PricewaterhouseCoopers (PwC) has been selected as technical consultants by the Maharashtra government to help the state implement its value added tax (VAT) system in the state. Some key elements covered would include drafting the VAT law, audit processes, training, linkages to information technology (IT) systems and communications.
The terms of contract are currently being negotiated between the Maharashtra government and PwC, and expected to be formalised soon. The contract would be for a period of one year, and valued in excess of Rs 5 crore.
PwC executive director S Madhavan told FE that this project would be implemented jointly by the firm’s UK and Indian teams, with Debra Adams from UK being appointed the project manager to oversee all operations. “International specialists are needed as the experience of professionals on VAT is limited in the country,” he added.
PwC will assist the state government to put together the legislation, currently at the draft stage, in its final form with suggested changes. VAT audit processes will also be developed, to ensure collections match projections budgeted for. Mr Madhavan said that this can be a fairly complex matter, and critical to the success of VAT.
Another module would cover training of over 8,000 staff of the state’s sales tax department. Over four hundred training workshops would also be held for the trade. Mr Madhavan added that awareness levels amongst the bureaucracy was already very high after attending various workshops over the last couple of years as the debate on implementation of VAT was taking place.
PwC would also advise on the IT strategy for the VAT system, although a separate vendor has been selected for executing the IT components. As many of the small traders might not be technology ready, PwC will suggest ways to handle manual filings too. Mr Madhavan added that VAT would be largely electronically driven, and Maharashtra is a state ready to technology well.
PwC would be working with economists for econometric analysis. The firm would also be developing a communications strategy to best disseminate information about VAT to all stakeholders, including professionals, dealers and government staff.
Mr Madhavan said that PwC has extensive international experience in VAT including countries in Europe and Africa, and even Pakistan. The firm is already doing similar work for the Andhra Pradesh government. While hurdles in implementation are expected, Mr Madhavan said that learnings from other countries would go a long way in making this transition as painless as possible. “Change, especially in the area of tax, is uncomfortable, especially something seen as a threat to one’s comfort zones.