Checklist to make your business GST ready

April 12th, 2017 Intech Systems GST Law and ERP

Intech’s ERP Solutions – Microsoft Dynamics AX and Microsoft Dynamics NAV are GST ready. The Goods and Services Tax (GST) Council has formally approved all the GST laws. The GST is expected to be implemented by end of July 2017.
With GST now in place, it is time for you to ensure you catch up to speed and seamlessly adapt it in your business as other taxes such as VAT, Excise, service tax, etc. will disappear giving way to one single Tax. GST would bring in significant changes to business processes. Depending on the operating size, geographies, and sector, the changes would be substantial and may require proactive planning with a time-bound action plan.
To make it a point that you’re GST ready, Look into this checklist to see if your business is  geared up for this change:

1. Understand your business process in GST scenario and classify which transactions are goods and services.

These transactions will be most affected by GST. Integrated Goods and Services Tax (IGST) model of taxation has been adopted for interstate transactions where Center would levy IGST which would be CGST plus SGST. Make sure that you thoroughly understand and bifurcate your transactions. This will help you in understanding the overall impact of GST on your business.

2. Classify your transactions under goods and services, and place of provisions

After classifying the goods and services related transactions, recognize which provisions will be applicable to them. GST is a just broad topic which comprise of many provisions for various goods and services. These provisions differ with location, industry and type of commodity. Thus, identifying what will be applicable to your business beforehand will take you a step further in GST compliance.

3. Define the change in business in stages of pre, during and post manufacturing

GST is surely going to change almost all your processes – be it manufacturing, trade or supply chain.  Reorganized manufacturing plants and warehouses would reduce the primary freight charges. GST would eliminate the existing penalties on interstate sales transactions and facilitate the consolidation of vendors and suppliers. Before GST sets in, make a calculation of how your various functions are going to change and operate.

4. Understand your logistics model – depot and branches.

GST is a destination based tax. There will be a greater impact on logistics and the charges/taxes levied. After GST implementation, your warehousing and logistics decision will be based on economic efficiency such as costs and locational advantages vis-a-vis key customers. You may have to strategize your supply management strategies in a manner that minimizes cash flow impact.

5. Define your sales policies – schemes, discounts and returns

Should you charge GST to your customers on the items or services you provide? Would your pricing still be competitive? All such questions are going to affect the selling price of your goods and service,  discounts and returns you provide to your customers and other such pricing policies. Defining your sales policies in compliance with GST will help you maintaining your profit levels and customers.

6. Review your contracts – Amendment to current POs

Though GST is still few months away, make sure that you make the required amendments in your current POs and contracts. It is advisable to define the terms and conditions to meet GST requirements.  will make your work easier in the future.

7. Review your suppliers – nature of goods, place of supply, contractual terms

Contract terms, not only with your customers but also with your suppliers need to be revised. With GST regime, the supply chain network design would be more flexible. GST would lead to club many small warehouses and have bigger, fewer, and highly efficient warehouses. Thus, changes have to be made in contracts with your current suppliers at various places. Make sure that you review your suppliers, what and where they supply and the mutual contracts.
Given the sparsity of time, being at the cutting edge of technology is now the only way to adopt this change smoothly. Want your business to be GST ready? Our team is here to help you navigate this change.