With the implementation of GST, organisations across the country are scrambling to ensure that they are ready to migrate on to the new system of taxation. While organisations are on the task, here are a few broad guidelines to help you get started.
Your checklist to get GST ready
Learn the act inside out and understand what is needed for implementation and eventually compliance. Know that you cannot do it alone. Here is how you do it-
- Set up a team that consists of tax experts and IT specialists
- Help them get the right training to understand the changes in taxation that come with GST and the technology requirements
- Establish a communication with consultants and government officials so that they can learn the intricacies and adaptations
- Enable right infrastructure and right business process adjustments to help your team prepare for GST implementation
Registration with GSTN
The first step to get GST ready is to get your registration done.
- Isolate the different states under which your business units are functioning
- Identify the process of registering each unit
- Prepare documents for registration as per the GSTN guidelines
- Submit documentation to the authorities and obtain GSTIN for each business unit
This process is not just for your business but also for your Suppliers. Align with your Suppliers and Distributors, enabling them to do the same. The GST requires all your Suppliers to be GST registered to avail benefits. Work with your Suppliers to help them understand the need for registration to ensure that they are still eligible to work with you.
Invoicing and Billing System Adjustments
A key element in migrating to the GST regime is ensuring that you and your suppliers follow the invoice and billing format recommended by the GSTN.
For your organisation–
- Collect the invoice format from the GSTN authorities to ensure you have the right format for return filing procedure
- Apply this format to all the invoices that you generate across all business units
- Adjust any business process, if required, to ensure that uniformity and consistency of this format is maintained across all departments and units
For your suppliers & supply chain-
- Share the same format with your suppliers and distributors to each an ecosystem of transparency to reduce the number of invoice corrections needed during return filing
- Help them adjust their systems and business processes with the expertise that you have gained to build a healthy ecosystem
Information Technology Updates
Technology is the backbone of the entire GST ecosystem. Without technology, it would be difficult for any organisation to become GST compliant. Here is how you can get your systems in gear when return filing begins-
- Align your ERP or Accounting software to generate files suitable for return filing with the GSTN
- Select an ASP (Application Service Provider) who can process your raw data on sales and purchases to create GST return files, encryption of your data as a security measure and act as a link between you and your GSP
- Select the right GSP (GST Suvidha Provider) who can ensure the secure transmission of your data to the GSTN and relay back any alerts about invoice corrections and mismatch. The right GSP will also ensure that you are always informed and ready to meet any updates in the GSTN
- Prepare for migration of existing tax information to the GSTN
Unsold and Transition Stock Migration
The challenge here may sound simple but it is far from being so. The situation is that businesses that function on a model that needs them to procure stocks in advance and in bulk have paid up taxes by the rules and regulations of the old system. But when they sell it, it shall be under the current GST regulations. Meaning, they face some serious challenges with managing the credit claims that will impact their cash flow.
Here’s how you handle this transition period reducing the burden of tax credit loss-
- Understand how the taxes will work for your business and your Suppliers/Distributors
- Gather information on how much unsold stock you have
- Analyse how long it takes for you to produce goods and what the demand in market is, to help you reduce time for which you stock goods for sale
- Help your Distributors gather the same information
- Put together a procurement process that benefits both
This is just the beginning. But a strong start is a must to compete in any race.
As we find more information that can help you tackle GST implementation, we shall keep updating our blog. Keep an eye on this space!