For the past two months TV Narendran, Managing Director of Tata Steel, has been gently coercing his suppliers and vendors to become GST-compliant.

The line taken was rather simple — become compliant or lose out on orders.

“We have about 10,000 suppliers and, on May 1, we told them either get GST-compliant or we can’t buy from you. Back then only about 30 per cent were compliant. Now nearly 70-80 per cent are ready for GST,” Narendran told BusinessLine .

Like Tata Steel, key industry players have been working for the past 12-15 months towards a successful GST implementation and are at a reasonable stage of readiness. However, they are also bracing for disruptions in the initial three-four months because not everyone in the ecosystem, especially small and medium enterprises, has sufficient resources to expend for the new regime.

Continuous changes

According to industry experts, in the initial few months of GST implementation, companies do expect significant challenges with respect to effective delivery by various realigned IT systems and continuous changes required in processes and systems on account of the law evolving each day.

“It is also highly expected that many sections of the industry may not be fully compliant with various requirements of GST law from Day 1 itself and would require a transitioning period of a few months post go-live date.

“This struggle is aggravated by the fact that for a certain period of time, the companies will have to run parallel systems to account for existing tax transactions as well to meet the requirements of the GST regime,” said Rajeev Dimri, Leader, Indirect Tax, BMR & Associates.

Lack of clarity with respect to taxability of transactions with Jammu and Kashmir is also leaving many companies unnerved.

“It may take four months to settle down. That is bound to happen for a change so large. But I also think the Indian economy is very resilient, so it is not going to cause a major disruption,” said Kumar Mangalam Birla, Chairman, Aditya Birla Group.

But despite the short-term pain, many corporates are hoping to benefit from the reduced paperwork and eased procedures. As per our initial assessment, we expect a transactional benefit of at least a couple of crore (rupees) with GST and there will be, of course, other benefits in terms of improvement in system efficiency but it is early days to quantify them,” said Narendran.

“We have set up a special task force within the company. We are ensuring that we are in close touch not only with our suppliers, dealers and retailers but also with the government to make sure we land in the best possible place. In the long run it is a win-win for everyone.

“We are committed to passing on the net benefits of GST,” said HUL Chairman Harish Manwani during the company’s 84th AGM.

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