An efficient ERP solution is key to tax compliance for the not so IT savvy businesses

India is all set to enter a new economic era with the introduction of GST from July 1, 2017. While the new tax regime will bring about economic gains for the country and enhance ease of businesses in the long run, it is the transition phase to the new GST regime that is worrisome for business owners, especially SMEs who must pay a significant price to upgrade IT and accounting systems to meet the detailed tax requirement on the GST network in order to be fully tax compliant.

The one question that most SMEs, especially with a large and diverse vendor base, are therefore asking is that even if they do upgrade their ERP, how can they be assured that the ERP will be able to meet the GST requirements if they are not IT savvy. The simple answer to this question lies in selecting the right ERP software available with a GST Suvidha Provider (GSP).

Technology is the backbone of GST and the success of its implementation will lie in identifying the right GSP, who are offering custom made cloud-based ERP solutions, that are not only efficient but are adequately user-friendly. GSPs have been handpicked to aid taxpayers. Thus, a business of any size and scale can be assured that their GST experience will turn out to be hassle free. By implementing such ERP solutions, its users can effectively meet GST requirements even without comprehending the complexity of technology that has gone into the manufacturing of such software.

Here is a glimpse at what a mature ERP solution can achieve in order to make an organisation GST compliant: 

Handle changes in business process

With the implementation of GST, business processes must go through a facelift. Several changes must be made to master data as business organisations must keep track of the registration of its vendors and maintain separate vendor and customer masters. This segregation can be made by the ERP software according to CGST/SGST/IGST. Further, a revision to invoicing of sales and purchase, stock transfer and subcontracting can also be handled by an efficient ERP system that can make an organisation fully tax compliant from day zero. 

Rebuilding tax rule engine

Tax procedures will go through a complete overhaul under the new GST regime. Most ERP systems have a tax rule engine that serves as a master repository of tax compliance and reporting. The ERP solution implemented by any taxpayer organisation must, therefore, be built from scratch or re-engineered to handle GST related changes such as migration of data, defining CGST/ SGST/ IGST according to the destination of goods, mandatory filing of monthly returns and claiming input tax credit. 

Change in reporting and workflow

Finally, with the current tax regime becoming obsolete, a new reporting framework must be put in place in compliance with the new GST regime. The robust workflow must be designed and implemented seamlessly by the ERP system as a single point of failure will result in the failure of overall tax reporting which in effect will impact business prospects in the long run.

Changes in this proportion are not easy to implement and small businesses are woeful because they will have to incur significant costs to overhaul their ERP solutions as a mere upgrade or a patch solution will not be adequate to handle these changes. However, it will be prudent for all taxpayer organisations to make a wise choice in the selection of ERP to make tax compliance hassle free even without thorough IT knowledge