GST would amalgamate various Central and State taxes into a single tax, mitigate cascading or double taxation, and facilitate a common national market. While the simplicity of the tax leads to easier administration and enforcement, enterprises have a tough time transitioning to the new system.
GST would amalgamate various Central and State taxes into a single tax, mitigate cascading or double taxation, and facilitate a common national market. While the simplicity of the tax leads to easier administration and enforcement, enterprises have a tough time transitioning to the new system. The old taxes would be halted on the last day, and the GST would go live the next day. Click here to setup a free discussion with our SAP experts. Enterprises need to start the transition process well ahead of time, to avoid chaos and confusion, and make sure they are compliant with GST from the word go.
Get the Systems in Place Regardless of the industry or sector, any business is likely to have a unique journey for GST implementation. However, a common thread underlying the journey would be the readiness of IT systems and procedures. GST is business driven. If enterprises have not already got rid of their manual ledgers and vouchers, there is no longer an escape. Achieving GST compliance will be impossible without a sound technical backup, which would include digitization of all records and automation of the processes involved in the transactional systems.
If nothing else, the GST assessee is required to file multiple returns involving sales and purchase of goods and services, and it is practically impossible to maintain all these returns manually.
There is no workaround to automating the system and making the system compliant with GST. The exact nature of the changes would obviously be not explicit until the GST law actually comes to pass. However, there are certain prerequisites to meet, which can be done now, before GST comes into effect. For starters, businesses would have to upgrade to the relevant version of SAP.
Businesses would also need to deploy an enhancement pack and service pack as part of this readiness. Click here to get in touch with us for a quote. Businesses would also need to make the following specific changes. Create or update the master list of vendors, customers, materials, and services.
Create a business place for each area of operations, and assign to plants. Tax and Pricing changes: Make sure the necessary forms, layouts, and modifications to EDIs are in place.
Upload the required programs well in advance, as soon as it becomes available. Businesses need to track and install the requisite notes and follow the manual correction parts. A certain level of customization would be required, according to the business process. Make Necessary Tweaks to the Business Processes Businesses would also have to make some changes in their business procedures, if not already following the recommended procedures, and such changes would have to reflect in the ERP suite.
Some of the tweaks required would be: Reconfiguring tax computation procedures based on the new rules Refining all tax-related outward and inward business processes Adopting sequential numbering for outgoing invoices Adhering to the new reporting and printing structure The list of requirements is exhaustive, and the specifics depend on the industry, the intricacies of business operations, and the total number of legal entities involved in the business.
Flawless implementation would obviously require intensive training. Here are some of the changes, based on the Model GST Law, for which businesses would have to be prepared, and tweak their business processes. Deploy a System for Input Credits GST levies and collects tax at each stage of sale or purchase of goods or services, based on the input tax credit method.
GST registered businesses may claim a tax credit to the value of GST they pay on the purchase of goods or services. The main task with GST is the adjustment of input credits available for the purchase of inward goods and services against the sale of goods and services.
Also, cross-setoff between goods and services will also be allowed Under GST, all accounting systems would require only six accounts for credit collection and set off. Get the Tax Base and Rate: The first step is to identify the tax base, or whether the product or service is covered under GST. Most products, with the notable exclusion of petroleum products, are under GST though.
Post GST, just about all transactions except salaries, banking receipts and payments will come under the scope of GST. The next step is to identify the tax rate. The GST Council has recently fixed the tax rate for items, under 98 categories of goods.
Businesses need to be double sure as to which rate their products and services apply. There is also the minimum threshold of 20 Lakhs turnover to consider. Leaving gaps in the value chain can lead to the system breaking down and going awry, and the ensuing mess can even lead to the closure of operations.
Make sure to cover all the bases now, before GST finally kicks in. Fingent empowers you with a host of SAP services that help to improve operational efficiency.
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The business places are considered to be organization units and are created under the company code level. In the system, creation of the business place happens only by when the company code is being entered.
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