The industry is worried about getting its back-end infrastructure in place as the July 1 deadline for the rollout of GST nears.
Businesses are concerned whether they would have sufficient time to test the infrastructure once the rules and rates are finalised.
Industry experts said the issues at the forefront that companies would like to have greater clarity on including the place of supply norms for service companies, how to deal with situations when the bill and shipping locations are different, the norms for the valuation of goods in order to transport them, and the reconciliation of e-way bills.
“From the system perspective, we should not worry on the tax rates as those can get entered in the master data in a days’ time,” Rituparno Mukhopadhyay, Executive Director, PwC Consulting. “However, the bigger issue is how to configure the systems. The final release of the GST patches from the ERP providers is getting delayed due to the rules which are yet to be finalised and with a new requirement like e-waybill having come up lately.”
“There are concerns about pricing because the rates still have to come out,” Archit Gupta, Founder & CEO ClearTax.com. “Rules are being clarified every day. Industry strongly feels it is not ready. The ERP systems have not come out with GST packages so that causes the industry a lot of grief because it is looking to comply, but it needs more time and clarification to be ready.”
The GST Council will be meeting in Srinagar on May 18-19, and the expectation is that it will issue wide-ranging clarifications regarding the rules applying to various aspects of the new tax regime.
“A fair share of large industry players are close to being ready as key rules are still in draft stage and is expected to be finalised at the May 18-19 GST Council meeting,” Hari Shankar, chairman of CII’s GST committee said. “The concern is more for smaller players in the ecosystem the vendors, distributors, retailers etc, and how well they are prepared as GST readiness is required across the value chain.”
The place of supply rules for service companies and how to treat transactions where the billing address is in a different state from the shipping address were the main issues of concern for the industry, according to experts and industry players. At the moment, the ERPs have configured the system to calculate a destination-based tax.
The reconciliation of e-waybills is also a big problem since they require the recipient to accept the e-waybill to close the transaction. This will involve a major behavioural change in India, according to industry experts.
“Also, final ERP upgrades are expected to happen only around June first week after rules are finalised which leaves very little time for testing from an industry perspective if July 1 is the appointed date,” Mr. Shankar said.
“Whenever GST comes, whether July 1 or in September, we would have to brace ourselves for some chaos,” Mr. Mukhopadhyay added. “However in case it gets delayed until September 1, we will have some time to configure, test the systems and get the vendors trained as there are many process changes which will impact them post GST setting in.”