MUMBAI: Many Indian companies including some of the largest ones are struggling to update their tech infrastructure to implement the GST (goods and services tax), say industry experts.
The biggest hurdle is the co-ordination between tax experts and the technology teams in introducing and tweaking the IT systems. In many cases some of the ERP software that were provided by the IT majors has to be redesigned as the GST rules keep updating.
Companies are mainly upgrading their enterprise resource planning (ERP) — a category of business-management software — so as to accommodate the complexities of calculating GST. ERP helps companies manage and monitor everything in the organisation, including supply chain, finance and even human resource functions. SAP and Oracle are the big players in the Indian ERP space. 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 between every entry, according to industry executives.
Many companies are also setting up teams that would include a tech expert from their vendors, an indirect tax expert and a finance department executive.
Several Indian companies have again begun discussions with their IT vendors and tax advisors to upgrade their systems to enable tracking of goods and analysis of tax and other cost implications once the GST regime comes into force.
ERP systems are extensively used by goods manufacturers, especially for supply-chain management. For instance, many retailers use the ERP systems to check movement of goods from the warehouse to the retailer. So if a soap manufactured in Himachal Pradesh reaches a mall in New Delhi, the ERP records every stage of the movement, including the goods carrier’s passage through check points.