The Goods and Services Tax (GST) brings about radical reforms in indirect taxation in India. The reforms particularly affect enterprises. They need to know a number of things for a business: taxes, tariffs and rate slabs, procedures for calculation and compliance. Apart from the input tax credit provision, there are several other factors in the GST, which would need time to be incorporated in business solutions. Those factors include destination system, twin rates, exclusion, etc. New multiple GST-compliant modules need to be incorporated in the enterprise resource planning (ERP) GST software. Similarly, the ERP needs to be synchronized with supply chain models to support inventory supply management, an integral part of warehousing and manufacturing companies.
Are Indian businesses ready for the GST transition?
The overwhelming answer is that they would need time to make the transition. 66% CIOs say they are not GST-ready and will need time to ensure compliance, according to a survey by DynamicCIO.
“There are eight parallel tracks going on in the group. It has caused huge amount of pressure on the IT teams. In my journey, it is probably one of the toughest projects as far as IT is concerned. For example, I am personally looking after the entire project on GST for the whole group. There are 54 legal entities, 70+ GSTIN IDs, almost similar number of locations. There are issues like supplier integration, customer presentations, internal preparation, dedicated supplier training, etc. We have to indulge in huge data collection process for the suppliers, dealers, and customers. This is, to me, a countless job with never-ending closure. It requires huge efforts with very little results,”says a CIO from a large Auto Ancillary Conglomerate.
Most of the CIOs said that the GST rollout will impact their lives to a large extent. As many as 90 % believe that the new tax law has or will impact their lives to a large extent (68.18 %: greatly (needing overhaul of the software); 31.82 %: substantially; not much impact (just like any other change: O%)). Around 68.18 % of CIOs said that the GST rollout will involve a lot of changes to the existing systems and business processes and may even entail acquisition of new hardware and software, along with a new approach to taxation.
“There is the GSP/ASP/GSTN data upload/reconciliation and a host of other activities for, which even basic testing is pending in most enterprises. A lot of companies are yet to decide whether to go for a GSP who is also an ASP or decide an ASP and then see preferred GSP or vice versa,” says Vijay Sethi, CIO, Hero Moto Corp.
Responding to the question of how long the GST transition would take, an overwhelming majority of the CIOs pegged it at 1–6 months (72.73 %), whereas another 15.91% of the responders felt it would take between 6 months and 1 year. A small group (11.36%) thinks it will take less than 1 month.
“I expect lot of work for IT teams for the next 3-4 months, as there will be lot of learning that would need to be incorporated after the rollout. As users come out with more business scenarios that were not thought through during earlier rounds of testing, there will be work to be done. IT has to work to incorporate clarifications regarding various rules. Will the data downloads and uploads be as smooth as being projected by most ASPs/GSPs, I think one should just go back and look at most software implementations, despite best of global vendors and multiple rounds of testing, there are plenty of bugs,” adds Vijay.
Only time will tell how successful Indian enterprises are in adapting to the radical new tax reform.