One of the biggest reforms which India’s indirect tax structure is experiencing is Goods and Services Tax (GST in India). This reform is an exceptional one ever since the Indian economy opened its doors about 25 years ago, and today the reality finally gets introduced. The constitution amendment bill came up in Rajya Sabha with a boost of good wishes and wide political consensus. Let me share how GST will work and results on the clearing of the bill by Parliament.
With GST, it is forecasted that the base tax shall be very comprehensive, since virtually all goods and services will be considered taxable, with less or minimum exemptions. Undoubtedly GST will be a game changer for the Indian Economy which will make Indian market common and reduce the cascading impact of the tax on the actual cost of goods and services.
For more information on GST in India, you can also check our complete guide to GST in India.
What will be the impact of GST in India?
- Complete overhaul of present indirect tax system
- Credit reporting and utilization
- Tax Compliance
- Tax payment
- Tax computation
- Tax incidence
- Tax structure
Besides all these GST is said to have far more impact on different business operations in India, for example, the price of goods and services, tax compliance system, IT, accounting and supply chain optimization.
Get ready for GST!
Goods and Service Tax brings in a vital change in doing business in the country. In order to be compliant with GST, there are some key areas which must be assessed like developing IT system, training the teams, gearing up for new process changes and advocacy for some new and best practices.
GST is all set to be introduced with effect from April 2017 and for this, the taxpayers should be GST compliant. Also, these changes would need proactive planning with a plan that is time bounded.
How does GST impact your business?
Some key areas of your business that are set to experience impact post launch of GST:
- Change management and training
- Indirect-tax impact assessment
- Supply Chain
- Accounting and reporting
- Technology refresh
- Cash flows
- Pricing and profitability
- Program management
Action required from company perspective:
- Identify the issues that need representation
- Develop/craft strategy for efficient advocacy
- Identify the new areas of opposite impact and get ready for contingency measures
- Regularly track policy development related to GST
- Update the prepared scenarios
- Prepare different circumstances for application and design of GST
- Understand the significant areas of impact of GST on your business
The introduction of GST in India means that there will be lots of changes. You will have to frequently submit more data to the government. All this means you will need to have better automate your invoice software as well as GST tax reporting system. There are lots of benefits of using a good business management software in your business. Please refer to our article on how to grow your business by using a good business management system.
Benefits of GST:
GST has definitely been envisaged as one of the efficient tax systems. We have already written in detail about Benefits of GST in India. Here are some of the major GST advantages:
- Automation of compliance processes and procedures for reducing errors while increasing efficiency
- Harmonization of the state and center tax administration
- Reduce the compliance and duplication cost
- Rationalization of the tax framework and further simplification of compliance processes
- Elimination of different taxes and their effects
- Wider tax base, requirement for reducing tax rates and cutting down the classification disputes
- The framework of GST will certainly adopt the destination principle. It will have amendments at regular intervals and is anticipated to bring one unified Indian market.
How to prepare your business for GST
It’s very easy for you to prepare your business for GST. You will need to put more effort on managing your supplier data, customers data and invoices. You will also need to plan about regular reporting to the government. You can achieve all these goals by using a good accounting software with GST.
Need more information on GST Accounting Software?
Contact us for a free demonstration of Complete Accounting & Business Management Software with GST.