Challenges and solutions for Gst implementation.

In this article, we shall discuss some major challenges that  will be faced by businesses and possible solution to the same.

1. Technological paradigm.

In GST the suppliers have to enter bills in Form GSTR-1, which will correspondingly will be tallied with the details entered by the receiver.  The goods sector includes companies that are involved in food production, packaged products, clothing, electronics etc. The Business to consumer transactions in this sector run into millions on a per day basis which can be handled only by employing best and cutomised ERPs or business process management software that allow the enterprises to manage business. These software also automate many back office functions related to technology, services & human resources.

When GST goes live, the ERP solutions will need to be updated with the new tax law in terms of rate of taxes, type of tax, invoicing, return filing compliance etc.

Solution:

Connect with your ERP/business software service provider and evaluate with the help of tax experts if the same system can be configured to adapt to the changes or an upgraded version is available. There are ERP solutions available in the market that come with 100 % configurable taxation module with which GST can be easily implemented in the ERP solution without any patches and service packs.

2. Increased burden in compliances.

Companies will now have to upload three returns every month -GSTR-1  by the 10th by (details of supplies to be furnished by the supplier), GSTR-2 ,by 15th (details of purchases to be furnished by the recipient ) and GSTR-3, by 20th of the month (details of taxes paid and input credit taken ) after a sale happens.

This means , by the next year end i.e., by 31st december , companies would have to upload annual return as well. This  will make the total to 37 returns during a year.

Solution:

Possibly, Some ERP's may also provide the feature of a customised return modelling system in which the invoices entered will be populated in the format of the returns for final submission.

3. Supply Chain management function.

Presently, when companies sell from one state to another state CST @ 2% in levied instead of  VAT. The credit of this CST is available. To counter this, companies have warehouses in every state to avoid paying a 2 per cent central sales tax (CST) for inter-state sales of goods and the state-imposed entry charges, octroi, and other taxes. These warehouses often operate at below efficiency levels adding to overall operational cost.

Solution:

Unlike CST, the integrated GST (IGST) for inter-state sales will be creditable and this will promote inter-state transactions. These firms will not have to set up multiple warehouses anymore; in fact they can consider consolidation of depots and shutting down some distribution centres.

It is high time the consumer firms reevaluate and realign their current operations in line with GST laws and get ready for the nation’s biggest tax reform since the end of the colonial era. With the correct measures, consumer firms should be able to get on board the GST rail in no time, and reap the benefits of a simplified centralised taxation system.

In the end, to sum up the whole matter, tie your laces tight and brace yourself to the upcoming challenges.

As rightly said by Martin Luther King, Jr.

"The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy. "