Get Ready for GST with the new ERP

Get Ready for GST with the new ERPGoods and Service Tax has finally approved in Indian economy (awaited to Welcome). After much ifs and but, the Government of India has finally waved green flag to the GST, which is supposed to hit your business from the next financial year supposedly from July 1st  2017.

GST is an indirect tax reform that aims to remove barriers between states and create a single market.

In other words there will be uniform tax rate between states. As per current taxation system the constitution divides taxation power between centre and the states. Both the levels of the government have some exclusive areas where they can levy tax. Those taxes, that includes company’s profits is exclusive forte of central government and thus are referred to as direct taxes. And indirect taxes are levied on manufacture of goods or provision of services, are also acumen of government at centre. Only taxes on consumption are exclusive domain of state governments.

With GST the tax barriers from state will be removed and a single market will be created and one will experience transparency in taxation that would deter governments from indiscriminately increasing taxes and consumers will not end up paying tax on tax as it happens when the goods move across state borders.

Not only there will be amendments in tax laws and reforms but also every manufacture should modify his working set up in tune with the GST norms. Manufacturing sector in India is the major economic driver. GST is expected to provide major boost to the already lagging manufacturing industries as it will hand out a transformation shift from a complex multi tiered tax structure to one that is integrated and stable.

Among many impacts that GST has on manufacturing sector, the major ones are:

  • Reduced cost of production
  • Increased working capital
  • Hassle free movement of goods
  • Restructuring of supply chain
  • Area based exemptions
  • Improved Compliance requirement.

Several Indian manufacturers have begun their discussions with their IT vendors and tax advisors to upgrade their systems to enable tracking of goods and analysis of tax and other cost implications once the GST regime comes to force.
Companies are more conscious on upgrading their Enterprise Resource Planning (ERP) – business management software to attune the complexities of calculating GST. ERP aids the companies manage and monitor everything in the organization, including supply chain, finance, and even human resource functions.

Companies must move from their current system, where every transaction is recorded separately to an upgraded system where there is correlation between every entry, in tune to the industry executives. Manufacturers widely use ERP systems mainly for supply chain management. Say for e.g. a product manufactured in Mumbai reaches the mall of New Delhi; the ERP records every stage of the movement including the goods carrier’s passage through check points.

But as per current system every state is treated differently, while GST aims to make India a common unified market place and thus required modifications and changes must be made in ERP software – procurement, warehousing and impact on vendors and customers among other changes.

With GST, ERP software will be affected in following way:

  1. Adaptability
  2. Scalability
  3. Customization

The changes in ERP will need to factor on various parameters including procurement, warehousing and impact on vendors and customers among others. Most enterprise must upgrade their systems; that links entries accurately as against their present system that records their transactions separately. Since GST will mainly have impact on data management and taxation, among other things the manufacturers must consider present versions of finance solutions and customer specific developments and plans accordingly.

GST roll out will be a great challenge for the companies in terms refreshing their ERP systems. Integrating new tax system with existing software is tough call and companies must be clear as which module of the software will be affected and how they will harmonize the changes with GST.

With GST on floor, the manufacturers and IT vendors must opt for more hybrid solution that blends on premise functionality with cloud solutions and that adapts GST scenario in the current software setup.

ERP Software Development Company Knowit
For any type query related to ERP please visit http://www.knowiterp.com or call 09811119075

Author: admin

Knowiterp is a steel ERP development company in India, Contact us for ERO software for manufacturing and solution.

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