ERP Challenges Under GST

Hailed as a welcome change for the economy, GST was created with the objective of simplifying the indirect tax structure in India. Touted as a facilitator of growth and free trade, it has come with its own set of challenges for ERP systems. Due to the absence of cascading taxes, organizations will experience reduced tax burden, along with tax credits being cross-utilized across supply chains.

Having said that let’s take a look at the other end of the spectrum; as we review the challenges being faced by ERP systems to be ready for GST:

  1. Continuous effort of updating: One of the biggest challenges being faced by organizations and ERP systems, is the change of fates and requirements for GST. With new cuts/additions like rate revisions and shifting of filing dates, continuous updating is time-consuming and costly. Though the general understanding of the impact of GST remains unchained, however, each change introduces challenges to the legislation and implementation, thus lacking uniformity of implementation.
  2. The widening of taxable basis: Due to the introduction of GST, organizations will have to revisit their procurement/sourcing, financial and supply chain models in the ERP System. Since almost every sort of provision, goods/services is now taxable hence the creation of new tax codes, conditions/updates and information about product and materials will now be necessary. This widening will also impact the taking of orders, goods received, compliance reporting etc.
  3. The increased burden on IT and Tax teams: The need to create accurate tax specific data, for GSTN means enhanced responsibility for tax teams. ERPs will need to capture relevant data for tax compliance, along with overseeing filling of missing data and constant updating. This implies that IT and Tax teams will now have to consolidate findings and work in tandem with implementation/testing plans, to ensure compliance.

By standardizing a centralized solution and keeping tax information in a central place, tax-values can be sent back to the ERP, separating the two systems in the process. Once this practice has been standardized, critical ERP tasks shall not be affected by governance/compliance/risk changes and ensure efficient smooth running. What do you think are the challenges for your organization’s ERP system post-GST? Write to us in the comments section below.

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