With 1st July, 2017 set as the final date for its implementation, many of the large business conglomerates have already taken the initiative to make the necessary changes in the current Enterprise Resource Planning (ERP) systems. Some of the major players like SAP and Oracle have already given their nod for incorporation in various GST compliance requirements within their current system for both the current as well as upcoming customers.
There is one big task in data migration that affects the master as well as transaction data as it requires widespread deployment of resources. Thus, it becomes all the more imperative to evaluate and identify certain areas that will impact implementation of GST within their ERP system.
Let us discuss in detail about some of the functionalities of a potent GST calculator and how it will impact the ERP. We shall now examine if our ERP is actually ready for GST.
- Books of accounts
Previously, business entities that were involved in the business of selling goods and delivering services together were required to maintain separate books of accounts and different codes for service tax and VAT related transactions. Such codes will become one, once GST takes complete effect. Keeping the GST law in mind, proper attention needs to be given if we are looking to carry forward the tax credit pertaining to the closing balance as per new account codes.
- Information about master data
The blueprint of GST bill has defined new rules in line with the charge of tax, place where goods and services need to be supplied. There will be a visible difference on the basis of these rules and there will be different tax rates that will be applicable for various transactions. To take care of such scenarios, there is a requirement to make sure that we revisit the master file with relevant data such as warehouse information, customer’s bill drawn to, Ship to address, and master list of items etc. This would play a pivotal role in streamlining the tax determination and reporting mechanism in the ERP system.
- Workflows and reporting mechanism
It must be noted that a major area of change that remains would be workflows and reporting framework. With the introduction of new calculator for indirect tax, GST calculator, all the current taxes would instantly become obsolete and there are new reports that need to be designed as per the GST Bill. Consolidating the tax compliance in the ERP model would lead organisations to become more vulnerable and will result in timely submission, since it will become the only point of failure for overall reporting leading to more robust mechanism that needs to be implemented.
We can interpret that transitioning to GST would not be an easy task without a decent ERP system in place.