We have been covering facet after facet of gst and its effect on your business. Today we’ll look at the transition side of it and what qualifies as a GST ready ERP.
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As is known that GST is about to transform the way businesses function, the entities must revisit their functioning, their processes, the changes about to happen, and the gaps they are required to bridge. While in the process you must also see to it that you have an enterprise system that is ready for the transition. A GST ready system must have the following functionalities.
- THE CODES
Your enterprise system must be able to record the various tax codes generated under gst such as CGST, IGST, UTGST, SGST at the time when the tax is deducted at source and also for the time when it’s collected at source.
- REGISTRATION NUMBER
Under GST you’ll be given a 15 digit Goods And Services Identification Number (GSTIN) of which the expected formation is given below
- The first two digits will be representing the state code as per the Indian Census 2011
- The following ten digits will be the PAN number of the taxpayer
- The thirteenth will be assigned based on the number of registration within the state
- The fourteenth will be Z by default
- And the last will represent the check code
Your enterprise system must be capable of recording this number to help you in effortless transactions.
- CUSTOMERS AND SUPPLIERS REGISTRATION NUMBER
The system must have the option to capture the registration number of the customers and vendors in their masters (of those who are registered under gst).
- THE RATES
Under GST there will be numerous different rates for different products and your system must have the option to capture those, also having the facility to flag items which are exempted from taxation.
- STATE CESS
Different states may have cess being charged on certain goods like tobacco, drinks, luxury and other products. Your system must be having the capability to capture these cess.
New accounts must be added in accordance with the new system for the input tax, output tax liability (for both CGST and SGST and UTGST) to track the recovery accounts, liability accounts, and interim credit account.
- HSN CODE
The system must be able to record the Harmonised System Of Nomenclature (HSN) for every good with every detail recorded therein.
- SAC CODE
You must also be able to capture the Service Accounting Code (SAC) with your system which is important for calculating the rates and taxes applicable on your services.
- SUPPLY LOCATION
As GST will be applicable on the place of supply your system must have the information available defining the place from where the supply is taking place as per the regulatory reforms under GST.
- THE DATA MIGRATION
You’ll need to migrate your data, your open and in transit transactions like purchase orders, sales order, sales quotation, the goods in transit, partially received goods, etc to the new or your refurbished system which supports GST. These will be taxed under GST.
Under GST the reporting requirements will be varied from what it is now and your system must adapt to those changes. After GST the returns have to be filed per registration. Also, there will be three returns that need to be filed monthly and one annual return for the regular taxpayer and in the case of contractual work and service providers, there will be a separate return that must be filed on a monthly basis. The returns must be filed through a GST Service Provider (GSP) which would incur a nominal charge.
The format of all the Invoice, Quotation, and other documents must be made in accordance with the regulatory requirements under GST. Also, the documents must have a unique number generated through the system defined by the tax authorities.
- TAX INVOICE
Under GST tax invoice holds a pivotal position and must be something that is taken care by your enterprise systems. Also, it must have a reference number which can be used to verify and check the authenticity of the documents.
- FILLING OF RETURNS
There are 3 monthly returns and one annual return for the regular taxpayer (except ECommerce and Service distributor) which equals to 37 returns yearly. You must be able to file these from the system itself and as these are supposed to go through the GSP, a resourceful discussion over the data and information that needs to be there in the system is all but positive.
S.I.M.P.L.E, A GST Ready System
“Action is the foundational key to success.” – Pablo Picasso
Taking the right action at the right time is all the difference there is between those who succeed and those who wonder how they did?. As we move ahead the difference shrinks further as we get closer to the day when GST is implemented. A timely preparation can help you in a smooth transition without much hassle.
Using S.I.M.P.L.E you can easily translate the transition into success. It is GST compliant and has all the features mentioned above. Along with great accounting and taxation, it also has other modules (about 1500+) that can help you successfully complete other transactions of your business. To learn more about S.I.M.P.L.E you can click here.
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Source: Taxguru, Cleartax