Renaissance in the Financial World…

It is very interesting to observe how India as a country is shaping up in the regulatory and compliance domain in the recent times. The evolution of laws which was expected to happen gradually through amendments and case laws have suddenly picked up such a pace that we are now forced to sit up, take notice and start updating ourselves in almost all the laws that have to do with the economy of our nation.

It all started with a small change in a small law called Sales Tax. We saw, for the first time in India sheer political will succeeded in changing Sales Tax into VAT. All the states agreed and complied with the same. Since that time onwards there is no looking back. The following is an interesting list, which forces one to reflect, that how many of these I personally have to learn or update myself with:

1.       State Sales Tax becomes VAT: The concept of levy itself has changed. The regime of one point levy became multi-point levy. Thus, the concept of Tax credit which was restricted to excise earlier now became a term of a common business person in the country. This change triggered what we call as the “Renaissance in the Financial World…”

2.       Accounting Standards becomes IFRS: All the Indian Accounting Standards also known as Indian GAAPs are now becoming IFRS (International Financial Reporting Standards) starting from 2011-12 to 2013-14. This has actually led to globalization of Indian financial statements. So apart from having Balance Sheet, P&L, Cash Flow and Summary notes, now we shall have SCIE (Statement of Changes in Equity), Statement of Comprehensive Income and Extensive Notes to accounts including points like Critical Judgments, Estimation Uncertainties, etc. The Good News is that the Balance Sheet is to have some logical format.

3.       Companies Act Getting Leaner: With Companies Amendment Bill coming out this year, The New Companies Act will offload its excess baggage i.e. the Rules, the forms etc and the main provisions of the Act will reside in the Act and all the balance stuff will be logically dissected.

4.       Indirect Taxes taking the shape of GST (Goods & Services Tax): The latest amendment on the Cards is the Excise and the Customs and the Service Tax is taking a new shape and are coming to us as one common Goods and Services Tax, which is promising to remove a lot of anomalies in the current taxation regime.

5.       Income Tax Act, 1961 to become DTC (Direct Tax Code): This Law was considered to be one of the most unchangeable laws in the country. It came to all as a surprise when government decided to overhaul the law which was affecting the common man in the nation. DTC promises to be fair, user friendly, simplified and considers the ability to pay of today’s time.

The current government has fostered a lot of courage to overhaul the laws governing our economy at a stroke. One would actually have to consider updating on the sample list of changes captured above and much more to come. From an organization’s perspective a company would have to now get evaluated with newer set of parameters than earlier. From a professional’s perspective, self development would be the mode that one would have to get into.

Revolutions like these create a lot of opportunities for industry professionals in the country. They also create threats for a lot of people. One thing is for sure, we all would have to fasten our seat belt and take the ride to a newer world, which is hope fully more integrated and more simplified for our fellow countrymen.

Vishal Thakkar

Brianna Knowledge Resources Pvt Ltd