With less than a fortnight to go for the Goods and Services Tax (GST) roll-out, many companies are yet to fully gear up for the switch and adapt their systems and processes, said accounting software maker Tally Solutions’ Managing Director Bharat Goenka. In an interview to BusinessLine, he said he expects the system to stabilise over two-three months by when companies will also work out their prices based on the new tax rates. Excerpts:
Are companies prepared for the roll out of GST from July 1?
There has not been enough time. People are ready for the concept of GST, but that is different from getting ready with a change in systems and processes. Even today, companies don’t have full clarity on GST due to changes in the law and rules.
The extent of clarity has increased over the last two-three weeks. But, getting ready for GST in four-five weeks is difficult as it is a complete change in the tax system.
To what extent will the relaxation in return filing in the first two months help companies?
It will be a significant relief from the procedural aspect but it will also add to the uncertainty of business outcome.
Almost 20 per cent of the gross profit on average depends on the input tax credit. The certainty of input tax credit has been delayed by almost 90 days. So a business may not know the input tax credit available for July until the time it files its returns in August.
How far are the IT solutions ready for GST?
The rules for creating invoices are out. The GST Network has committed that it will soon launch its returns filing software that businesses can use.
But for ERPs to become available and stable, the APIs have to be issued by the GSTN. The testing will take time. We, at Tally, have also told our customers that on Day 1 of GST, we are concerned with their ability to make and file invoices using the portal. Don’t expect to file it from within Tally. When we give it from Tally, it is tested and stable.
Have companies finalised their pricing policies based on the new GST rates?
There may be some confusion for two-three months before prices stabilise.
Companies have to understand the beneficial nature of GST that increased ITC would result in lower tax incidence. Many companies think that since the rate is higher they have to pass it on to the customer. It is possible that after two to three months they will realise that they are making higher profits than before and change their pricing. If they don’t, they have to face the Anti-Profiteering Authority.