Tag Archives: GST

What Role Will GSPs Play in the GST Network?

What Role Will GSPs Play in the GST Network?

The Goods and Services Tax or GST will need to run on an IT platform with tools like GSP or GST Suvidha Provider and ASP or Application Service Providers to support it. GSP basically stands for GST Suvidha Provider and through this, taxpayers and users can carry out the GST provisions vis-à-vis an online platform. The GSP is therefore held to be the enabler for taxpayers so that they may comply with GST rules in an online platform. It is authorized by the Indian Government and using the GSP, individual taxpayers can file their IT returns. So, all GSPs will be controlled by government and they will run according to the MoU.

Agreements will be signed between the GSP and the GSTN which is a government organization. In the ASP and GSP, taxpayers must provide the important details so that returns may be calculated automatically. Details of taxpayers are then extracted to be converted into their GST returns.

These are filed then on their behalf with GSTN through the GSP. The GST will have a G2B website so that taxpayers can access these systems. This will however not be the only way by which taxpayers can interact with the GST network. They can also use third party applications that have user interfaces through their desktops and mobiles. These third party applications will be able to link with GST network through secure ASPs. So, the GSPs have been basically designed to offer helpful strategies to the citizens so that they can communicate with the systems till GST returns have been filed. In this process, there has to be two collaborative arrangements. One will be between the GSP and the App client and the other between GSP and GST. The GSP and App provider may be one entity. So, given the new environment of the GST administration, the GSP is expected to play a crucial role. The GSTN will try to build a GSP eco-system to make sure it is successful by constructing an open and participative framework to benefit capable entrepreneurs and businesses.

GST compliance by taxpayers: Taxpayers under this new regime must offer the following data from time to time:

• Invoice data uploads
• Upload GSTR-1 which is based upon the invoice data as well as other information supplied by taxpayer
• Downloading of data on inward supplies as Draft GSTR-2 from the GST portal.
• Matching of purchases that have been made and downloaded from GST portal.
• Filing of GSTR-3 created by the GST portal based upon GSTR-1 and GSTR-2.

The GSP will offer taxpayers all services that have been highlighted above besides maintaining separate business ledgers like the purchase and sales ledgers and value-added services. The GSP will also ensure that there is an automatic reconciliation between purchases made and entered in purchase register and the information downloaded in GSTR- 2. There may also be trade-specific needs which the GSPs must satisfy.

The GST system will therefore have a G2B portal for the benefit of taxpayers. There will many types of taxpayers like large and small businesses, small retail vendors, SMBs etc. They will need different types of facilities for converting their sales data into a GST-compliant format. So, the GSP will be responsible for helping taxpayers to comply with GST rules through innovative solutions.

Implementation Framework: The GST is predicted to be successful because of the convenience it will provide for individual taxpayers. He will be free to use many third-party applications that will offer different interfaces for use in mobiles and laptops. These GSP-developed apps can connect through secure APIs; they will use these to enrich the taxpayer’s experience. All the APIs can be accessed across HTTPS protocol. This is beneficial because:

 There will be consumption across platforms and technologies depending upon individual needs.
 Automatic uploading and downloading of data
 Power to adapt to changing taxes and business regulations and end-user models
 Integration with ERPs and accounting systems which taxpayers usually use for their daily activities

Interesting Topic :

Getting Help For GST: 5 Things To Keep In Mind Before Choosing A Partner Or Solution


Getting Help For GST: 5 Things To Keep In Mind Before Choosing A Partner Or Solution

The GST or Goods and Services Tax regime has invited quite a bit of deliberation from different quarters, and with good reasons too. Whether it the pre-implementation discussions or the post-implementation concerns, experts have spent a lot of time deliberating on the various aspects of this tax regimen. The current focus is on finding ways to implement the GST using tools that can guarantee easy compliance with changed laws.

To ensure effective compliance companies need to analyze multiple solutions. However, not all businesses are equipped to understand the changes rightly. There are only handfuls which have the expertise to evaluate the different solutions available in the market. As a result, smaller businesses are grappling with GST related challenges. They are also not sure about which partner to choose during this transition to make it smooth and hassle-free. It is important to understand that businesses will have different sets of requirements. All the GST Suvidha Providers and ASPs or Application Service Providers have been trying to come up with solutions that can cater to specific business needs.

1. Maintaining Records: One of the first things that you need to consider is maintaining annual records. You will come across many market plans that provide solutions for six months or on a quarterly basis. However, all businesses have to ultimately file annual returns. So, when a business is using a solution meant for 6 months only, it will need to adopt another solution when this is over. At that time, all records must be shifted seamlessly. There are also companies which charge clients depending on how they long they have been associated with them. So, costs of transferring records when you are choosing a partner.

2. Offline Advantages: Given that the new tax regime is digital in nature, it is absolutely imperative that businesses adapt to the Internet technologies. At the same time, there is very less or practically negligible web connectivity in rural India. These function as important centers of small and medium sized businesses. So, the partner you choose should offer offline capabilities too to be able to store records of invoices that can then be updated from time to time. So, tax professionals will have the freedom to access and edit this data from anywhere.

3. Flexibility of Operation: The model which any business will choose should basically allow it to import data through different formats. So, you should be able to get data from manual entries and also from excel-based imports. The model must also allow you to enter data on clouds and to keep the data there for later edits. This plug-and-play architecture will shorten adaptation time and is recommended when you are choosing a partner.

4. Supports: Regardless of how effective the technology is, when you run a new system, there are bound to be lots of queries and teething troubles. So, you need an infrastructure that is equipped to handle these queries. It should work 24×7 like a multi-linguistic call center offering real-time technical supports to users. This model must also be backed by trained professionals which will offer counseling, free demonstrations and even personal visits, if needed. This kind of support system is a must for the Tier II and III towns that make up hubs of SMBs.

5. Editing Advantages: While the GST is meant to make the taxation model very effective, there is however the problem that many players are not yet accustomed to the digital methods. They have always followed traditional ways of handling taxes. Data that has been filed with GSTN cannot be changed and this is an issue for many people who have a rather complex supply chain and may work with many vendors. So, chances of invoice discrepancies and gaps in transactions are unavoidable. These can be changes only once returns have been filed. However, there are players that provide advanced features in their packages whereby pre-filing changes are possible.

These are some factors to bear in mind when looking for partners and solutions. You need a provider that allows you to switch from one to another model in required without any additional formality or payments. Besides these factors, there are many others which should be properly evaluated before a partner is chosen for GST implementation. It would be a mistake to choose a solution simply on the basis of low prices or being lured by free trial offers. You need a partner that can offer you a combination of expertise and experience. It should also have direct presence in the most important cities throughout India.


Interesting Topic :

How are Different Verticals affected by the GST?

How the GST Will Change IT Set-Ups in Organization


GST Suvidha Providers

How GST Suvidha Providers can help in GST Filing?

GST (Goods and Services Tax) was implemented on July 1, 2017. Businesses don’t really have a good idea of how to file GST. This is where GSPs help businesses. GSP stands for GST Suvidha ProviderThese government registered entities act as enablers for businesses to comply with the intricate laws of GST with the help of their software or their web platform. This platform is a medium which is nothing but an online compliance platform. The term “GSP” was coined by Goods and Service Tax Network (GSTN), which is a private company who 49.5 per cent stake is held by the central government and state government collectively.

This organisation’s main objective is to develop as well as maintain IT infrastructure for implementing GST in India. It is again in line with the Digital India initiative, which wants to convert the system, especially the government works as well as tax compliance implementation into a paperless format.

Understand the GSP Mechanism – How it actually works?

To get a closer look at the entire system of tax compliance and at the same time get a closer look at the entire system, here is a schematic description of the entire work flow. First the tax payer who needs to pay the GST to the income tax department. But how can it be done? This is where the work of GSP ecosystem comes into play. There is an entire system of web portal, customized applications, ERP solution, accounting package, and mobile application. The tax pay has to first get registered and generate Challan. In the next step comes the three step function including Invoice Uploading, return filling, and ledger. Once these are done, the next step involves transfer of these to the GSP-GST server, and then to the GST server.

Understanding with an Example

The best way to understand the entire GSP ecosystem, it is important to understand with the help of an example –

Suppose, there is a company named XYZ Limited, which is a private MNC company. Let us assume that this company runs operation on SAP ERP. This system respects Purchases and Sales, which are maintained in the system. At the end of every month, ERP generated reports are attached with tax return and then uploaded on the portal of the government.

Government is now trying to chalk out a single as well as automated workflow. According to this initiative, the ERP companies will be able to build an interface with the portal of government for all kinds of compliance related to GST and that can be done directly through their software.

However, it should be said at this point that GSP can be any technology company or even a start-up and not essentially an ERP company. However, the only requirement is that company must have expertise in building up of web applications. 34 companies have been shortlisted till now in the first round of license allotment.

What is the Eligibility Criteria for Providing License to GST Suvidha Provider (GSP)?

GSP license can be given to any company that is a registered in India under the various sectors including Information Technology (IT), ITES (Information Technology Enabled Services), Insurance sector, Financial Services, and Banking. There are strict eligibility criteria that a GSP applicant has to meet. Once an applicant company fulfills eligibility criteria, the entity needs to sign contract with Goods and Service Tax Network for becoming an authorised GSP. Once the contract is signed, the GSP will be allocated a unique license key so that they can access the system of Goods and Services Tax.

Some of the most important eligibility criteria are given below –

There are different kinds of eligibility criteria including financial strength, capability demonstration, technical capabilities, and many more.

In the first batch, the most important financial strength criteria include paid up or raised capital of at least Rs. 5 crore along with minimum Rs. 10 crore average turnover during last three financial years. The technical capabilities should include aspects such as backend infrastructure, adequate IT infrastructure (either owned or outsourced) for carrying out at least 1 lakh GST transaction every month. The company must follow data security measures that are in accordance with the IT Act. Moreover, the company must be adequately equipped with data security measures in accordance with the IT Act.

In the Batch 2, the eligibility criteria for GSP criteria have been relaxed a bit. In the financial criteria the paid up or the raised capital has been earmarked as at least Rs. 2 crores. The average turnover requirement has been earmarked at least 5 crores in the last three financial years. The technical capabilities have been kept more or less same.


From July 1, 2017, the GSPs have started working with the tax payers and help them in every step of registration, return filing, and paying taxes.

GST Ecommerce

GST from the Perspective of an Ecommerce Website

GST (Goods and Service Tax) has been introduced to expand the tax net through 101st amendment of constitution. They say 101 is an auspicious number and therefore the rolling out of GST will have good effect in the economy. Goods and Services tax has come to effect from July 1, 2017. This new tax has rattled many small to medium sized businesses.

No matter which vertical a business belongs to, it has been affected – either positively or negatively.  It can be said without any doubt that implementation of GST was not easy especially in a country of such size and diversity. Such an enormous task has not been done by any other country of similar size as well as complexity. Simplifying tax structure is not an easy task. However, GST is aimed at simplifying as well as rationalising taxes, thereby helping goods to move from one part of the country to another seamlessly without any kind of discrimination among regions. This is expected to increase growth and at the same time improve ease of doing business.

In this blog, a comprehensive analysis will be done on the effects of GST on ecommerce website.

A section of the industry, especially from the online industry believes that GST is the best thing that could have happened to B2B ecommerce throughout India. One of the major advantages of ecommerce industry from this tax reform is the ability to maximize distributed inventory benefits. Here, there is no requirement of dealing with variables including optimisation of tax net.

Currently, it is being seen that different states of India impose entry taxes as per its requirements and many times from its whims. With GST in place now, the time is now not far away when these kinds of state-specific entry taxes will be done away with, thereby leading to rationalisation as well as simplification of taxes with the help of GST. From now on, there will be only one tax for the businesses to pay and that is GST.

Ecommerce and GST

There are three challenges regarding implementation of GST and they are –

1. Collection of tax at source itself
2. Proper treatment of returns on sales, cancellations, discounts, and replacements
3. There were certain clauses that are restricting or delaying implementation of GST bill.
Ambiguity around a few specific clauses in the GST draft bill still persists. Now, let’s check out how these challenges can be combated.

How to Combat These Challenges?

The bill suggests that ecommerce platforms have the responsibility of collecting the TCS on sale of goods as well as services that are made by the supplier. The filing of return is needed to be done on a monthly and yearly basis. This is needed to be done by the ecommerce platform. This becomes a huge accounting burden for the ecommerce sites because lakhs of sellers carry on transactions on these platforms on a daily basis through the ecommerce sites.

GST law suggests that it is the ecommerce aggregators that have to collect and deposit tax from each transaction at the rate of 1 per cent. If you are a trader or dealer then you would get the payment after the deduction of 1 per cent tax is done. Every online traders or dealers have to get registered under Goods and Services Tax even if the yearly turnover is less than 20 lakhs.

Till now in India, the Cash on Delivery (COD) mode is still a prevalent mode of ecommerce transaction. This is one of the reasons that the rate of cancellations as well as returns stand at around 15 to 18 per cent. In addition, it takes anywhere from 7 days to 15 days for cash reconciliations. This is a big challenge on part of the ecommerce platforms because unlike other offline business models there are certain distinctive variations and special problem scenarios such as –

• Returns take place in a different month than the sales booking
• Interstate cancellations of orders are quite common in ecommerce platforms

In case of returns, there are special provisions too. The GST law suggests that the reported supplies of ecommerce companies will be matched with the figures provided by the supplier in its return for outward supplies. If there are any kind of mismatch then redetermination of vendor’s output liability will be re-determined.

The law suggests that in case of returned products (especially the ones that are returned in the next month or even in the same month) the ecommerce firms have to claim refund of the tax from government.

What’s the Way Ahead?

GST brings with itself benefits as well as concern for ecommerce companies. However, the benefits outweigh the concerns when seen in aggregate. The present situation is that the ecommerce industry needs more clarity especially in terms of different ecommerce verticals such as tourism, ticketing, booking of resorts and hotels, events, and adventures.


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Go4hosting gst-cloud-infrastructure

How are Different Verticals affected by the GST?

How are Different Verticals affected by the GST?

Central government has rolled out Goods and Services Tax (GST) with lots of expectations, on one hand, and resistances, on the other. No matter which vertical a business belongs to, it is definitely going to be affected. GST is considered to be the most radical tax reforms in India. Reports say that this radical tax reform has the potential of ramping up the GDP of Indian economy by 2 percentage points. Some of the main business areas are expected to be affected by the introduction of GST. Some of those areas that are going to be impacted include pricing of products/services, tax compliance framework, and employee skill set.

GST, the new radical taxation regime in India, is bound to affect various business verticals. Consequently, the technological needs will also vary from one vertical to another. Then what should be the different focal points of the CIOs (Chief Information Officers) of different verticals? All these aspects will be dealt with in the following section with different verticals

Pharmaceutical Industry

GST rate for pharmaceutical products has been pegged at 12 per cent. However, for the specified life saving drugs, the rate is pegged at 5 per cent. Hence, the effect of Goods and Services tax on pharma industry is more or less neutral. However, it is being said by a section of the industry that that from now on the retail medicine shops will not be able to pass on the discounts they used to give to hold on to the existing customers or in many cases to lure customers. Retail medicine shop owners point out that earlier they used to give VAT of just 5.5 per cent. However, from now on the GST will be of 12 per cent, which means an increase in tax rate by 6.5 per cent. So, the customers who use to buy significantly high amount of medicines every month may see their medicine bill to soar by a certain percentage because they will not get the 10 to 12 per cent discount they used to get from the retail medicine shops. However, shop owners also say that the issue will be resolved once the pricing of medicine becomes clear, the existing stock (bought by them before the introduction of GST) clears out (in which they have to bear a loss of around 6.5 per cent), and they start buying the medicines as per the existing GST rate.

In the pharmaceutical manufacturing front, the companies have a huge opportunity of modifying as well as modernising the existing supply chains. They need to cut their logistic costs and at the same time increase efficiency of their operational unit. This will ultimately help them in their profitability. Moreover, the decision makers (say, the Chief Information Officers) of pharmaceutical companies must alter their IT systems so that it helps them in complying with the tax requirements.

It is being discussed in the industry chambers (especially FICCI) whether it is possible to restrict the tax rate to 5.5 per cent, as before. This is because of the fact that the 12 per cent rate is said to be against India’s drug policy and the current rate will lead to inflationary trends, as the effective tax rate is slated to increase by 2.3 per cent in the GST regime.

Financial Services

Impact of GST on financial services will be unique. This is because of two important aspects –

• Financial sector is highly regulated
• This sector involves personal as well as commercial risks

There will be two big challenges –

• Manual compliance with tax will not be present anymore
• The compliance will not be on a real time basis

No matter which challenge you consider, deployment of technology in a seamless manner will be a challenge. Therefore, the Chief Information Officers of financial services will need to invest in solutions that are capable of analysing information in varied post-GST conditions in real time and at the same time come up with output which matches templates of GSTN.

It is absolutely true that capex on these solutions will be different from one organisation to another. So, the CIOs will be needed to consult the heads of Strategic Business Units (SBUs) closely, thereby ensuring easy allocation of budget and at the same time proper alignment with business technology.


Before the introduction of GST, the tax rate on telecom was 15 per cent. However, it now stands at 18 per cent after GST. However, the GST-regime comes with benefit of input tax credit, which will bring down overall effective rates for consumers. Telecom Minister Manoj Sinha has said that after factoring in the input tax credit, the effective GST rate will come down to 16 per cent, which is just 1 per cent above the previous rate. However, the minister has said that they are keeping the effects under watch currently. So, CIOs have to bring in solutions that take care of all these factors along with anomalies that are expected to crop up due to the state-wise revenues.

This is how the major sectors of the Indian economy going to be affected by Goods and Services Tax (GST).

Interesting Topic:

How the GST Will Change IT Set-Ups in Organizations

GST Provider

How the GST Will Change IT Set-Ups in Organizations

The Goods and Services Tax or GST is expected to be a game-changer in the Indian tax system. As expected, there are bound to be many changes within the IT framework in businesses for this tax to be implemented. The main idea behind the GST is to do away multiple indirect taxes such as VAT, luxury tax, Sales Tax, excise duty etc that would have to be paid on goods. Now, only a single tax will be imposed on the goods or services used. So, the GST seeks to bring about uniformity in the taxation system, removing multiple tax barriers and revenue collection problems that were taking place between the states and the Center.

The GST will include the CGST wherein revenues are to be collected by the Center, SGST where state governments will collect revenues for the intra-state sales, and the IGST levied by the Center for inter-state supplies. In view of the fact that as many as 3.5 billion invoices will be processed each month by the GSTN or the Goods and Services Network, it is expected that technical problems would arise. In case the GSTN fails to function seamlessly because of technical glitches, it would turn out to be a cause of grave concern for the whole industry.

So, it is important to apply security patches to the sensitive data which is dynamically generated. Accounting systems have to be regularly updated to ensure a seamless transition to the GST. IT systems have to be upgraded accordingly and the IT systems and staff need proper training to guarantee a smooth shift to the GST regime.

How businesses can become GST-ready:

The GST will be driven vis-à-vis an online platform and this necessitates a robust infrastructure which can update data in real time. Since there will be huge volumes of sensitive data involved, it is important to have a stringent IT architecture that can comply with the security needs. The GST-ready set-up must also adhere to the compliance requirements prescribed by the GOI.

Accordingly, the ERP or Enterprise Resource Planning systems will also have to be remodeled, with rows added or deleted where entries are made. These changes will ensure that things are aligned to the new tax regime. IT personnel will therefore need time to update the accounting software or ERPs to make them align with GST specifications.

Besides the time needed by the IT sector, the trials and tests of the newly created software, like the new ERP systems have to be carried out to prevent future problems. The IT organizational set-up may also need to get new hardware for such development and testing purposes.

The ERP systems in organizations have to comply with the GST rules. This is necessary because the ERP will directly influence functions in every other department. So, at enterprise levels, ERP systems must be tested. The GST bills are going to affect the ways in which businesses run because all the tax related documents and processes have to now match the GST rules. When the companies register to get a GST identification number or the GSTIN, it will include the service tax registration, excise registration and also VAT registration. So, the tax processes will change completely to imbibe the new tax.

Transactions have to be started afresh. Partially open transactions and pending transactions must be closed or shifted to the new system. ERP firms such as the SAP has come out with GST related software to enable you to implement GST with SAP-certified cloud providers.

Since the GSP is digital, businesses must get rid of the manual vouchers and ledgers. There must be a shift to digitalizing records and conducting automated transactions. The SAP will extend ASP pr Application Service Provider services; it will offer the necessary interface for uploading invoices in the GSTN. It will work as an ASP within the GST environment. So, all GST-registered organizations will have to connect their business SAP to the GSTIN.

With the GST, business functions are also slated to undergo major changes. The tax computation processes have to be reconfigured and tweaked to comply with the new rules. All tax-related inward and outward business processes must be refined. Sequential numbering for the outgoing invoices must be adopted. Businesses have to adhere to the newly introduced printing and reporting structure. These lists of requirements will vary from one enterprise to another, depending upon the industry to which it belongs to, the legal entities which are involved in that business and the degree or complexity of business functions.

ERP System for Being GST Ready

What are the Reasons that Your Business Needs an ERP System for Being GST Ready?

If you have a budding business whose annual sale is more than 20 lakhs, you must be fully ready to embrace the change. When it is GST, the first thing it needs you to embrace is the technology driven change. So, the first thing you should embrace is the advanced enterprise technology. It is not an option anymore. You have to embrace it as a must-have technology to stay afloat in the disruptive changes. One such technology you should have that will help you achieve that end is the adoption of ERP.

One such disruptive change has taken place on July 1, 2017, which has raised many questions in the business world – right from the small businesses to the large ones. To deal with such disruptions, the businesses should be equipped with the ERP system so that they are able to deal with the GST hoopla with ease. Once a business has put into place the ERP system, it will be a cake walk to comply with the Goods and Services Tax.

Though it is still not known the possible effect of GST on the economy, government reports say that the tax reform will make doing business in India easy to perform and comply to. In fact, they say that all kinds of manufacturing and service verticals are going to witness a revolutionising financial prospect as they need to pay tax only at one point and not at multiple points.

Before the implementation of GST from July 1, 2017 the tax computations were done by the business in one of the two ways. They might be through manual means and the other through the use of standalone software. However, the entire ball game is all set to witness a complete change with GST reform. The first step towards this revolutionizing change is the tax paradigm in India is the adoption of ERP software system.

Though it is now a compulsion for businesses to comply with GST tax system by going digital compliance, you can check out the following reasons for the needs of faster adoption and compliance. By adopting the best ERP software system, you can not only be GST ready but also get many advantages. The reasons to fast adoption of GST ERP software are given below –

• Automation and Digitisation

When it comes to process manufacture businesses, they need to track many things on a regular basis so that the data discrepancies can be avoided. Some of the aspects that need regular tracking include production, bank, purchase, sales, and inventory entries. It is extremely difficult to keep track of so many aspects manually. These needs regular update and it can be done in the best way through automation of the process, which again can be done in the most efficient way through use of ERP software system. This means that there is a shift from manual processes to digital processes, which are more transparent and is in line with the reforms of GST tax. The digitisation processes will be simplified with the online transactions as well as reconciliation processing by the ERP software systems. This digital process also helps a business to avoid any fine or penalty because there is now an appropriate database in place.

• Easier and Efficient Management of Documents

With GST system, everything including the documentations will be in the digital format. All the documents, no matter whether it is regarding the returns, refunds, registration, payments, or warning notices, everything will be in digital format. With GST system in place from July 1, 2017, businesses need to comply with the e-filing guidelines. To comply with this requirement, you need to equip your business with the automated ERP software. This will help you in addressing the challenges in a better and more efficient manner.
• Business gets Compliance Ready

With GST reform in place, Indian business landscape is all set to witness extensive compliance reforms. In fact, the compliance management is now online as the new rules of tax are in place from July 1, 2017. When a business uses ERP software, it becomes easier for meeting the regulations in a more efficient and better manner. Therefore, the system will help the business entity in maintaining accurate financial records.

• Systematic Approach

With ERP software for GST compliance, the entire process will get systematic. This will lead to smoother movement of both goods and services throughout the country. It will therefore ultimately curb the overall expenses on taxes. With GST in place, there will be a wave of ripple effect of standardisation in place.  


If you still don’t have an ERP software system in place, it will be more cost effective for you to get ready for it. Otherwise, the non-compliance will ultimately adversely affect the business in means of incurred penalties and fines. It may cost you few more bucks for the enhanced compliance with GST ERP software system, it will be worth it for you.

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GST Triggers New Challenges in ERP

GST Triggers New Challenges in ERP

While the GST or Goods and Services Tax have been designed to unify the tax regime, consolidating many taxes into a single tax, there are bound to be new challenges. A single tax is meant to lower costs for businesses since it will lessen overall tax burdens. But IT teams have to now get down to making changes in their Enterprise Resource Planning or ERP systems to make it GST ready.

The changes which the IT professionals may have to introduce for revamping the ERP could be very simple like simply updating the ERP software version. But, in some cases, the task is likely to be complicated. To bring about any changes in ERP, the cooperation among different department, IT and tax departments is required. In case of the GST however, the requirements are found to be constantly shifting. In the recent past, many businesses have begun to redesign and upgrade their ERPs in preparation for this landmark change. But the entire process takes a lot of time and is highly expensive. Systems are far from being ready for the GST because it not very clear as to what the GST requirements are.

Understanding taxes and their effect on businesses is something that everyone knows. But implementation dates have been pushed back and every time it is missed, there is some new change to the law. On the whole GST is expected to trigger businesses into rethinking and redesigning their sales modules, procurement modules, and financial management modules. Perhaps the most important challenge which ERP is going to face with the GST is widening the tax base since now almost every good is becoming taxable.

When the VAT had been earlier introduced, there were three main rates namely, 12%, 1% and 4%. However, there rates are not the same across states today. Every time there is a change in the rate, it becomes a major ERP event. The IT staff has to get down to building new codes for the taxes and also update data about products. So, businesses that were hitherto involved only in provision of some specific supplies will ensure that all of their ERP processes are taking into account the taxes. You need to review the current process and how the business operates to be able to understand how this tax could change these. When there is a question of goods supply between two units belonging to the same business, this change may be from 2% CST to 18% GST. A change like this will automatically affect the way in which orders are taken or goods are received.

To comply with taxes, the ERP must generate data for use in creating correct entries in the GSTN for both internal and external transactions. It has to ensure that valid tax invoices are produced. Since data must be uploaded to the GSTN, the IT needs to have access to accurate tax data to include in the ERP instead of waiting to fill this information later on. The ERP must have this relevant data and it can fill in the missing information while the process is going on prior to compliance. When businesses try to produce this data at the time when compliance is scheduled, it may lead to a lot of discrepancies and mismatch in data.

So, the tax teams are expected to do this on their own or get advisors if the nature and complexity of business so demands. They need to determine which processes will remain unchanged, which may be optimized under this new tax regime and which can be done away with as they are irrelevant. The results will then be made available to the organization which will then decide how the IT department and tax department will collaborate in implementing and testing the plan.

Every aspect of the ERP software needs to be properly maintained. This means that when the GST slowly stabilizes, the IT and tax departments will feel more pressure to keep updating and testing the processes. So, any strategy for ERP migration will have to take into account greater time to assess the processes for a minimum of 18 months post-GST. Alternately, instead of designing and testing the ERP solutions, the tax data can be centralized and stored in a central location. This way the tax system can easily offer tax data to the ERP. The maintenance team will focus on the aspects at which ERP excels, like processing management and workflows whereas the tax system will look after computing and compliance. This will ensure that the sensitive ERP tasks are never disrupted because of government changes and compliance changes.

Although businesses may have to initially spend more to become compliant, in the long run it is cheaper than being non-compliant. The time has come for business owners to realize the value of this tax reform they must equip their businesses properly to be able to deal with tax compliances. When you can automate for GST reforms, you are likely to enjoy long-term benefits; the ERP system will offer businesses a helping hand to address GST-compliance challenges.

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How to Empower Yours by ERP Complying with GST Tax Bill

How to Empower Your business by ERP Complying with GST Tax Bill

India is poised to witness a historical tax reform at the dawn of July 1st 2017 as the nation welcomes new Goods and Services Tax bill that will transform the existing fragmented market into a singular and unified entity.  GST will usher a new economic era to help simplify complexities of the current tax system.

Organizations can look forward to a multitude of benefits, although tax professionals and finance executives are required to burn midnight oil as the nation prepares for the historical tax reform called as Goods and Services Tax bill.

Since Enterprise Resource Planning platforms serve as the solid foundation for operating a myriad of business applications, one must ensure that the ERP system complies with GST so that the organization can easily sail into the new waters of GST regime.

Vital areas of ERP to be influenced by GST
Goods and Services Tax bill will impact a wide spectrum of business processes as well as organizational departments. The biggest impact will be felt in the tax related procedures that will have to get aligned with GST regulations. There will be considerable revisions in terms of vendor invoices, goods receipt, billing related documents, and documentation associated with stock transfer, just to name a few.

Sales invoices will have to be assigned unique sequential numbers and the master data will have to be revised for incorporation of new requirements as per GST regulations. You will have to make necessary changes in customer master charts of accounts, and vendor master. The registration numbers of GST will be required to be stored and maintained in case if all customers as well as vendors that are already registered or are going to be registered in future.

Registration of GSTIN
It is compulsory to register and procure GST Identification Number or GSTIN because it will cover all current registration numbers including VAT, Service TAX, and Excise. If the enterprise is operating from different states, then it will have to obtain separate GSTIN registrations in those states. One GSTIN will be sufficient to cover IGST, CGST, and SGST, the three principal variants of Goods and Services Taxes.

Procedure of taxes
There will have to be complete revision of tax procedures for incorporating GST structure, which is entirely different. Unique GST associated changes can be listed as compulsory monthly tax returns, separate defining of IGST, CGST, and SGST in case of MM as well as SD. Additionally, there will be changes in SAP ERP systems, which will have to be moved to TAXINN from TAXINJ.

Migration of open transactions
It is obvious that in any business organization there will be multiple transactions that would be partially open. The transactions must be reversed or closed before the onset of GST regime on July 1st 2017. One must address the spillover of unfinished transactions that may be associated with transit goods, goods returned after GST deadline but purchased before the beginning of GST system, and so forth.

Patching and upgrades
Evaluation of the existing ERP platform is essential to plan patching and upgrading in order to build a GST compliant system. Benefits of GST can only be exploited by getting all systems and processes ready to accommodate significant changes that need to be adopted before GST.

Benefit from Cloud Adoption in the GST Era

MSME Sector to Benefit from Cloud Adoption in the GST Era

In terms of implications and the scale, Goods and Services Tax (GST) deserves to be called as the single largest tax reform in the history of India. This tax reform will kick-start the new system of destination oriented consumption tax and will comprise of interstate as well intrastate commerce and trade transactions.

Lucrative subsidiary planned for MSMEs

GST is set to offer a broad array of advantages to enterprises in small and medium sector. One of the incentives will be in the form of subsidy for those enterprises that embrace cloud computing. Small and micro enterprises can look forward to a handsome subsidy up to Rs 1 Lac provided these are adopting cloud computing for streamlining communications and management of correspondence through innovative applications.

Cloud computing also helps design bespoke IT infrastructure backed by custom software for the organization. Medium and small organizations can ensure to remain upgraded in various aspects of business operations.
Government plans to offer this subsidy on client charges for the period of two years according to modified guidelines that relate to the Advancement of Information and Communication Technology in MSME Sector.  The companies need to issue the entire payment to specialist enterprise and the disbursement of subsidy will be effected via direct advantage exchange mode.

Assets will be initially dispensed by office of the development commissioner specially appointed for MSME sector to Telecommunications Consultants India Ltd and thereafter the amount of subsidy will be transferred to beneficiary accounts of MSMEs.

Leveraging cloud computing for seamless GST compliance

Cloud computing and other IT technologies are part of Information and Communications Technology or ICT. Majority of the organizations are found to be skeptical about cloud adoption due to a myriad of concerns. It is expected that these companies will be encouraged to adopt cloud computing solutions by exploiting the subsidy scheme.

Administrations of cloud computing are proposed to be divided in two categories. In the first category the maximum subsidiary of Rs 1 Lac for every unit that is eligible. This will available for not less than two years in the Micro and Small Enterprises category.

If the unit has incurred lower costs for procuring cloud applications, then these will fall under second category. This subsidy will be borne by utilization administrations with support from central government as well as small and micro undertakings.

According to reliable estimates, the total expenditure for these subsidiaries will be approximately Rs 69 Cr and the contribution pledged by the center will be to the tune of Rs 41.40 Cr.  

In conclusion

The move will certainly help boost adoption of Information and Communication Technology at micro and medium level. Moreover, implementation of cloud assisted application will be essential for complying with upcoming GST system that heavily depends on use of internet medium.

It must also be understood that cloud computing has emerged as a highly reliable and robust solution for management of storage and a myriad of business processes. No wonder, cloud solutions have been viewed as extremely practical alternatives to on-site IT infrastructures.

Micro, small and medium enterprises need to exploit these financial sops while embracing cloud computing in the GST regime.