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GST in INDIA: End of the Road or Beginning of the Journey

9th September 2010

Goods & Service tax (GST) is the most talked about topic in the field of indirect taxation today in India. Everybody is keenly waiting for the proposed GST draft which will replace the existing system of VAT in India. The central government wants the GST to be implemented in India by 1st April, 11. Although there are & will be been many hurdles which are to be crossed before GST is implemented.

1st April 2010 was the date when India also had to enter the era where Tax reforms are no longer a word from the books. But the date with history could not be realized and now the new date being talked about in the market both from Government as well as non Government sources is 1st April 2011. GST was first introduced in France and since then over 140 countries have adopted GST. The irony is till date in India it is still being discussed.

Will India be able to make it? Well this is not the question which we are going to focus here... The question in focus is Is your ERP GST ready? Let’s understand how the government is planning for GST from IT infrastructure point of view:

As all of us know that GST has two types:

  • Unified or Single GST
  • Dual GST

In India Dual GST would be implemented- CGST and SGST

The Central Government shall establish a common IT infrastructure which will serve the needs of both CGST and SGST. A Taxpayers Information Network (TIN) will be established by the centre keeping in view the information requirement of CBEC and the state tax administration. The TIN will be shared between the centre and the state.

The payment of tax and transaction reporting should be made through a combined payment and transaction reporting statement in form no. GST-1. This statement should detail all business to business transactions relating to sale and should be common for both CGST and SGST compliance and it should be mandatory to file this statement electronically on a monthly basis while making payment of taxes.”

ERP by definition itself take care of the business layer for any organization; but what about the operational layer which goes unattended to in any of the ERPs. If we talk of Financials then yes any ERP would work on the business layer and give you COPA, but what about the Taxation and Tax Planning and that too specifically in India where the Taxation is 5 times complicated than in US or any other European country?

GST will have a far reaching impact on virtually all aspects of businesses operating in the country, for instance, pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems. Introducing all of these in an ERP from a functional and technical aspect is not at all easy. All ERP OEMS would have to do a wave change in their product designing as well as internal structure to accommodate the changes with respect to Indian Statutory Norms.



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