of situation there may be some relief from the government,” hoped Noida-based financial advisor Harsh Chaturvedi.

Startups Seek Extension Till Coronavirus Clears

The government may have to extend deadlines as there is no other way for a lot of businesses. Many startups have set up WhatsApp groups, and more savvy and new-age companies use collaboration/productivity tools like Slack, Asana, etc. to manage, but it is still expected to have gaps. Making a complicated finance process remote, overnight, is not an easy task.

“The upside is, we will learn to adapt, processes will evolve, and there will be a lot of technology adoption for even ‘traditional pen and paper’ businesses. We will see a lot of these roles and functions becoming more efficient in the coming months,” added Iqbal.

For the time being, the government can extend due dates for 15 days, to say the least, ask companies. This will give some time for corporates to find a solution as to how they can manage their workload. For instance, since there is a lot of panic among employees as most of them travel through public transports, some corporates have allowed work from home on a rotational basis and allowed their employees to travel from Uber/Ola. This will to an extent manage the workload as well and also will be cost-effective as well. However, if the situation worsens, this is also not a viable option.

The government can extend due dates in a staggered manner as per the turnover of the corporates, say companies. “Moreover, there are ROC compliances, GST Returns, TDS Compliance, etc. due dates of which fall around almost the same time. The government should plan all of it and that too at the earliest possible so that Corporates can plan accordingly,” said Puneet Dang, cofounder and chartered accountant, SPRN Associates, a fintech and tax advisory startup.