The dawn of a new indirect taxation era in India is nothing less than a point of concern for all the taxable entities in the country. Although seasoned economists and experts have asserted that Goods and Services Tax (GST) framework in India would be a force to reckon with, nevertheless one has to acknowledge the fact that GST regime would call for radical shift in the overall compliance strategies. As all the functions associated with accounting, return filing, payment, reporting, and tax credit claim would be wholeheartedly automated with the implementation of GST, businesses would be in consequential need of a robust GST compliance software.
The point that must not be overlooked herein is that GST is a novel law, and in all probability, it might attract several legislative amendments with the passage of time. In this circumstance, ensuring meticulous adherence to a myriad of jurisdictional guidelines, regulatory rules, and obligatory compliance requirements might become a distant task if businesses would not be offered futuristic GST software.
Let’s glean through the crucial aspects of a futuristic GST compliance software:
Seamless integration with your ERP: Once the GST system takes over, it would compel every firm to embrace all the changes required for robust compliance. Herein, the roles played by any compliance software would become quite crucial. First and foremost, all the software and tools shall have to ensure that businesses can easily integrate their existing accounting systems or Enterprise Resource Planning (ERP) software with the GST compliance tool they are planning to invest in. If a tool fails to ensure seamless integration with existing ERPs or accounting system that a firm uses, then it might lead to a plethora of unanticipated complications.
Data integration from multiple sources: Owing to sensitive nature of data, most of the accounting software do not facilitate integration of data from multiple resources. The unfortunate occurrence of several data theft instances recently has indeed discouraged software companies to induce the feature of data integration from multiple resources in their products. However, taxable entities must know that the data in financial records cannot be configured for spick-and-span computation and reporting. Therefore, a robust GST software must ensure immaculate framework for data integration from multiple resources. Additionally, it has to be assured that the security architecture of such a tool is not compromised.
Immaculate reconciliation of all accounts: In the current era of taxation, businesses are allowed to file revised tax returns; however, things would be unreservedly changed with the dawn of GST regime. All the functions associated with reconciliation of invoices would be performed, handled, and managed through compliance tools. Additionally, it must be ensured that various sets of data in purchase registers, sales registers, cost accounts, and financial accounts are in absolute agreements. Therefore, businesses need to be reasonably cautious about this feature of the GST tool as the absence of integrative reconciliation can effect business firms’ eligibility to claim Input Tax Credit.
Methodical mechanism for tax validation: Erroneous computation of tax can have drastic impact on any business firm’s compliance rating. What is even more frightening aspect for any taxable entities is that it can expose them to a plethora of legal complications during the GST era. In terms of financial damages, flawed computation of tax can lead to loss of Input Tax Credit. Considering these aspects, it becomes vital to choose a competent GST software that can ensure methodical mechanism for tax validation on all the invoices that are processed under GST era.
Flexibility for future changes: Being a novice law, GST framework might undergo a radical overhaul, that too within the initial few days. Although all the changes would be induced through appropriate legislative processes, nonetheless these businesses have to respond to these changes as and when those come into effect. In such a circumstance, if a GST accounting and reporting tool does not have flexibility for future changes, then it will unquestionably make it difficult for businesses to ensure strict adherence to modified jurisdictional requirements. Therefore, businesses need to select a compliance tool that has cognitive flexibility for future changes. This would facilitate enhanced business agility as well.
In short, these are the five crucial aspects of a future-ready GST software that taxable entities in India need to be watchful about.