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India's most ambitious indirect-tax reform is likely to roll out from 1 July 2017. The major objective of the Goods and Service Tax will be to eliminate cascading effect of indirect taxes. GST could be the biggest tax reform in India replacing existing Indirect taxes such as Excise, Value Added Tax (VAT), Service tax, etc., into one taxation system GST.

Most of companies in India adopted ERP system in one or the other form for day-to-day activities. The biggest challenge to adopt new taxation system in the form of GST in the existing ERP system.

Companies took many years to develop their business and adopt ERP system to the current state. The statutory needs of GST has to be done within this short period.

GST could have a major impact on ERP systems, which has been listed below:

1. Supply

Supply, includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Keeping in mind, all supplies needs to be re-defined in the ERP system.

2. Updating GST Registration number of Suppliers/Customers

In Supplier and customer master, GST registration numbers must be mandatorily updated, which will impact Invoices issued/received in GST regime.

3. Configuring GST tax ledger

CGST, SGST, IGST, additional cess ledgers have to be created and applied based on transaction type.

4. Configuring GST tax rate Rules

GST council has agreed on rate structure as 0%, 5%, 12%, 18% and 28. These different slab rates have to be defined in system.

5. Calculation of GST i.e, CGST/SGST/IGST/Additional cess

In case of Intra-state transactions, Seller collects both CGST and SGST from buyer. In case of Inter-state transactions, Seller collects IGST from buyer. Additionally, on Luxury/Demerit goods, Seller has to collect additional cess. Provision should be made in the ERP system to accommodate these tax calculation changes.

6. Voucher serial numbering

A unique sequential numbering for outward supplies needs to be specified as per the directives given by GST authorities.

7. Invoice/Document printing

Existing Invoice/Document printing format has to be modified in accordance with GST.

8. Free Supplies and Tax applicability

In GST regime, as tax is applicable on Free Supplies, the existing ERP system has to be changed accordingly.

9. Transactions through e-commerce operators

In case of transactions through e-commerce operators, such e-commerce operator details needs to be captured and reported to the authorities. Necessary provision should be made to capture these details in the existing ERP system.

10. Invoice matching

In GST regime, Input tax credit will be made available, based on Vendor’s Tax return and payment submission to authorities. Hence, each Vendor’s evaluation is required. The ERP system should track these details.

11. Submerging existing Tax structure

As existing Indirect tax structure like Excise, Value Added Tax (VAT), Service Tax, etc., submerged as GST, most of the businesses have to de-activate these taxes in the ERP system.

12. Managing Returns/Change in price of pre-GST Invoices

ERP system should accommodate Returns and change in price of Invoices issued in earlier tax system.

13. Chart of accounts

In the existing system, separate accounting codes are maintained for each tax system i.e, Excise, VAT, Service tax. As these taxes are subsumed into GST, Chart of Accounts has to be modified in the ERP system.

14. Report changes

Existing reports like Sales Register, Purchase Register, MIS repost, etc., has be changed in accordance with GST requirements

15. Return filing system changes

In the existing system of ERP, separate Return/Annexure are submitted to each taxation like ER1, ST 3, various VAT return/Annexure, etc., As these taxes are subsumed into GST, the Return filing system has to modified as per GST requirements.

16. e-ledgers

In GST regime, e-ledger registers such as e-tax liability, e-tax credit and e-cash registers are maintained in the department website. Proper reconciliation system is required in ERP system, to ensure Books of Account and e-ledger register are same.

17. Utilization of Credit / Payment of taxes

As utilization of credit / Payment of taxes has to be done in e-ledgers which is maintained in department website, proper reconciliation system is required in ERP system.

18. Ware house

To optimize cost, enhance logistic service and improve customer service, companies can redefine their existing ware house structure. Based on these changes, ERP system should be changed accordingly


To adopt these changes in existing ERP system will be a time consuming activity. Proper planning and execution has to be carried out without any delay for smooth transition to GST regime.

Note: The views expressed in this article are solely of the authors of this article.


Published by

(Tax Consultant)
Category GST   Report

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