Passing of GST or Goods and Services Tax in India on 8th August, 2016 was a momentous feat by both the Houses of the Parliament. Since its announcement, GST has created quite a stir for almost all businesses as it will eliminate all the past known taxes and make way for just one tax. It is hailed as one of the most game changing reforms in the country making business easier and faster. In short, GST is a single consumption based tax which will be levied on the manufacturing, sales and consumption of all goods and service nationwide. The direct beneficiaries from this reform are the common people as all other taxes and cascading taxes will be eliminated resulting in lower prices, faster delivery, stable demand and supply making business transparent and faster. The implementation will start form 1st April, 2017 in the form of ‘dual GST’ i.e. CGST which will be levied by the central government and SGST which will be levied by the state government and an IGST which is an integrated GST for Central and State.
For most businesses while GST will prove as a boon as most of prices for goods go down owing to the one tax factor, it still has created a state of anxiety. Year of perfecting tax laws and filing could not have prepared anyone for this. The place where GST will hit the most for the businesses will be in hiring professionals, conducting training sessions and revisiting their ERP software. By revisiting we mean go through the complete structure thoroughly and imbibe the new tax module. For most, it would mean purchasing a new software since they might be using age old software whose source code must be working on old technology, hence redundant or the ERP vendor would have shut shops making recoding and implementation harder.
Following are the measures that a company can take to be prepared for GST:
1. Appoint a professional: GST and its calculations might be tough for the accounts team to handle it on their own. Hence, the company should invest in hiring a GST professional who can not only help in train the employees in the office, but also help in selecting a new software which is GST integrated.
2. Go back to processes and workflows: While this may not seem like an immediate thing to do, it sure will be important. Due to GST some commodities will be available at a lower price and some at higher price. Readjusting of raw materials and finished goods is important simply because some items may be priced higher and lower than the previous value due to the tax.
3. Revisiting the Software: This is the most important aspect of the GST change. If it is an old ERP system, then you might wish to invest in a new one since you would have already grown out of the old system. Many ERP vendors themselves will be contacting you either with a GST plugin or with a patch to have in built in the system. It is important that the heads of the company along with the hired GST professional and ERP vendor, sit across the table and discuss which is the best way forward. This is the right time for a company to start looking for an ERP software which will be GST compliant.
4. Compliance system: Every country has their own compliance systems and what makes GST unique is that it is expected to uncomplicate the compliance system facilitating transparency and clarity. Though the bottom line remains – Compliances. Along with calculating the GST, the company needs to think about the compliances and the documentation that follow. Here too, the company can take help from the professional while keeping in mind that the ERP system that they will purchase or patch up needs to also contain these compliances as a part of their core GST function.
We at Process Master, have been in the forefront of research as soon as GST was announced. Taxes, invoices and inventory are core aspects of an ERP software and at Process Master, we have been thoroughly following the GST implementations in Malaysia, talking with experts and building workable models in our ERP to get GST right as soon as the implementation plan is released. For more information on GST software please send us a mail to [email protected] or call us at +91-731-259 0244, 423 7548.