With GST, in place , there would be uniformity in imposed taxes

With the central and state governments laying down the groundwork for the roll-out of the goods and services tax (GST), Karan Choudhury spoke to Krishan Arora,  partner, Grant Thornton India LLP, on how the new indirect tax regime would impact the e-commerce sector.

How is the e-commerce industry preparing for the GST roll-out?

E-commerce players are getting detailed GST analysis undertaken to assess impacts and changes on various facets including financials, cash flows, working capital, IT  changes, and compliances.

Do you think the industry would be looking at restructuring warehouse as there would be no area- specific advantage left ?

Currently, warehousing strategies are tax- oriented, which restricts effective utilization of available resources and leads to logistics effeciency. With the GST in  place, there wouldbe uniformity in imposed taxes.

Companies may consider restructuring warehouse strategy , keeping in mind business imperatives and not tax. For Example, a company might have one big warehouse at a  central location, which might serve multiple states, leading to a decrease in the number of warehouses. Alternatively, companies might opt for warehouses at specific  locations on the basic of a hub and spoke model.

Are companies aligning its systems with input tax credit? How are they re-structuring your IT preparedness?

There are various changes an e-commerce player would be required to make in its enterprise resource-planning platform.To illustrate, a few key changes made in IT systems/formats are the following: Each invoice will need to include a Harmonised System of Nomenclature (HSN) or service Accounting Code(SAC) code,  the Place of Supply should be determined based on GSTIN for B2B transactions and delivery address for B2C sales, tweaking to be done to deduct and account for TCS,tracking mismatches for input credit, return filing etc.

Will they need to hire more people to handle the paperwork,which might increase due to GST implementation? By how much would the overall costst increase?

While compliances may slightly increase, the same would be simplified since evry state would have similar compliance requirements/formats, which can be done online, sitting at one place. Therefore, depending upon the volume of business transactions, the companies would need to assess their additional manpower requirements and corresponding costs. 

The Business Standard New Delhi, 26th April 2017