With the impetus on the GST bill passage and its implementation by the government, the businesses are looking forward to the new indirect taxation system. The BJP government provided the thrust to the GST when it came to power in 2014. Before that, the discussions were on for several years without much clarity and direction. There are many business houses that feel that there is not much to be done even today as there is limited information on GST. They intend to look at the changes and investments only after the GST is implemented.
There are many other business houses that have started their work on the GST readiness in the previous year itself. They do not want to be caught in a situation similar to the one in Malaysia when it rolled out GST on April 1, 2015. The rollout had its problems arising out of lack of awareness and preparedness. There were business disruptions, working issues and delay in compliance for many. Malaysian GST is fairly simple with a single rate, whereas the Indian GST is much more complex with more than one rate and state, centre and Interstate taxations. Hence, it is prudent on the part of the businessmen who have begun the preparation for the GST while there is still time.
There are multiple areas of importance which the business houses have to look into from a seamless transition into the GST regime. Wait and watch attitude is not going to help much and will only lead to production stoppages, higher spending and penalties when the implementation would be required in a short time. The businesses need to be looking at the following in order to be fully prepared for the GST.
- The businesses in the same sector, for example, pharmaceuticals, logistics etc. have to hold discussions among themselves on issues like the tax rate, place of supply rules that affect them directly. They can strategize to handle the issue or make a joint representation to the GST council for addressing it.
- Working out the impact of the GST on revenue and procurement streams, working capital and cash flows. Making provisions for the transitional phase and carrying forward the existing credits are equally important.
- Reworking the supply chain network design to suit to the proposed GST system.
- The finance and accounts department operations need to be streamlined for incorporating the changes in entries, payments and tax credits.
- Suitable changes in the IT infrastructure and ERP system to comply the GST requirements.
The businesses need to be ready with this groundwork, along with the training of its staff and suppliers in order to implement GST without any major issues. A proactive approach will help you in gaining a competitive advantage and improving relations with your suppliers and customers.