GST entails a strategic, structural, and organisational overhaul for businesses.
GST has possibly been the only high amplitude talking point across every corridor of India. As the July 1 date approaches, the most audible whispers have been about the complexity of compliance. Are businesses ready to embrace the most transformative tax reform ever in this country? While there will be early pain, this will be one tax that will simplify the indirect tax challenges that businesses face. It will shut out a complex clutch of indirect taxes that are hard to justify and even harder to interpret. The rate slabs, products, and services that have been slotted under each slab are being debated and will find stabilisation as the tax economy of India matures over the next 1-2 years around GST. Indirect taxes account for nearly 34% of total tax collection in India. Indirect tax collection in developing countries is higher than that in developed countries. GST is therefore a game changing tax reform and will possibly change the way business is conducted in the country.
GST conclusively touches all areas of business operations—supply chain management, ERP, IT, cash flow and working capital management, accounting and commercial processes, vendor management, sales and distribution, pricing, etc. In this backdrop, it will be absolutely binding on corporates to assess the conclusive impact of GST before putting in place methods to be compliant, and also benefit from the opportunities it will provide. Companies are making strategic, structural, and organisational changes to engage with the GST law. The big themes that have emerged for corporates are:
GST is a market unifier: one product, one market, one tax
Historically, indirect taxes have driven businesses to restructure and model their supply chain, distribution, pricing strategies, and other operating systems because of the multiplicity of taxes and costs involved. The impact on end price begins no sooner the product left a factory.
This story is from the July 2017 edition of Indian Management.
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This story is from the July 2017 edition of Indian Management.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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