Indian Government after a historical bill passing has finally got the path cleared for implementation of the much-awaited Goods and Services Tax (GST) reform in India. This change though a very promising one for country economy, is a matter of an inevitably challenging task that is in the path for every entity with in India. Biggest of the change impact is on the medium to large organizations that rely on ERP Package for running their businesses.
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Goods and Services tax (GST) has been identified as one of most important tax reforms post-independence. It is a tax trigger, which will lead to business transformation for all major industries.
Given the passage of the Constitution (101st) Amendment Bill, 2016 for GST in the Parliament on 8 August 2016, ratification of the said Bill by more than 15 states by early September followed by its enactment, and passage of four GST Bills in the Lok Sabha on 29 March 2017 and Rajya Sabha on 6 April 2017, with the clear road map being laid down by the Finance Ministry, the Government of India seems to be on course to implementing GST with effect from 1 July 2017.
The GST Council consisting of representatives from the Centre as well as the states, after being constituted, met on several occasions to discuss various issues including dual control, GST laws, exemptions, thresholds, rate structure, compensation cess etc. and reached consensus on the same. Council has also recommended four-tier GST rate structure and the thresholds. GST has been split into CGST, SGST/UTGST and IGST.
Taxes expected to be subsumed under GST are:
GST is a destination-based tax that will replace the current Central taxes and duties such as Excise Duty, Service Tax, Counter Vailing Duty (CVD), Special Additional Duty of Customs (SAD), Central Charges & Cesses and Local State Taxes, like Value Added Tax (VAT), Central Sales Tax (CST), Octroi, Entry Tax, Purchase Tax, Luxury Tax, Taxes on lottery, betting and gambling, state cesses and surcharges and Entertainment tax (other than the tax levied by the local bodies).
It will be a dual levy with State/Union territory GST and Central GST. Moreover, inter–state supplies would attract an Integrated GST, which would be the sum total of CGST and SGST/UTGST.
Consensus between Central and state governments has been reached on four-tier rate structure as follows (published by GST Council):
A well-designed GST in India is expected to simplify and rationalize the current indirect tax regime, eliminate tax cascading and put the Indian economy on high-growth trajectory. The proposed GST levy may potentially impact both manufacturing and services sector for the entire value chain of operations, namely procurement, manufacturing, distribution, warehousing, sales, and pricing. It will also stimulate the need to relook at internal organization and IT systems.
With its proposed implementation from 1 July 2017 gaining intensity, it is critical for companies, which have business operations in India to understand the broad contours and framework of the proposed GST law, likely impact of the new levy on their business and start taking appropriate steps to meet its requirement and be GST ready.
* The information mentioned above has been reproduced from GST Sites and Forums. Information may vary by the date of implementation
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As a preferred partner organization, JARKS IT is at the forefront of assessing the impact of the GST solution for systems readiness to both implement GST Software and remediate existing MIS reports for uninterrupted business continuity. We at JARKS are one of the few key oracle partners, who have been given access to the relevant patches.
JARKS IT has been closely working with Oracle’s product team, support team to make sure EBS GST product enables customers to adhere to new GST law that is to be rolled in the current financial year.
As a part of this efforts, a dedicated team has been formed to rigorously to test the product. Being a testing partner with expertise in native market, we have identified key issues and challenges related to the product design and its functionality and have been giving inputs to development team on a continuous basis.
JARKS IT offers a custom designed GST Roadmap keeping in mind customer needs and GST product. Roadmap uses specifically developed accelerators, analysis tools and reusable templates that will help customer quickly and efficiently make the transition.