GST is being touted as one of the single biggest economic reform in India since liberalization and one that promises to change the way India does business. This is Part 1 of a two part blog series discussing the challenges for corporations implanting the impending India’s Goods and Services Tax requirement. You can read Part 2 here.
The enactment of GST in India is expected to subsume around 17 central and state indirect taxes, boost compliance, curb tax evasion and give the much needed impetus to the Indian economy.
While with GST, there is belief a new chapter has begun in India’s growth story, this new tax regime and its implementation can also be a big challenge for corporations doing business in India. Through the GST Network (GSTN), the Indian government is working to provide the technology backbone to introduce GST and connect the databases of states and the Centre – easing some of the burden on corporations.
The government is targeting the launch of GST on July 1, 2017, and many of the companies we talk to are working diligently to understand and execute their GST infrastructure requirements in order to meet the deadline.
India’s Goods and Services Tax, which promises to facilitate ease of doing business in the long run, is a complex tax regime as far as its implementation is concerned. A few of these key challenges include:
Determination of tax – Companies will have to have a system which will facilitate determination of tax as per the new regime. This will include consideration of source and destination along with special provision for states, products and schedules.
Compliance processes – Companies will have to make sure that there are periodic updates/uploads of sales and purchase data with reconciliation for tax payments and credits.
Reporting and analysis – Companies will also have to conduct analysis on pricing, supply chain networks and costs because of tax changes.
These are, for many corporations, difficult to overcome through current process and IT infrastructure. A robust IT infrastructure and tax technology, which takes cognizance of these conditions and offers a simplified software solution, will definitely form the backbone of successful and effective GST implementation.