5 ways to get your large network business GST-ready
The rollout of GST from July 2017 is going to be the most significant tax reform India has witnessed thus far. GST is one indirect tax for the whole nation that will replace the current multiple taxation regimes and make India a unified common market. With barely two months left for the rollout, the preparedness and challenges faced by manufacturers is a most discussed topic. In this article, we provide a roadmap for companies with a large network or are present in a number of locations.
- Get yourself familiar with the GST network
This seems like a no-brainer, but this is actually the very first step of preparedness. Integration of your finance and IT teams to study and analyse the GST network (GSTN), the one-stop tax portal is where you should start. Hold video conferences with team heads and your local IT and finance teams to understand, analyse and familiarise yourself with the new regulations. Chalk out the responsibility of team leaders of various locations so that they know exactly what to do when the rollout begins.
- Assess the change required in software modules
Companies with a large network will naturally have a greater impact of GST with regards to data management and taxation requirements. The software used for finance solutions, therefore, must be assessed and revamped where necessary. A standard software patch cannot be a solution, therefore partnering with a software company that can provide customised solutions is the answer. An efficient software partner can help you assess the impact on your IT and accounting system and make the transition to GST smoother.
- Upgradation and automation of ERP
Larger companies present at multiple locations need to overhaul their ERP systems to accommodate the new regulatory complexities. Automation in the products business has already been adopted on a large-scale basis in order to reduce wastage and increase efficiency. With the GST rollout round the bend, automation for accounts receivable will be key to the transition of companies with a large network.
If you have a central accounting department that has to get location wise information, some of which is done manually, it is going to be a humungous task here on to keep track and measure productivity. On the other hand, migration to a central depository and generating electronic invoices across all locations will make accounting much easier. In this time of transition, automation in account receivables by upgrading your ERP software will make GST compliance much easier.
- Training your suppliers
Under the GST, you are completely dependent on your suppliers in order to get the benefits of input tax credit. Input tax credit means that at the time of paying tax on the output you can claim credit and reduce the taxes you have already paid on inputs. This means that each invoice for any business transaction you make across locations is registered on the GSTN and matched for compliance against input credit claims. You, therefore, need to ensure that all your suppliers can upload such invoices so that you can all claim benefits. Training smaller suppliers at this stage are therefore crucial.
- Discuss the plan with third party logistic service providers
Thus far, third-party logistics service providers (3PL) had warehouses near the distribution centres of its major clients. This was a ploy to avoid interstate taxes. Post GST rollout, 3PLs are expected to build integrated warehouses suitable to its clients rather than be worried about tax evasion. If you work majorly with 3PLs in distant locations, get them on board in your workshops, meeting or video conferences to understand how they would restructure their assets to accommodate your long-distance consignments.
Getting ready for the GST rollout is a huge challenge, but with the right attitude and the help of efficient partners you can be GST ready and take advantage of the opportunities, it will now present.
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