Looking for a big change in India! Introduction of GST will change a lot in the business landscape but a major impact will be felt by SMEs who may not be prepared for the change.
Come July, 2017 and GST will be rolled out. The Bill will be cleared by the GST Council in its next meeting on Feb 18 after which it will be presented in the Parliament in the second half of the budget session starting March 9. All rules are likely to be framed and announced latest by March 31. The question is being the SMEs prepared for this change?
The SMEs actually have three months to prepare and be ready to go live by July 2017.
A major implication from SMEs standpoint would be, creation of a level-playing field by having low threshold. This could put pressure on the SMEs who would no longer be able to avail excise duty exemptions but will have full GST impact., thereby increasing competition from larger organisations.
According to Chartered Accountants, there are three areas that SMEs need to be aware of while moving into GST.
First stock status as on the last day that will determine the credit of VAT and Excise which can be claimed for discharge of GST liability. Challenge here is that many of the SMEs may not be maintaining stock registers. They need to do so now.
Migration to GST that will necessitate changes in business processes.
Necessary changes in the accounting systems and ERP to reflect requirements of the GST regime.
SMEs have limited knowledge of the law regarding the GST.
GST to be tech-driven given to digital invoicing etc. post GST which is still very unchartered for small businesses.
SMEs need to take the following steps:
· Understand the GST model law and track changes in the BILL.
· Hire a good tax consultant to advise around the current implications.
So let’s be prepared!