Finance and Administration
Impact on working capital may be significant for the manufacturing sector. business organisations which maintain high inventory of goods in different states will be adversely affected as they will have to pay GST at full rate on stock transfer from one state to another.
Product Pricing & Profit
With Changes in Indirect taxes product and services pricing policies will have to revised. GST will eliminate the scope of double taxation in certain sectors which enables more tax credit to offset tax liability
Supply Chain Procurements
With one county one tax GST removes the barriers of credit eligibility and less paper work when purchase from Inter State. Revising supply chain to get more tax benefit. India a common market leading to economy of scale in production and efficiency in supply chain
GST will have impact on routine procedures , record maintenance , credit matching mechanism , and compliance of return filing , payments etc.
Existing Contact / Agreement
GST will impact contract of Organisations enter into long-term contracts for sales, procurement and service. Organisation will have to understand impact of certain clauses specifically in relation to rate , period , escalation clauses.
Success of GST will be highly dependent on the use of information technology. In GST responsible person will have to maintain date of credit availed, mismatch etc. Also some of accounting entries will have to be change during and after transition period.
Under GST regime, stock transfers are deemed to be supplies and are subject to GST. Though GST paid at this stage would be available as credit. These key changes will impact on the working capital. Business need to rethink for maintaining healthy working capital.
As GST Regime will be having all changed provisions, return filing, compliance part accounting and management personal will have to be trained to adopt and implement changes timely. Organisation need to develop SOP for smooth process of work and taskes.