The Goods and Services Tax (GST) is one of the most significant tax reform post-independence and has rightly heightened interest from all stakeholders. GST is expected to provide a significant boost to investment and growth of the economy. This can be achieved with reduced capital cost and also through improved resource allocation driving increased total productivity and competitiveness.
GST will be transformational and will affect every part of business right from contracts redesign, financial reporting, supply chain, tax accounting, and technology enablement. GST could result in an inexorable holistic business transformation, which should lead to a new target operating model for the organizations that aim to improve cash flow, pricing, profitability, sourcing and their Enterprise Resource Planning (ERP) systems. It is essential for organizations to comprehend the potential impact of GST in order to leverage upon this opportunity.
Improper GST implementation and lack of preparedness can lead to disappointing consequences for business owners and consumers alike. The GST implementation will provide an unprecedented opportunity for enterprises to take on internal system and process transformations to bring in functions like finance, commerce and logistics efficiently, leading to higher profitability and growth for businesses.
Business network relationships with suppliers, distributors, contractors, third party logistics and other business partners will transform completely. In the rapidly approaching future, business partners will become more integrated and will require real time updates and information flow over digital business networks.
Companies should consider the following activities to be GST ready as GST implementation date is upcoming:
GST involves a discernible shift from origin-based taxation to a destination-based tax structure, affecting the various aspects of business. The advance planning before the transition into the GST regime provides an excellent opportunity for organizations to assess and realign business models across their value chain in order to gain a competitive edge over their competition. To accelerate economy, much-touted GST reform should be passed.
The inevitable business transformation triggered by GST would involve recognizing, addressing and leveraging various tax and business drivers including taxability and rates, exceptions and discounts, cash flow and refunds, and governing rules and regulations.
GST is likely to have a far-reaching impact on numerous facets of business including pricing of products and services, supply chain, IT systems, accounting, and tax compliance framework. It is advisable for the industry to plan its transition to the GST regime in advance to enable the three main objectives: no business disruption as on the cut over date, 100% compliance of all legal and procedural requirements under the new law, and handling opportunities efficiently to generate business value.