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GST pushes startups and SMEs towards automation and enterprise technology

Muqbil Ahmar 6 Stories

Thursday July 13, 2017 , 2 min Read

The Goods and Services Tax (GST) has been implemented. One of its ramifications is that it pushes Indian enterprises, including startups and SMEs, towards automation and technology, particularly enterprise technology such as enterprise resource planning (ERP) software.

This is a massive push. There are 3,100 startups in India, which is the fourth highest number, globally. This is according to a Nasscom report, which also predicts the number to rise to 11,500 by 2020. Moreover, India’s economy has 50 million micro, small, and medium enterprises (MSMEs), according to the Ministry of Micro, Small and Medium Enterprises. Plus, 15 million retailers which have to carry out digitization of sales. The GST Network (GSTN) is expected to result in 5 billion invoices per month.

Why will GST push enterprises towards technology and automation?

Businesses must know quantum of taxes, application of rate slabs and tariffs, and procedures and compliance rules. Moreover, there are factors unique to the GST which make manual computation complex. Factors such as input tax credit, exclusion, destination system, twin rates are better left to technology.

Moreover, automation could help businesses save money and avoid non-compliance costs. Automation will help businesses navigate the GST faster and efficiently as it will be humanly impossible to manage the extremely high volume of reporting and GST transactions as information will cross a number of check points. Non-compliance may lead to consequences.

Indian businesses shy of adopting modern enterprise technology

Compared to global standards, adoption of technology like enterprise resource planning (ERP), customer relationship management (CRM), human resource management system (HRMS) by industry is pretty low in India.

According to a recent survey, percentage of MSMEs using modern tools like ERP is around 42%. The report says that there is still little awareness among the SMEs of benefits that an ERP solution may confer despite the fact that businesses can be made simpler, more user-friendly and automated, resulting in increased operational efficiency and streamlining of business processes.

GST propels Indian enterprises towards automation

A transition is inevitable due to the factors enumerated above, which need automation for full functionality. Factoring them manually will be difficult, if not altogether impossible. On the positive side, this is an opportunity for businesses to upgrade.