The GST tax regime successfully consolidated almost all the indirect taxes into one. But as the GST council continues to make changes to the GST laws, a large number of businesses are still struggling with the transition. Read this post to know some important tips for smoother GST transition.
It has been almost two years since the largest tax reform in India, GST, was implemented. While the tax regime has abundantly benefitted many industries, and even the GST collections are reaching new heights every quarter, a large number of businesses continue to struggle with the tax reform.
One of the biggest reasons for the challenges in GST transition is the regular changes the GST council makes to the taxation laws. This is especially true for SMEs that generally do not have the monetary resources or workforce to stay updated with all the new changes. If your business is struggling with GST transition too, these are a few tips that can help-
- Re-work Your ERP Systems
Most businesses, including SMEs, now commonly use Enterprise Resource Planning (ERP) solutions. One of the biggest aspects that impact transaction data and master data is data migration. Extensive deployment of many different types of resources is required for efficient data migration.
Thus, it is essential for businesses to identify and examine how GST will impact their ERP system. Right from invoice generation to coding, the structuring of the ERP systems needs to be re-worked for successful GST implementation.
- Tax Planning
There are transitional provisions under the GST laws. Try to understand these provisions and how they can impact your business. You can then analyse your tax planning possibilities and re-visit the current tax positions to get a clear idea of where you currently stand and how the new tax regime affects your business.
Also, make sure that even your vendors/suppliers are following the GST laws and have made the necessary changes to their tax planning. It is only when you as well as your vendors are in sync with GST that your business could benefit from it.
- Understand Input Tax Credit and Composition Scheme
To eliminate the problem of cascading taxation, which was prevalent under the previous tax regime, the GST council has introduced the input tax credit system. Under this law, businesses can claim a tax credit up to the extent of the GST they have already paid on the purchase.
As it is one of the important aspects of GST, thoroughly understand how this works and the importance of invoice matching in the process. Similarly, the composition scheme with which businesses can pay a fixed GST rate based on their turnover is also worth knowing.
- Look for GST Accounting Software
Businesses struggling with GST transition can also consider purchasing a GST accounting solution. Such solutions can make it easier for a business to accurately calculate their taxes and even file returns at the specified intervals.
Many of the top solutions come with features like vendor/customer GSTIN collection, sales reports, purchase reports, invoicing, and more to make taxation easier. Prefer purchasing a popular GST solution which is regularly updated as per the latest changes in the GST laws.
- Hire GST Advisory
A simple and effective way to seamless transition to the GST regime is working with a GST advisory firm. Irrespective of the size of the businesses, GST advisory services can help assess the impact of GST on your business, offer compliance support, assist with regards to realigning business operations, and also provide GST training to your employees.
Overall, such advisory services can help ensure that your transition to the new Goods and Services tax is smooth and time-efficient.
Taking Advantage of GST
GST is the most comprehensive and significant tax reform in the history of our country. To benefit from the new taxation system, it is essential for every business first to understand the different GST laws and their functioning thoroughly.
While GST might look complex at first, start with the basics and things will definitely get easier with time. Also, do consider the tips discussed in this post if your business is struggling with the transition as they will help you understand the tax reform better and enable you to take measures that can benefit your business.