As we are getting nearer to GST Implementation, transition from existing tax System to GST will be a nightmare for any Business. As GST is new in India and it takes time for execution, so the SMEs should start preparing for GST now.
In this prospective below steps to be followed for smooth transition to GST.
1. Updating Digital Signature in GST portal
Enrolment to GST process has been already started, ensure Digital Signature is updated in GST portal.
2. Carry forwarding Input tax credit of existing Excise/VAT/Service Tax
Input tax credit of VAT, can be carried forward to GST as SGST. Input tax credit of Excise/Service tax, can be carried forward to GST as CGST.
One can claim Input Tax credit based on Tax invoice, Debit note, supplementary invoice or any other documents as may be prescribed. Additionally, un-availed Input tax Credit of Capital Goods needs to be considered.
3. Update Vendors/Customer’s GSTIN
Ensure you have collected and updated GST Registration number of your vendors and customers.
4. Updating existing Accounting and Inventory software systems
Assesses has to be compliant with GST norms, update existing Accounting and Inventory software systems including any software add-ons (if any). Get in touch with your software vendors and ensure your software is GST compliant.
For more details, please refer: Impact of GST on ERP System in India
5. Collect HSN/SAC details
Collect HSN/SAC details of commodities which you deal along with GST rate information.
6. Get updated with GST knowledge
Get updated with new concepts of GST like Definition of Supply, Branch Transfers, Managing Job-work related entries, Invoice matching, etc. Attend GST awareness events, conducted across the country by various Organisations like Tally, Chamber of Commerce like Asshocham, Trade unions, etc.,
7. Redefining Business Process
Changes in business process needs to be relooked like Advance Receipts, Amendments, Reverse charge mechanism, etc.,
8. Other aspects
i. During initial period of GST implementation, it may lead to inflation/impact your cash flows and working capital be prepared to handle the situation.
ii. GST may increase burden of compliance and associated costs due to multi-fold return process. Adopting proper Accounting and Inventory compliance software system like Tally, SAP, Oracle, etc., would be appreciated.
Note: The views expressed in this article are solely of the authors of this article.