Industry and businesses not ready for GST; what they need to do

The long-awaited goods and services tax ( GST) is set to be rolled out on July 1. While its benefits are beyond question, business and industry don’t seem to be ready for this historic indirect tax reform. ET and EY list key action points and what businesses need to do:

Business impact
- Impact on supply chain, sales and operation planning (S&OP) and procurements
- Organisational structure
- Working capital and cash flow management
- Impact on contracts with vendors and customers Product pricing and discount management

Action Points
- Revisit supply chain and procurement process
- Amendment in vendor and customer contracts
- Circulate vendor and customer communication
- Revisit pricing of services/goods supplied
- Negotiation with suppliers for reduction in prices


Tax Impact
- Impact on compliances: - State specific registrations
- Mechanism and periodicity of filing returns
- Credit availability i.e. reconciliation of credit mismatch
- Impact on valuation of transactions - Accounting and invoicing process
- Reconciliation of returns with financial statements
- Impact on financial processes — Accounts Receivable, Accounts Payable and Cash Management
- Training of relevant employees/stakeholders

Action Points
- Finalisation of tax positions, tax rates and classification
-GST migration and obtaining fresh registration
-Preparation of compliance manual as per GST compliance requirements
-Input tax credit availability — credit tracking and eligibility
-Make changes in accounting and invoicing processes
-Revisit valuation of goods and services

Technology Impact
- Impact on IT infrastructure to capture transactions
- Impact on ERP, will be required to amend: - Vendor, customer, price and tax masters
- Invoice formats
- Credit register formats
- Inventory levels (warehouse management
system changes)
- Implementation of IT-enabled tools to manage compliances

Action Points
- Changes in IT system with respect to: - Raising state wise invoices containing prescribed particulars:
- Additional fields (GSTIN of supplier and recipient/Place of supply/ taxes etc.) to be added for recording of transaction
- Tax codes and GL codes
- Product/ service-wise GST rate database (including HSN/SAC) (on the procurement as well as output side) - Testing of IT System before ‘Go live’