Are you prepared to introduce GST in your company? Have you given your requirement to your GST Software Provider? We are just few weeks away from implementing GST so it’s better to get your system ready for GST. The changes in existing invoicing system, introduction of new patches in ERP system or new import export policies to get more profits out of GST are likely to be at the top of the priority list of your company and your GST partner.

Here we would highlight the key corporate challenges that are likely to occur in businesses due to the introduction of this newly formed law. These findings surfaced once we refocused our efforts after the constitutional amendment leading up to GST in India. Our research was to find the upcoming changes in corporates routines to deliver the simplest-to-use GST solution in the market.

As you already know, GST is based on the principle of value added tax and either “input tax method” or “subtraction” method, with emphasis on voluntary compliance and accounts. Which will end up on the goal of invoice matching.(Source: Wikipedia)

GST in India is expected to change corporates’ behaviour in following ways-

Change 1- Company will move to a ‘Payment When Upload Invoice’ System

In this current pre-GST era; Companies are able to complete a transaction just after receiving an Invoice only and making the due payment to the Supplier without having the actual payment in hand which also gives them the ability to avail tax credit on the invoice, even before filing the tax returns.

After GST scenario is going to be as- Tax credit will be assured only after invoice matching is done. The question arises here- how will companies ensure that Tax credit is not rejected or it is reflecting incorrect value.

If we move to the process of getting it done then it will be followed as- First, an invoice will be uploaded to the GST system by the supplier. Company will then proceed to check whether all the data in the invoice is correct and matching the records (once the invoice is made available to you). All the companies are likely to make the payment to the supplier only after this verification.

Similarly customers would also expect companies to upload the relevant sales invoices before making the payment. Therefore, we believe that ‘Payment When Upload Invoice’ will become a common phenomenon.

Change 2- Government Tax System Will Be a Regular Touch Point Afterwards

In the pre-GST era, interaction with the government tax system was a once-in-a-month or once in a quarter phenomenon for most businesses.

The new reform will make companies stay in touch with Government Tax System on regular basis. It begins with an invoice being uploaded either by the companies itself or by their Goods and Services Tax Practitioner (GSTP), or both of them. And in the case where both of them upload, data needs to be efficiently managed rather than being the source of confusion.

When company will start acknowledging invoices for purchases made then they would prefer to get the authentic status of the invoices before making a final payment to the suppliers. Considering this to come into a regular practice, stay prepared to engage more frequently with the Government Tax System.

Change 3- Real Time Challenge: Meet Different Cut-Off Dates to File Tax Return

In the pre-GST era, there was only one cut-off date for filling Tax return. The task of the company was to provide information to the tax consultant who used to prepare and upload the returns, pay the due taxes, and provide final work done signal in the form of acknowledgements to the company.

Now, the process of upload, matching, missed uploads and tax payment have different cut-off dates- 10th, 15th, 17th and 20thof each month. Stay ready to meet the deadlines every now and then. On each of these dates, anxiety levels are likely to rise depending on whether a company’s returns are successfully processed or not.

This problem will be arisen with product industry mainly where they get hundreds, thousands and millions of Invoices in a month and with the new GST reforms there will be several billions of invoices to be processed in a given month. As this system is expected to have both store and provide information at a time which will surely demand time to process such a high volume of data and provide results of success or failure based on the GST rules.

An analogy to simplify this would be depositing a cheque in a bank account and getting a message that the amount is credited but is subject to clearing. Whether the clearance is successful or not is known at a later point in time.

This asynchronous behaviour means that just by uploading information to the GST system does not complete a compliance activity. Anxiety levels will peak towards the 4 cut-off dates as the processing time could take longer. Companies will expect to be informed about any failures or successes in the process of matching records.

Change 4- Requirement of a Centralized System to Organize Function at Different Locations

This can be a new process to be introduced for all the companies having more than one location from where they operate their business functions, In this era of expansion many companies are following the business model of facilitating their customers by having many braches at different locations to cater the maximum volume. So if your business is operating from multiple locations, the operational complexity further increases.

The company will be assumed to upload a few of the Invoices and invoice matching from each of your locations. GSTP will take information from you for and the data from GSTN for already uploaded invoices. Based on this collected information, GSTP will submit the returns.

It is expected under the new reform that all of this is simultaneously operated. While simultaneous operations from multiple locations would need an extremely high degree of integrity & accuracy in Compliance data. Therefore, a company’s ability to seamlessly operate with multiple disparate systems is extremely crucial to ensuring your books and compliance returns match.

Change 5- Have a System to Sign Return with No Error

Under new GST reform, the last mile stone to be achieved before filing return requires you to download the summary (which doesn’t contain individual transactions) and sign a return. Before signing, it will be crucial to ensure that nothing is pending and that there is no difference between what a company has submitted and what GSTN has sent to them– this will be a challenge.

It is important to be aware that a company, It’s suppliers and customers could all update relevant sections of information that go in tax return. Since the GSTN system is asynchronous, the summation might be in processing; therefore some information won’t be available in summary immediately.

There will be a need to reconcile all the above information together in a system in order to build confidence in signing returns.

Change 6- Compliance Convenience Focused on Seamless Business Operations

These pain points are likely to cause a lot of confusion in the businesses. In fact, if not managed well, it can keep them busy for a significant period of time and potentially even distract them from running business efficiently.

These sudden functional changes will increase the urge to take one simple step to get fully equipped GST Software to accomplish all the pending activities related to the GST system so that your focus remains in running the Business and it being GST Compliant.

We at Webtel have gone into an extensive research to provide the solution of all such challenges through our WEBGST software. So what are you waiting for? Connect with us to become a PRO-GST company.