The Goods and Services Tax (GST) promises to bring a single unified tax regime for India, which will consolidate many different taxes into a single tax regime.
Data migration is one big task which affects both master data and transaction data and requires extensive deployment of expert resources. Hence it is of utmost importance to examine and identify the impact areas of GST implementation in ERP System.
Here we will discuss some of the functionalities and modules that are going to get impacted under GST regime.
Reporting and Workflows – Another major area of change would be the reporting framework and workflows. All the existing reports pertaining to the current indirect tax regime will become obsolete and new reports need to be designed as per the GST Law. Consolidation of tax compliance in ERP system will also result in vulnerability on timely submission, as it becomes the single point of failure for overall reporting, and hence more robust workflows need to be planned and implemented.
Bringing out these changes in an ERP environment is not an easy task and organizations should start addressing these changes without any delay for an easy transition into the new tax regime.
If you are using any version of Tally as accounting software, you can easily import all your sales and purchase data to ClearTax GST software and file your returns. Now you can integrate your Tally data and use ClearTax GST software for all GST compliance.
Chart of Accounts – Earlier organizations involved in the business of selling goods and providing services simultaneously were required to maintain separate account codes for Value Added Tax (VAT) and Services Tax related transactions. These account codes will get merged once GST goes live. Attention must be given while carrying forward the closing balance of tax credit from current account codes to the new account codes.
Master Data Information – Model GST law has defined new rules with respect to the charge of tax, place of supply of goods and services and time of supply. The tax rates applicable to various transactions will also differ on the basis of these rules. To address such scenarios, there arise a requirement to revisit the master data such as Customer’s Bill To and Ship To Addresses, Warehouse Information, Inventory and Item Masters etc. This will streamline the tax determination and reporting thereafter in the ERP system.
Tax Rule Engine – Most of the ERPs have a separate Tax Rule Engine which is a master repository of all the logic inside the system. This includes the tax charge rates, tax jurisdiction and tax compliance and reporting. Major re-engineering work would be required to build this tax engine for GST from scratch.