Over the past few months, GST has been the talk of the town. Hailed as the most revolutionary tax amendment of the Independent India, GST is set to streamline a wide array of indirect taxes levied during different stages of manufacturing, selling and consuming goods and services across the nation.
However, to bring about a change in the existing systems is often fraught with apprehensions and rebuke. Those in the favor of the tax amendment believe that GST is going to set India free from the shackles of red-tapism and simplify doing business in India.
In lieu of the taxes currently levied by the Central and State governments, GST proposes radical changes in the ecosystem, via the input tax method. Once the GST bill is implemented, businesses will be able to claim credit on taxes, based on the value they have already paid for GST at the stage of procurement.
Hence, GST renders other taxes administered by the State, such as VAT, Octroi and Excise etc obsolete and instead, introduces a nationwide singular and consolidated tax.
In the Favor of the Logistics Sector
Consolidating indirect taxes in the entire supply chain mix, GST is further expected to reduce optimize decision making, reduce the duration of transportation cycles and eventually make room for consolidation in the warehouse sector. However, while the logistics sector sets its eyes on reaching the zenith of growth and expansion following the implementation of GST, the enterprises in the domain still need to initiate process-level overhauls in order to adopt GST.
Currently, enterprises have deployed ERP (enterprise resource planning) software, automating the accounting functions. In fact, since the 90s, taxation departments have been using technology for tax administration. However, with the change in the regulations, companies would have to revamp the invoices and procedures and upgrade the software system to comply with the reformed rules.
The logistics sector further needs to explore hidden vistas, perhaps adopt a variant of a supply chain models currently in practice. The reformed ERPs are required to not only adhere to the GST bill, but also support the cumbersome inventory supply management.
Opportunities for the Tech Startups
Technology would play a vital role in setting-up the required systems necessary for the smoother roll-out of GST enabled infrastructure. Technology enabled compliance will assist taxpayers in automate invoices matching from within their software rather than by logging onto the portal. Use of technology will also enable efficient tax administration for registration, returns filing, data exchange, and effective investigation, monitoring, auditing and performance analysis with little or no human intervention.
Since GST warrants a complete overhaul of the existing processes, the transition might prove out to be rather difficult for enterprises still using redundant systems. Getting the current system to not compute VAT, Excise and instead factor in GST is going to be a challenge, if the software companies have gone under the radar. Inevitably, these companies would be on the lookout of new tech-providers, startups or vendors offering a GST-enable ERP solution.
Taking the tech innovation further, software systems of today may further offer several user-friendly features, such as offline capabilities, alerts, mobile or tablet optimized interface, and additional mechanisms to avoid duplicity of data. The companies may further expand across multi-disciplinary industry verticals of hyper-local logistics in B2B and B2C domains. Several recently launched services like Fresh, Meals, Grocery, Menus and Jugnoo Delivery are taking charge of the same.
Hence, while it is a natural human instinct to resist change, the nation-wide implementation of GST is going to affect each and every stakeholder in the ecosystem. However, keeping the growing pains aside, the implementation of GST is only going to make Indian economy, especially the logistics sector, more efficient and prosperous. Hence, empowered with tech-enabled solutions, ambitious enterprises of today must act swiftly and adapt to the change.
- Saahil Goel, CEO & Co- Founder BigFoot Retail Solutions
