GST will be implemented in India from 1st July 2017, this will completely change the taxation system of India, GST will replace most of the indirect taxes in our system and merge them into one. Though GST presents a huge amount of challenge to businesses. , for a well prepared organization it can be an opportunity to review their supply chain and IT system. GST is a completely different taxation system, our current way of tax calculation and reporting are not adequate. Here are areas where IT system and ERP can be helpful in dealing with upcoming challenges.
Detail record keeping – Compliance in GST require you to keep and upload detail of all invoice on monthly basis. You will also have to download and verify all your purchase and transaction. Apart from these you have to maintain records of advances, debit note, credit note, sales return, purchase, return, stock transfer, payments and other transaction. Maintaining records of various transaction types and that too on large numbers can be very cumbersome task and can be very difficult to do with manual or basic IT system. This is where you can take help of IT and ERP systems.
Large number of compliances – With the implementation of GST filing returns will take more cost and effort than before as before returns have to be filed every quarterly or even half yearly but with the implementation of GST you have to file 3 returns per month plus 1 return yearly i.e. a total of 37 returns per year and this will be for a organization that operates on a single state but if an organization operates from multiple states number of returns need to be filed also multiplies i.e. if an organization operates in 10 different states number of returns needed to be filed will become 370 Without a proper IT structure this will take a lot of time and trouble.
Input tax credit rules are complicated – Input tax credit is really important for every organization and after implementation of GST this will become more stringent as not following proper guidelines that are provided by GST council can result in loss of Input tax credit. GST council have almost 10 rules and organizations have to comply to all of them if they want proper input tax credit, ensuring each time that if you have complied with each rule or not will take a lot of time for the organization and will also be troublesome. Proper IT infrastructure will help in this; it will speed up the process hence saving a lot of time and trouble for the organization.
Cost of non-compliance is too high– If any part of the supply chain failed to act in accordance with GST guidelines the whole supply chain will suffer, and there is a new concept called GST COMPLIANCE RATING, non compliance will result is dropping of the compliance rating , this will result in future business loss as organizations with more compliance rating will be preferred over organizations with less compliance rating, this is why cost of non-compliance now is much higher, An IT system can help you with the non-compliance in the supply chain so that it can be fixed as soon as possible hence causing minimum damage to the system.
Business environment changing- GST have its own network called GSTN with this step government is shifting towards digital, most business nowadays also choose to have a good IT infrastructure to increase efficiency of their organization. In this competitive market you have to keep yourself updated according to the market trend or other organizations will you left behind hence not having a good IT department will give the edge to your competitors and can have severe impacts on your business.
Can ERP help?
ERP stands for enterprise resource planning; most organizations use this software to create a common database so that access of information becomes easy of various departments of the organization. So can it help with GST as well? ERP can help with GST in following ways:-
Going digital – Importance of data handling after implementation of GST is mentioned above in the article. An ERP integrates and automates processes and ensures no entry is missed. This will surely help reducing effort and cost of manual record keeping,
Under the GST tax system, all your documents pertaining to warning notices, payments, registrations, refunds and returns would go digital. Thus, businesses are expected to adopt e-filing for GST tax compliance. This calls for equipping your business with automation software to address this challenge. ERP solutions would make this task relatively easier and hassle-free.
Compliance Ready -Compliance reforms as mentioned above will take a lot of effort for businesses than it does before GST, when GST comes into play compliance management will go online. Posts GST rollout compliances for multi-state and destination based tax regulations would become difficult to manage for manufacturers. ERP for manufacturing industry will not only help to meet these regulations, but will also help to maintain accurate financial records.
Standardization – GST is intended to facilitate seamless movement of goods and services across the nation and will reduce overall tax costs. To take advantage of this standardization, organizations will require a robust ERP system from the ground level. GST has created a burning need to standardize the entire invoice capturing process, for both sales and purchases; the transformation can be made smooth with the help of ERP through an appropriate GST ready ERP solution.