India Inc at full throttle to get GST ready by July 1

Companies are working in mission mode to deal with the new tax regime

As the wait for the much-delayed goods and services tax (GST) nears its end, companies are working in mission mode to align their operations and are putting in place structures to deal with the new tax regime.
 
While larger corporate entities are better placed in terms of the backend information technology infrastructure, streamlining operations by bringing all stakeholders on board remains their biggest challenge. Medium and small enterprises may need more time and the help of larger partners to meet the tentative GST deadline of July 1.
 
Fast-moving consumer goods companies like Nestlé, Coca-Cola, Dabur and ITC have already conducted impact assessments for the GST and are working on overhauling their systems. Most of the firms in the consumer goods sector are focused on putting in place the IT infrastructure or a new enterprise resource planning (ERP) system to comply with the filing requirements under the GST. To streamline the process, firms are also actively engaging with various stakeholders like trade partners, suppliers and vendors. Any break in the value-added chain will lead to everyone forgoing income tax credits.

 

According to Venkatesh Kini, business unit president, India and South West Asia, Coca-Cola, the firm is getting ready to consolidate operations and communications in the country. After GST, Coca-Cola is planning marketing initiatives for the entire country, instead of specific regions. It recently realigned its team overseeing bottling plants, the work is now taken care of by one senior vice-president instead of two.
 
Firms are also actively promoting digital transactions among stakeholders. Nestlé has tied up with National Payments Corporation of India and HDFC Bank, and Hindustan Coca-Cola has joined hands with State Bank of India to bring retailers and trade partners on board. PepsiCo, too, is tying up with e-wallet firms and some public sector banks.

 
“Digitising transactions will be crucial in the GST regime as it will bring in transparency. We are actively promoting it,” said Suresh Narayan, chairman and managing director, Nestlé India. Both Nestlé and Coca-Cola said the number of their warehouses might come down.
 
E-commerce major Flipkart said it had started making changes to its tech systems, accounting, invoicing and inventory management systems to ensure readiness. It is providing training to its sellers and employees.
 
“We will take around 15 days to switch to the new system. However, complete normalcy will take around three months to reach. We will strive to ensure we adhere to our compliance and service standards,” said Sushobhan Dasgupta, managing director, Johnson & Johnson Medical India.

 
According to R K Baheti, chief financial officer, Alembic Pharmaceuticals, a rationalisation of company warehouses is on cards but its scale will remain low. “While we are fully prepared, switching to the new system will be a problem for our retailers and stockists,” he said.
 
“We are upgrading our ERP system and will be ready for the deadline. We have identified all our business scenarios and are in the process of mapping the GST impact. We have conducted several rounds of GST training for our internal stakeholders and are working on identifying suitable application service providers for the GSTN integration,” said Sundar Ramachandran, group head, IT, Punj Lloyd.

 
Medium and small enterprises might face hurdles due to resource constraints and experts said it was their larger partners whose role would be crucial in walking them through the GST transition. “A large number of MSMEs is yet to gear up with the technology, therefore, they need both support and time to transition to the GST,” said Vikas Vasal, partner and national tax leader, Grant Thornton India.
 
Mercedes-Benz India has roped in an “external partner” to become GST-ready and the country’s largest car maker Maruti Suzuki has formed an internal cross-functional team that is working on various aspects of GST compliance. Both firms are organising training sessions for their suppliers and dealers. G N Gauba, chief financial officer, Motherson Sumi, says their group-owned IT firm is helping with the process.

  (With inputs from Alnoor Peermohamed)