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If there is one memory that Sudhir Desai readily wants to forget, it is about the arduous days in 2005 when Value Added Tax (VAT) was introduced in India. As an IT manager with a large white goods company Desai was caught completely unaware because the IT infrastructure was not ready for the changes proposed by the government. Complicating the problem was the fact that different state governments were implementing the same scheme in different time frames and prescribing different rates. Almost overnight, the entire system at Desais firm came close to a standstill.
There was little option for Desai and his team but to manually realign all the systems right from ERP to HR management. Over a period of two months, they worked day in and day out to get the system up and running. Since the operations of the company were spread over a large geography, the challenge and the subsequent work was far more daunting. For these two months, Desai barely slept, ate or even went home. Those are the days he wishes he could forget.
Today, he has a new worryGoods and Service Tax (GST), which is all set to replace multiple state and central levies and consolidate them into a single central and state GST levy from April 2010. No wonder then, Desai and IT managers like him have already started to lay the preliminary ground work for the transition. Being an all pervasive tax, GST will substantially impact all stakeholders including the staff engaged in marketing, finance, sales, tax and IT.
Being at the helm of managing the infrastructure required for GST roll out, IT managers also need to understand every possible effect of past tax structure and retain the accuracy of post-GST implementation.
It is important for companies to start at a broader level and conduct an impact analysis of how introduction of GST will impact the business, suggests Nimish Goel, Manager-tax and regulatory services, PwC.
He further adds that an organisation needs to ascertain the vendors capability of making changes in the ERP systems as it gets ready to migrate to the GST regime.
Readiness quotient
It is necessary for an IT head to analyse if the existing ERP accounting system is ready to deal with the forthcoming change. Also, some of the key strategic areas, including system of invoicing, managing supply chain, input credits, maintaining records, and providing sufficient and accurate information for filing GST returns should be planned in advance.
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