Goods and Services Tax – GST – By: – Ravi Kumar Somani – Dated:- 3-1-2017 Last Replied Date:- 4-1-2017 – GST would become a reality and the nation could witness changes in the traditional ways of doing business. Businesses right now have the option to proactively embrace this reform, understand its intricacies and take a business advantage out of this change by acting immediately. Since the tax system is in the transitional phase, hence, this is the right time for businesses to understand the immediate action points for smooth implementation of the GST. This article provides a broad thought process and a way forward of major areas actions that a business can re look. Various immediate action points can be as under: CREATING A CORE GST TEAM: Identifying resources across various departments within the organization and a core GST team must be formed which would be a task force equipped with the charge of smooth implementation of GST. Since, GST is not just a tax reform but it s a complet
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
; Impact on various business departments i.e. Finance & Accounts, Procurement, production, stores, Sales & Marketing, IT, Admin & HR. Strategizing the right pricing to create right balance between margins and volumes; Impact on existing contracts and agreements; Impact on Key vendors, their readiness and approach to GST; Change in procurement and other sourcing strategies; Aspects to be representing through various bodies/ associations; Assessing the capacity building to meet the needs of the GST; Readiness of the ERP system and technological interface to usher into the new tax regime. MIGRATE THE REGISTRATIONS: In registration process, it is crucial for the businesses to understand the need for various geographical locations and business verticals for which registration is required. Once this aspect is clearly decided, complete documentation must be kept in place to migrate into the GST regime. Assistance of professionals must be obtained to comply with all the procedural
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
dit availing document or due to oversight or credits which were assumed to be ineligible or where credits missed transferring in return from the books. Businesses would face many practical issues in credit transition. Therefore, proper care must be taken while transferring the credits ensuring due compliance of the law. Further, businesses must have proper documentation, trails in place to establish the claim of the credit at a later date during departmental audits. TAKING BUSINESS RESTRUCTURING DECISIONS: Businesses would undergo a change due to advent of GST. Therefore businesses must timely act and restructure its model as per the requirement of the GST to have a competitive edge over others. There are many re-structuring aspects that can be looked into, few are as illustrated below for better understanding: Whether to change the manufacturing location, principle place of business; Adding locations of supply being closer to customers/ vendors – Making national presence – No State ba
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ssible ways in which a transaction can be restructured and then a decision must be taken as to which model would suit the most based on the nature, size and risks involved in the business. Few illustrative aspects of transactional restructuring are as under: Breaking a composite supply into multiple different supplies – For Ex: Combos with aerated drinks in restaurants, Cinema halls; Merging multiple supplies into a composite supply – For Ex: Vaastu, High Rise Premium to be merged with construction; Strategizing the stock transfers to avoid working capital blockage; Clear breaking up the Price to optimize taxes; Revisiting the Discounts policy – Nature of discount, Cash discount or trade discount, whether linked to invoice or not; Security Deposits in lieu of advances to ease cash flows; Reviewing pricing of all related party vendors to avoid disputes in transaction value – Able to establish arms length; Doing away with the policy of raising Mother PO's with supplies over a period
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
must also be extended to chain of vendors, customers and other stake holders. In a VAT system of taxation any weaker link in a chain also poses adverse impact on the entire chain. DEALING WITH VENDORS/ CUSTOMERS: Constant communication with the vendors/ customers and their support is very crucial in smooth transition. Carrying along the un-organized vendors into the GST regime is a risky affair. Many aspects of the GST regime such as matching concept, compliances etc. would be perturb the business in GST regime if the vendors are not organized. Therefore, the challenging task of the vendor evaluation/ assessment and their preparedness for the GST must be assessed well in advance during the transitional phase. DECIDE ERP SYSTEM READINESS: Needs of the businesses from ERP would undergo a change in the GST regime, but the crucial decision making factor is to understand the nature and extent of the tweaking to the ERP that is required to be done to atleast start with. It could be challengi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =