It has been anticipated that the Goods and Service Tax (GST) will bring about a massive transformation in the Indian tax system and it is also touted to be a major tax reform from the time of India’s independence. The objective behind the GST is to render the process of indirect taxation relatively easy and is designed to substitute intricate tax forms which includes; service tax, state value added tax (VAT), octroi or entry tax, central excise and all other types of indirect taxes. GST will be collected when goods and services are supplied and will be levied on transaction values that would also comprise of commission, packaging and all other expenditure sustained when a sale is made.
Implementing GST is bound to standardize the process of taxation throughout the nation and will also facilitate total tax credits from inputs and at the time of procuring capital goods and the same can be set off against the output liability of GST. This major transformation in the system of taxation puts both large scale organizations and small and medium enterprises (SMEs) on the same platform while obliterating any differentiation in tax at the time of transferring stock.
From a taxation perspective, the GST does present its own set of advantages and disadvantages to SMEs however, the major challenge that SMEs are confronted with is to align their IT systems with the tax reforms that the GST warrants.
From the perspective of planning and implementation, IT teams within SMEs are still trying to understand the kind of planning and implantation that will be required for updating and reviewing their existing ERP systems to effectively incorporate the intricate aspects of the GST. Though it can be assumed that the only change that is required to incorporate GST within their IT systems is as simple as updating their existing ERP version. But, that might not be the case. Any alteration in the ERP necessitates a fine coordination between IT, tax and other departments with a view to guarantee successful incorporation. Aligning ERP systems with GST presents a situation where there is a frequent shift in requirements and the date of implementation.
In view of the changes that are expected to be brought about by the GST, several SMEs have initiated the process of upgrading, designing and fixing novel procedures and functions within their ERPs. However, this is largely a continuous process which requires much time and needless to say, there will be an escalation in costs too.
On the whole, SMEs will have to reconsider the below mentioned areas within their ERP systems:
- Financial management modules
- Procurement or materials modules
- Sales or supply chain modules
These areas have to be considered as the change effected by GST will make an impact on the said modules. Since the GST requires major adjustments in rates, it directly translates as a major alteration to the ERP as there is a need to create new tax codes, conditions and update relevant information pertaining to materials and products. These factors warrant the need for an ERP system that is GST ready.
Agaram InfoTech is an ERP solution provider that is well-versed with the implications of GST on organizations small and large. We understand that in order to accommodate the requirements of taxation as warranted by the GST there is a need to drastically alter the procedures by which tax calculations can be executed. We ensure that the customized ERP solution that is provided is not only GST ready but is designed for flexibility wherein any future changes in the tax systems or financial environment can be easily accommodated.
In addition, considering our rapport with our existing clients and in order to forge new relations with new clients and our strong commitment to client satisfaction, Agaram InfoTech also provides GST related consultancy. We have in-house experts who are well-versed with the finer nuances of GST and they are highly qualified in their domain to provide assistance pertinent to GST. As an initiative in this direction, we have proposed a GST seminar that is absolutely free of cost for IT and finance personnel which will enable smooth GST implementation within their organizations.
Choosing Agaram as your ERP solution provider can help you to overcome the IT related challenges presented by the GST.