All you Need to Know About Sovereign Gold Bond SchemeFebruary 27, 2017
How to Make Your ITR-V Rejection-ProofMarch 2, 2017
GST is a significant tax reform which will completely transform indirect taxation in India. Almost all types of industries and businesses will be affected by it. GST may simplify indirect taxation later but first businesses need to take necessary steps to make themselves GST ready. Government has set a date for its implementation and to meet this deadline its working overtime. GST implementation is expected to happen on April 1, 2017 which means that businesses have only three months remaining to finish their preparations. If you haven’t started your preparation yet and wondering what to do, then this article is for you. If you think that you are prepared to welcome GST, this article will help you evaluate your preparations. Here are 10 things that you need to do to effectively make your business GST ready.
- Revamp IT and accounting systems: The impact of GST on IT and accounting systems need to be evaluated by companies. Based on the findings, systems will need modification or complete replacement. With the help of software development companies, this transition process can be made smoother.
- Follow best practices of other countries: MNCs which have their operations in spread in countries where GST structure is already in place have an advantage in preparing themselves for Indian GST. However, other companies can prepare themselves better for GST implementation by gaining an understanding of best practices of such companies other nations with regard to single indirect tax systems.
- Train your network of vendors and suppliers: Larger multinationals often have a large network of vendors or suppliers. These suppliers may not be able to prepare themselves for GST in the necessary manner. Therefore, these companies should encourage their smaller suppliers to begin preparing for the switch to GST in order to make supply chains more efficient. New invoicing rules will be applicable to smaller suppliers even if they do not enough turnover if the party they are dealing with comes under the scope of being taxed under GST.
- Upgrade or modify ERP systems: Your present ERP system will become useless after GST comes into picture. You need to upgrade your ERP system in order to meet the requirements of GST and changing cost implications. Upgrading your ERP systems can be costly but is a necessary step which will help you take advantage of huge cost benefits resulting from GST implementation.
- Get a fix on which software modules need to be changed: As GST will have more of an impact on data management and taxation, organizations need to look into their present versions of finance solutions and plan accordingly. The revamp exercise is not going to be a standard software patch that can be applied to their systems at one go. Companies will have to be very clear about which modules of their software are going to be affected, and how they will correlate the changes with GST.
- Familiarization with GST Network and relevant training: GST Network (GSTN) also known as GST Common Portal is the one-stop tax portal that the Government has set up to provide tax filing and input credit services to the taxpayers. Companies will need to familiarise their finance department, legal department and any other departments with the Common Portal and provide necessary training wherever necessary.
[ Read: GST Portal Login Guidelines ]
- Engage with the government: The transition process is more complex for big businesses. Bigger companies can engage with the government, the finance ministry and various chambers of commerce for an expedited understanding of GST to ensure smooth implementation and compliance. They can get detailed information regarding rules and regulations to effectively make their preparation.
- Update your backend systems: Backend systems need to be kept up to be updated in order to facilitate seamless transition to GST.
- Set up milestones and monitor your progress: Getting ready for GST compliance is a huge challenge. Therefore it is important to set up milestones and check their progress from time to time. If the GST implementation deadline is extended then they may get some relief otherwise the progress should be made keeping in mind the original deadline.
- Take parties involved with your business into confidence: As companies take steps to get ready for GST compliance, they may encounter disruption of internal processes. They need to take their employees into confidence and explain that this is a temporary phenomenon, and things will fall into place soon.
GST implementation may get delayed due to lack of common ground among parties involved. The government is hoping to kick-start the initiative on April 1, 2017 but it may get delayed by 5 or 6 months. Even then companies have very less time to upgrade their systems to comply with the new tax regime. Several companies have already taken steps to be GST-compliant; if you haven’t, you should start now.