As GST is likely to have a multi-fold impact on the various facets of business, a smooth transition to GST would require a holistic approach. Key focus areas for transition can include-
- Mapping the ‘as is’ scenario, and assessing the fiscal and other impacts of GST, on various business verticals and analyse ‘what if’ scenarios.
- Representing the industry on areas requiring urgent attention, before the government.
- Post the final GST law/procedures and rates, refining the hypothesis and approach, in view of changes in law and business models such as the revalidation of assessments undertaken earlier, new projects or upcoming changes in business plans.
- Firming up the final operating model such as the consolidation of warehouses, deployment of IT patches, reorganisation of internal roles, responsibilities of tax functions, etc.
- Finalising a detailed implementation plan to execute and monitor key tasks such as negotiations with suppliers, vendor/customer communications, and implementation of IT and supply chain-related changes, etc.
GST transition closer to GST roll out date
Closer to the roll out date, following activities will need more attention:
- Testing IT systems, updating masters and handling the cut-over and migration-related issues
- Implementing processes to manage the potential cash flow impact
- Listing all transactions that a company would have and plan how it would be executed under GST – would there be changes in the documentation, tax treatment. Sometimes it may benefit to alter the manner in which a transaction is conducted
- Taking stock of vendors and their preparedness – are all vendors registered under GST? Are they prepared to handle the robust GST compliance? Do vendors need support in their preparations?
- Drawing up fresh contracts for procurement/sales, revising the tax clauses in contracts especially long-term ones, etc.
- Revising the tax compliance set up, statutory records templates, tax manuals, compliance calendars, Frequently Asked Questions, etc.
- Communicating with stakeholders including vendors/channel partners and customers.
- Evaluating the fate of pending litigations and the validity of the judicial pronouncements in the pre-GST regime.
Key challenges posed by the changes brought on by GST can be converted into opportunities by sensitising stakeholders and enlisting their support. Training would be a key focus area throughout the entire GST implementation road map.
Training can be provided to:
- Senior management on strategic aspects
- Business teams on the expected impact and the way forward on specific product lines, groups (such as IT, supply chain, sales), locations (factory, head office, depots), etc.
- The tax team on key changes impacting the compliance framework
- Vendors, customers and channel partners, to explain the changes in the prices, discount structures and promotional schemes.
GST could entail a complete overhaul of the existing business processes, including:
- Redefining the process maps at various levels up to L4 and L5
- Aligning processes with the revised Standard Operating Procedures (SOPs)
- Dealing with sensitive changes such as the reconfiguration of escalation matrices, roles and key performance indicators at multiple levels
- Identifying the training and skill enhancement requirements.