MUMBAI: At a time when the government is pushing hard for GST, companies and their technology vendors are working hard to make their IT systems meet the requirements under the new indirect tax regime.
The enterprise resource planning (ERP) -a category of business-management
software -systems of companies will have to be changed with the introduction of GST and for many, say industry trackers, this is the biggest challenge to tackle before its launch. In fact, the delay in the roll-out of the new tax system with it being caught in a Parliament logjam, is benefiting many comp anies as they get more time to meet the requirements.
SAP and Oracle dominate the market for ERP systems. Many companies will have to move from their current system where every transaction is recorded separately, to an upgraded system where there is a correlation of every entry.
Most companies will have to give a lot of time and attention towards ERP version changes, like upgrading tax modules, for the new GST patches to work and comply with the new regime, said Harishanker Subramaniam, indirect tax leader at consultancy firm EY.
“This transition for the companies wo uld take anywhere from six to eight months, amid the evolving GST framework, law and business process making it a challenging task.” Many companies are in utter chaos, say industry trackers, as ERP is a complex system that records every transaction, from purchase of raw material to sales.
Companies would also need a fair degree of customisation of their IT processes for ensuring compliance in GST, they said.Companies in the same sector would have to customise their ERP systemsBSE 0.00 % as per their needs.
For this, companies are already working with vendors such as SAP and Oracle, as well as tax ex perts at the big four consultancies -EY, KPMG, PwC and Deloitte. Both SAP and Oracle individually, too, have started working with tax experts so that they can launch newer versions of their software.
“We are engaged with a tax consulting firm who we seek consulting support from for all tax-related matters across both direct and indirect tax legislations,” said Arun Subramanian, vice-president, globalisation services, at SAP Labs India.
“We are engaged with all the four leading tax consultancy firms who we work closely with regard to GST. Their insights on interpreting the rules are invaluable.” Industry trackers point out that in other countries where GST was fairly simple, the implementation of ERP turned out to the toughest of the problems.