Indian companies have now begun discussions with their IT vendors and tax advisors to upgrade their systems for tracking of goods and analysis of tax and other cost implications once the goods and services tax (GST) regime comes into force.
Companies are mainly upgrading their enterprise resource planning (ERP) — a category of business-management software — so as to accommodate the complexities of calculating GST. ERP helps companies manage and monitor everything in the organisation, including supply chain, finance and even human resource functions. SAP and Oracle are the big players in the Indian ERP space. Many companies will have to move from their current system, where every transaction is recorded separately, to an upgraded system where there is a correlation between every entry, according to industry executives.
“GST will mainly impact master data management, tax computation and business process localisation, among other things,” said Arun Subramanian, vice-president, Globalization Services, SAP India. “Specific organisations will need to look into their versions of finance solutions and customer specific developments and plan accordingly.”
ERP systems are extensively used by goods manufacturers, especially for supply-chain management. For instance, many retailers use the ERP systems to check movement of goods from the warehouse to the retailer. So if a soap manufactured in Himachal Pradesh reaches a mall in New Delhi, the ERP records every stage of the movement, including the goods carrier’s passage through check points.
Under the current system, every state is treated differently, While most companies acknowledge the need for new IT systems, many are just waiting for the final tax rate. “We have not made changes to ERP systems as yet. Announcement of the tax rate is one of the crucial elements of how the ERP will be affected,” said Harsh Goenka, chairman of RPG Enterprises.