SWITCH OVER Businesses make changes in existing systems; analysts say technical glitches cannot be ruled out
though the GST is finally a reality, the litmus test for the government and the GST Network begins now. Analysts and businesses said barring a few discrepancies especially related to billing, day one was “more or less” seamless and saw no panic.
At the time of billing, a restaurant in Pune included both integrated GST (IGST) and state GST in one. IGST is a mechanism to monitor the inter-state transfer of goods and services.
While the customer did not have to pay more, but instead of IGST the restaurant should have included central GST. “This is a procedural lapse and there is no revenue loss to the government and the customer also has not been overcharged… this is because of lack of awareness and we have sought time until March 31 to exclude any penal action on such lapses,” said Praveen Khandelwal, secretary general, Confederation of All India Traders.
While businesses have made changes in their existing Enterprise Resource Planning (ERP) systems, technical problems cannot be ruled out, analysts said. ERP players such as SAP and Oracle have incorporated the GST compliance requirements within the internal systems of businesses, making updating of records necessary to avoid the procedural problems.
“The industry would expect the government to make announcements on procedural relaxations in terms of the initial teething problems,” said Suresh Nandlal Rohira, partner, Grant Thornton India .
Pressure on logistics will increase as the demand for fresh stocks is likely to surge in a few days. Many companies slowed down their procurements in a bid to clear their existing inventories.
Consulting firm KPMG, in its report, said as “distributors have slowed down procurements in the run-up to GST, some sectors are expecting massive surge in demand in the first week of July.”
“Procurement of goods had slowed down in the last two weeks but demand will increase once the new tax structure is in place, arranging for transportation will top the agenda of many companies,” Waman Parkhi, partner, indirect tax, KPMG, told Hindustan Times.
“Many have decided to buy time before going in for fresh inventories,”said former ICAI President K Raghu.
Former ICAI President K Raghu said that several retailers including chemists have decided to adopt a wait and watch policy before procuring new stocks.
“Many have decided to buy time before going in for fresh inventories,” Raghu said.
However, GST Network chief Navin Kumar assured a smooth switch to the new system.