Getting businesses in India GST ready

Getting businesses in India GST ready
Getting businesses in India GST ready

The Goods & Services Tax (GST) is one of the most significant reforms in post-independence India which has rightly garnered interest of businesses across the nation. Here a tech enthusiast highlights why digitisation is the key. For decades, India has been thriving on a 'red tape' culture. India as a trade economy has been functioning on high import tariffs, excises and turnover tax on goods and services having enormous cascading effects, leading to a distorted structure of production, consumption and exports. Currently, India ranks 130 among 189 countries in the ease-of-doing-business. One cannot help but admire the ease with which business is done in countries like New Zealand, Singapore and a handful of European nations that top the list owing to factors like strength in procurement through online processes, and easier and cheaper tax services. These nations, way smaller than India have been practicing the system of unified taxation for over 20 years and with success. Thus, lessening the travails of small and medium sized enterprises to make business easy is of high priority for the government and GST is an affirmative step towards that. The attempt is to bring together the fragmented indirect tax structure under one unified reform without jeopardising the business environment. The cornerstone of GST's success is digitisation of businesses. The reform of 'Digital India' that goes hand in hand with GST has been a step to bring small and medium sized enterprises to the ambit of digital ways of business. Currently, the logistics and manufacturing sector of India is fragmented with many unorganized players. Organisations tend to have a supply chain structure that is disintegrated - a warehouse in each state, suppliers in same state as the manufacturing plant, multiple but smaller manufacturing facilities. This results into multiple loops of procurement, vendor payments, indirect tax filing, distribution, etc. However, with the use of digital technology and implementation of GST, all the stages of supply chain can be linearised by a business and made easy at the click of a button. For this, organisations will need assistance in unifying their operations - be it procurement, sourcing, product discovery and more across its facilities - embed digital technology in their supply chain and migrate their systems to the GST Network (GSTN). A manufacturing business that deals with procurement and demand on daily basis and is not used to complex paper work and laws should avail all the help it can get to understand the enormity of GST and adapt to the change. It would not be a wrong thing to say that the unified tax reform has undertones of the cleanliness drive of Prime Minister Narendra Modi. Further to strengthening the economy by sweeping away the unorganised players across industries, GST will also put a check on malpractices of tax evasion and bribery. As a result, businesses in manufacturing will re-evaluate their facilities, re-allocate products to plants, and consolidate supplies to drive operational efficiency. On implementation of GST, tax implications for firms would range from 18-25 per cent, and if records are not properly reconciled, companies would lose out claiming it back. Thus, only those players who are willing to adapt to the change and give-away the traditional 'red-tape' ways of administration are the ones who will be able to sustain themselves in the long run. The shape the nation will take post GST roll-out is something to look forward to. Weaving the entire country into a one-taxation reform is a humungous task and hence the fear of the unknown is certain among businesses. A 2-trillion-dollar economy with myriads of business complexities as well as federal nuances, adopting a uniform tax net is going to be a reference for many other countries. The immediate effects may go unnoticed but the reform should transform businesses in the long run. If implemented successfully, developing nations will look up to India on how its commitment towards adoption of technology has helped its economy move away from traditional way of administration, compliance etc. and to a better investment destination. Rahul Garg, a tech enthusiast with extensive experience of Strategy, Product Management and Operations in the industry, is the founder of Moglix - a B2B e-commerce marketplace.

Related Stories

No stories found.

Podcast

No stories found.

Defence bulletin

No stories found.

The power of the quad

No stories found.

Videos

No stories found.

Women Leaders

No stories found.
India Global Business
www.indiaglobalbusiness.com