GST Is Coming – Are Corporates Ready?
India Inc. is anxiously waiting to see how GST roll out is going to impact their businesses. Touted as the boldest reform of Independent India, there are a lot of expectations from GST.
Elimination of entry tax, octroy and purchase tax will allow free movement of goods and services across the country. This will encourage more players to enter the market further expanding the market.
Taxpayers would have to reconcile their procurement with the sales of their vendors and supply of goods/services with their purchasers on a monthly basis in order to avoid denial of input tax credit and imposition of tax liability
In limited timeframe companies will have to ramp up their ERP systems to support the revised tax regime. With many types of taxes abolished and new compliance requirements for GST the ERP & accounting systems need to be implemented in limited time.
Compliances are expected to increase with GST. Earlier with several taxes were dodged due to cumbersome nature of transactions with simplification of these transactions under one GST tax code tax collection will improve. Total number of compliances are expected to increase under the Model GST bill. Today company operating in 15 states can obtain a single centralized service tax registration whereas under GST, separate registrations may have to be obtained for each of the 15 states. Instead of filing of three or four service tax returns per year companies will need to file four to five returns per state per month. A manufacturer with operations in 10 states earlier used to have 13 registrations (1 Vat for each state, two excise and one service tax), under GST the registration count will cut down to 10 but the number of returns will increase from 12 on monthly basis to around 50 per month.
Increased compliances with simplified structure will mean higher enforcement and hence companies need to be prepared for the Tsunami of Tax changes ahead. It is high time that companies prepare themselves for monitoring their compliances as the volume and criticality of the compliances are only going to increase. Switching to an automated compliance tracking system like CompliCheck is going to become a necessity for businesses. CompliCheck is offering free subscription to small businesses and startups with single location. CompliCheck is priced to make compliance tracking affordable and simple.
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