Goods & Service tax (GST) is the most talked about topic in the field of indirect taxation today in India. Everybody is keenly waiting for the proposed GST draft which will replace the existing system of VAT in India. The central government wants the GST to be implemented in India by 1st April, 11. Although there are & will be been many hurdles which are to be crossed before GST is implemented.

Mumbai, Maharastra -- (SBWire) -- 09/09/2010 -- 1954... the year when taxation took a major turn as GST was first introduced in France and since then over 140 countries have adopted GST. The irony is till date in India it is still being discussed.

1st April 2010 was the date when India also had to enter the era where Tax reforms are no longer a word from the books. But the date with history could not be realized and now the new date being talked about in the market both from Government as well as non Government sources is 1st April 2011....

Will India be able to make it? Well this is not the question which we are going to focus here... The question in focus is

Is your ERP GST ready?
Let’s understand how the government is planning for GST from IT infrastructure point of view:

As all of us know that GST has two types:
1.Unified or Single GST
2.Dual GST

In India Dual GST would be implemented- CGST and SGST

“The Central Government shall establish a common IT infrastructure which will serve the needs of both CGST and SGST. A Taxpayers Information Network (TIN) will be established by the centre keeping in view the information requirement of CBEC and the state tax administration. The TIN will be shared between the centre and the state.

The payment of tax and transaction reporting should be made through a combined payment and transaction reporting statement in form no. GST-1. This statement should detail all business to business transactions relating to sale and should be common for both CGST and SGST compliance and it should be mandatory to file this statement electronically on a monthly basis while making payment of taxes.”

Lets see the above statement in the light of ERPs and the companies using any of the ERPs

ERP by definition itself take care of the business layer for any organization; but what about the operational layer which goes unattended to in any of the ERPs. If we talk of Financials then yes any ERP would work on the business layer and give you COPA, but what about the Taxation and Tax Planning and that too specifically in India where the Taxation is 5 times complicated than in US or any other European country?

Majority of ERP OEMs and vendors provide Indian taxation computation (manual) in their ERP but none of them gives statutory formats inbuilt as a part of standard package because the data and the structure they have is as per global standards and not only that they deal with the business information and not operational information.

Some organizations customize their ERP with the help of the implementation partner or internal IT team. In many of such cases the GAP between what is there in ERP and what is required for Indian Indirect Taxation is huge and the people who implement it are very good Business Process Consultants but not Tax consultants.

Whenever there is a change in the law they struggle to make the updates even though they may have the best Tax consultants on board or as contractors. Not only that with the introduction of e filing of returns the situation has become complex because the excel file which needs to be uploaded at ACES website needs to be prepared manually or reconciled with the data in ERP which is a labour intensive task. All these challenges crop up when during internal or external audits with the government agency they are not able to produce the required information at a click of a button. This results in many organizations overpaying the taxes thus affecting the PAT or underpaying the taxes resulting in SCNs or penalties and in many cases criminal offences.

Taxation not only plays a major role when we compute our cost of the goods but also our profit.

A very good example can be seen when in 2005 VAT was introduced in India. All the major companies faced challenges to implement it in ERP. To introduce new process in ERP every company had to go through following process.

• Understand the law
• Interpret & provide logic to IT team
• IT team had to check the impact areas and then change the code.
• They need to involve external consultant to verify the changes.

In doing all the above steps the company’s resources were utilized in the unproductive work and in the areas which was not their competitive strengths. The other side of it was the organizations had to keep a tab on the support and update of the application(s) which resulted in more overheads and expenses.

GST will have a far reaching impact on virtually all aspects of businesses operating in the country, for instance, pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems. Introducing all of these in an ERP from a functional and technical aspect is not at all easy. All ERP OEMS would have to do a wave change in their product designing as well as internal structure to accommodate the changes with respect to Indian Statutory Norms.

UDYOG: Your Solution.

Udyog Software India Ltd has been working in taxation field since 1993 and is renowned name in the field of taxation software. There are renowned tax consultants who work with the Udyog team to develop the software and to understand the impact of any changes in the law from the industry perspective.

Recently Udyog has launched a product call iTax which takes care of the entire gamut of Indian Indirect Taxes like Excise for Manufacturing; Excise for Trading; Service Tax; VAT/CST; SEZ; EOU in an offline integrated mode with ERP. This ensures minimum of manual intervention and increases the visibility at operational level, that too at a click of a button.

iTax- Your solution to GST shackles

For smooth transitions from current tax structure to GST following points have to be considered by any of the organizations:

Excise & Customs:
• Maintain proper records of input credit ( Quantity & cenvat credit)
• Maintain proper records of capital purchase credit (Qty & cenvat credit)
• Maintain proper records of sub contracting vendor wise.
• Maintain proper records of returns ER-1, ER-5 & 6 & Form-II
• Maintain proper records related to export sales under Bond, rebate , refund or LUT
• Maintain proper records of imported material & BOE documents.

VAT & CST:
• Maintain input tax credit register.
• Maintain output tax credit register.
• Maintain all return formats.
• If exempted Items keep proper records.
• Related to CST & others forms keep proper track records of issuable & receivables forms detail.
• Pan India distribution then tries to maintain all above records state wise.

Service Tax:
• Maintain proper records of input credit services wise.
• Maintain proper records of payment detail
• Maintain proper records of output service (services wise)
• Maintain proper records of received payments from customer’s detail
• Maintain ST-3 returns properly.

What Udyog provides:
• Udyog’s iTAX addresses all those “taxes & duties” that are getting subsumed
as GST, let it be VAT, CST, Excise and Service Tax.

• Robust “Tax Master” – is inbuilt in iTAX, using this, without changing the
current data, we accommodate “cGST, sGST & iGST”

• Old reports will be available even after cut-off dates for references
• Already equipped with central & state efiling, easy to accommodate new e
-Return SGST & CGST.

• New formats once published, Udyog’s team prepares them over night after
testing ships the updates to all the customers

• A mapping tool that comes with iTAX is completely “database driven”, so we
map according to new tax codes, that can also be done remotely

• Local channel partners who are undergoing training on GST implementation will
be a great help to address locally of our large customer base

• “Udyog’s Taxation Formula Builder” – was the first one to accommodate “Tax
on TAX” way back in early 90s

• Udyog has done 4 seminars in major cities early last year about “Introduction
to GST” with a great attendance of various industry clients with renowned
consultants. More of such knowledge based event to be done this year
starting September end.