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Compliance can build trust with stakeholders

In a webinar organised by World Trade Center Shamshabad, financial experts emphasise on the importance of adhering to laws and regulations for MSMEs and startups to achieve success

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Dr BV Murali Krishna, Addl CCT(e-Governance), Karnataka
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6 April 2023 10:53 PM IST

Digitalisation of tax departments has enabled banks and other lending agencies to cross-check data and provide funding to taxpayers rather than solely relying on audited financial statements. In addition, being compliant can build trust with business partners, ultimately leading to growth opportunities

Hyderabad: World Trade Center Shamshabad in association with Federation of Telangana Chamber of Commerce (FTCCI), and The Association of Lady Entrepreneurs of India (ALEAP) organised a webinar on ‘Year-end compliances for MSMEs & startups’. Dr BV Murali Krishna, Addl CCT(e-Governance), Karnataka was the chief guest for this online event.

During his inaugural speech, Dr Murali Krishan emphasised the importance for MSMEs and startups to have a thorough understanding of the various compliances involved in conducting business. Particularly with GST, he advised to ensure that they correctly classify their products or services and apply the appropriate tax rate.

“Failure to do so could lead to potential litigation and the possibility of having to pay additional taxes if an item is invoiced at a lower rate. Such unexpected expenses could significantly impact a company's profits, making it crucial for entrepreneurs to remain vigilant about GST compliance,” he informed.

S Swaminathan, Founder & CEO of IRIS Business Services Ltd, was the guest of honour. During his virtual address, he shared his perspective that compliance should not be viewed as a burden, but rather as an opportunity for businesses to make strategic decisions based on compliance data.

He emphasised that the digitalisation of tax departments has enabled banks and other lending agencies to cross-check data and provide funding to taxpayers rather than solely relying on audited financial statements. In addition, he pointed out that being compliant can build trust with business partners, ultimately leading to growth opportunities.

“By prioritising compliance and leveraging digital tools, companies can position themselves for success in a rapidly-evolving business landscape,” Swaminathan said.

To gain a broad understanding of the compliance issues, WTC Shamshabad has organised an exclusive session with industry experts.

CMA B Mallikarjuna Gupta, virtual chief financial officer and GST & Management Consultant, was the moderator of the session. He emphasised the importance of adhering to laws and regulations for MSMEs and startups to gain the trust of their business partners and achieve success.

Specifically, he noted the critical nature of year-end compliances related to income tax, GST, and annual compliances for the Register of Companies and maintenance of cost records. He stressed the importance of accurate and timely recording of transactions, as well as filing returns in a timely and accurate manner.

“By prioritising these compliance measures, businesses can position themselves for growth and build a reputation for reliability and trustworthiness,” Gupta further said.

CA KSB Subramanyam, Chief Financial Partner, Manohar Chowdhry & Associates, emphasised the importance of timely and accurate documentation of business transactions.

In particular, the panelist highlighted the need for proper accounting of expenses and the timely deduction and reversal of taxes in the next financial year. Failure to adhere to these provisions could result in significant financial consequences, and the cost of non-compliance is ultimately more expensive than the cost of compliance.

By prioritising proper documentation and compliance, businesses can position themselves for long-term success and avoid costly mistakes. Subramanyam stressed that entrepreneurs should refer to the AIS (Annual Information Statement) form while filing their income tax returns as it pulls data from various sources.

He adds, “This will ensure that all incomes are accounted for, and taxes are paid on it in accordance with the provisions of Income Tax.”

Another panelist CMA TK Jaganathan, Partner, JH & Associates - Cost Accountants, said that the maintenance of cost records can help monitor and control resource consumption and utilisation, improve operating margins, and determine the basis for cross-charging under GST. He has emphasised that the cost of products or services must consider design costs, not just production costs. Cost records can serve as a reliable source of information for these purposes.

Jaganathan said, “By maintaining accurate and up-to-date compliance records, entrepreneurs can make informed decisions that support their business goals. These records can provide insights into resource utilisation, production costs, and other important factors that impact profitability. As such, entrepreneurs should prioritise the maintenance of compliance records to help drive their businesses forward and ensure long-term success.”

On the occasion, CS Priyanka Rajora, Proprietor of Rajora& Co, noted that the Indian government has introduced measures to promote the ease of doing business, particularly for MSMEs and startups. These measures include relaxation on certain compliance requirements.

However, she has also emphasised the importance of conducting regular board meetings and filing annual forms on time to avoid hefty penalties.

Priyanka adds, “Proper documentation of board meetings is also critical to improving corporate governance. By keeping accurate records of discussions and decisions made during board meetings, companies can better demonstrate their commitment to transparency and accountability. This, in turn, can help improve valuations and increase investor confidence.”

Final panelist of the webinar CA Mahadev R, Partner at HNA & Co LLP, highghted the importance of year-end compliances under GST for MSMEs and startups. He emphasised that reconciliation should not be treated as a yearly ritual but instead, a regular activity. Reconciliations must be conducted between the Sales Day Book and various GST forms like GSTR-1, GSTR-3B, e-waybills issued, and e-invoices generated.

He also advised taxpayers to issue self-invoices for discharging the tax liability under reverse charge and to issue credit notes before November 30. He further stressed the significance of proper maintenance and preservation of records.

World Trade Center Shamshabad ALEAP FTCCI IRIS Business Services Ltd 
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