E-invoicing system for e-Commerce Operators

The e-invoicing system is also available for the E-Commerce Operators (ECO) to
report the invoices to the Invoice Registration portal, generated by them on behalf
of the suppliers. The e-invoicing system identifies the e-Commerce operators based
on the taxpayer type in the GST registration details. The taxpayer having the type
as ‘TCS’ will be enabled for reporting invoices on the e-invoicing system as eCommerce Operator.
However, it is important to note that E-commerce transactions can be reported by
the E-commerce operators with “EcmGstin” attribute as their GSTINs. This means
to say, that apart from specifying the Seller GSTIN in the payload, it is mandatory
to specify the e-Commerce operator GSTIN in the “EcmGstin” attribute of the
schema by e-Commerce Operator when he logs in using his user credentials.

  1. e-Invoice APIs available for e-Commerce Operators
    • Generate IRN (for self or on behalf of suppliers)
    • Cancel IRN (applicable to only for those IRNs, generated by e-Commerce
    • Generate E-Waybill
    • Cancel E-waybill (applicable to only for those IRNs generated by e-Commerce
    • Get IRN (applicable to only for those IRNs, generated by e-Commerce operator)

  1. Scope of Access to IRNs generated by e-Commerce operator and Supplier
  1. Process for integrating on the Sandbox system
    The following procedure has to be followed by the e-Commerce operators to
    integrate their ERP systems to the sandbox system of IRP.
    • The Registration module in the sandbox system has an option ‘E-Commerce
    • The e-Commerce Operator may select this option and enter the GSTIN of type ‘TCS’
    and get registered in the sandbox portal, by authenticating with OTP sent to the
    GSTIN registered mobile.
    • API credentials such as Client-Id, Client-Secret, User-name and Password may be
    • On logging into the sandbox tool, there is no need to add the GSTINs.
    • The payload to generate the IRN may be prepared and tested in the sandbox tool.
    • As already mentioned, the payload shall contain the Seller GSTIN, Buyer GSTIN and
    also the e-Commerce GSTIN along-with other details.
    • All other validations and schema and procedure mentioned in the sandbox portal
    may be followed.
    • While using the ‘Cancel IRN’,’ Generate EWB by IRN’, Cancel EWB’, ‘Get IRN’, send
    the ‘Supplier GSTIN’ in addition to other parameters
  1. Process for integrating on the Production system
    The following procedure may be followed by the e-Commerce operators to
    integrate their ERP systems to the production system of IRP.
    • The TCS registered taxpayer will need to do login registration in the Invoice
    registration portal (https://einvoice1.gst.gov.in). If already registered, the
    taxpayer can login to the Invoice registration portal.
    • Select the API registration.
    • Submit the application for whitelisting the IPs along with summary test report. Up
    to 4 Indian Static IPs are allowed.
    • On submission of the application, the network team will scrutinize and whitelist
    the IPs.
    • API credentials such as Client-Id, Client-Secret, User-name and Password may be
    • Create the username and password for the other PAN related GSTINs by selecting
    the above GSTIN.
    • Use above credentials, the payload to generate the IRN, may be prepared and IRN
    may be generated.
    • As already mentioned, the payload will contain the Seller GSTIN, Buyer GSTIN and
    also the e-Commerce GSTIN along with other details

GST Returns 2.0

Returns are required to be filed in tax regime by the taxpayers declaring the details of their income in case of direct taxes and the amount of tax on it. In case of indirect taxes, it is a statement which shows the details of the purchases, the amount of input tax credit claimed on it, the total value of sales and the amount of tax payable on the same. Apart from this, the returns also act as a medium of information flow between the taxpayer and the department, whereby giving full visibility to the Government on the amount of taxes being collected based on items, services, or class of taxpayers or geographic regions. This information helps the Government in the determination of the policymaking on the tax rates and also which areas/goods there is more demand and which industry needs support from the Government.

In India, GST has been rolled out from the 1st of July 2017, and there is 360change in the return filing process. Salient features of existing GST Return filing is

  • Mandatory filing of online returns
  • Same return formats for the State and the Central Taxes
  • Filing of transaction-level data
  • Same return formats across India
  • Different return formats based on the nature of registration like Regular, Composition, Input Service Distributor, e-commerce Operator, etc.,

Though transactional data filing is mandatory in GST, the same is not effective in minimizing the revenue leakages as Matching of buyer’s data with the seller’s data is not implemented. It has resulted in the reduction of tax collections as a section of taxpayers is misusing it. To curtail this tax evasion, the Government is introducing the New Returns formats along with matching and e-invoicing.  In the new returns, the number of returns to be filed by the taxpayer has been reduced, but at the same time, the need to have additional data to be uploaded. To implement the same in organizations, the taxpayers and professionals have to understand the requirements clearly and the basis that they have to revisit their business process.

Salient features of new return formats

  • A single return to be filed for the inward and outward supplies
  • Transaction data to be reported at HSN Level
  • Each return is supported with two Annexures, Anx – 1 for the outward supplies and Anx -2 for the Inward Supplies
  • Suppliers can upload the sales invoices on a real-time basis continuously
  • The information flow between the supplier and the recipient is on near real-time basis
  • For ease of taxpayers there returns formats have been introduced
  • Quarterly filing of returns is available for the taxpayers having a turnover up to Rs 5 crores
  • Debit / Credit Notes need not be tagged with a tax invoice
  • Payment of taxes is to be discharged through PMT-08
  • Different due dates for return filing for the monthly and quarterly taxpayers to reduce the load on the GSTN Servers to provide better user experience to the taxpayers.
  • Matching tool for reconciling the Purchase Register with Anx – 2

New Returns 1

Compared to the existing GSTR -1, which has lots of tables for classifying and reporting the various transaction, debit notes/credit notes, and amendments to the invoices. All these different tables make complex and confusing to the taxpayers and basis on the inputs received from the industry, trade bodies, professionals and department personnel the returns have the revised and made simple. The new returns will improve the user experience and also reduce the load on the GSTN portal as they are simpler, and the due dates for the regular and quarterly taxpayers are different.

New Returns 2

Differences between the three returns data for Outward Supplies

New Returns 3

Differences between the three returns for the Inward Supplies

New Returns 4

Basis on the nature of transactions the taxpayers have, they have to select appropriate returns in GST. Newly registered taxpayers have the option of selecting any of the three return categories.

Data flow from Supplier to Recipient in the New Returns

New Returns 5

  • Once the Recipient accepts the invoice, the same gets locked in the Supplier’s return, and he cannot edit or modify the same.
  • If the Recipient does not take any action, at the end of the month, the liability is finalized and updated in the returns accordingly.
  • If the Recipient Accepts the invoice, the same is updated for his input tax credit.
  • If the Supplier uploads the invoices before the cut off period, say 10th of the next month, if the Recipient accepts the same, can avail the input tax credit in the same month.
  • If the Supplier uploads the invoice after the cut off period say 10th of the next month, the Recipient even if he accepts the same, the input tax credit will be reflected in the subsequent month.

Data from Anx – 1 and Anx -2 flows the respective returns, and then the liability is frozen. An option is also provided for the taxpayers to enter the input tax credit on the invoices issued before the rollout of the new returns but claimed after the rollout of the new returns.

With the new returns in place, a lot of changes are required in the business process and accounting. These changes will help to implement the same without any challenges and also ensure that there are no GAPS in the GST Compliance and data is readily available for the Annual Return and GST Audit if applicable.


As there is a requirement of matching of the supplier invoices before availing the input tax credit and payment of taxes, the taxpayer should train all the concerned stakeholders like Purchasing Team, Stores Personnel, Finance Team along with the taxation team. Even training has to be provided to the IT Team will be aware of the requirements and accordingly develop or make changes to the existing ERP’s / Accounting packages.

Business Process

The business process of procuring the goods have to be changed at the earliest as a change in any organization faces resistance. The Purchase Department should have a process to check for the supplier return filing status as one of the conditions before the release of the purchase/service/work orders. This condition should be added along with the existing criteria like Quality, Price, Post Service, Warranty & Delivery period. As per the new provisions, even if the data is auto-populated in Anx – 2, if the Supplier does not file returns for two months, the input tax credit cannot be availed. Any deviations in the above process will strain the cash outflows as the taxpayer is deprived of the input tax credit and has to discharge the liability through cash.

Follow up with Vendors

The purchase department team’s  KRA should be enhanced now to follow up with the suppliers for filing of returns and payment of taxes. Access should be provided for them for Anx – 2 so that they will have updated information and have regular follow-ups. This will help the organizations to avoid the last-minute rush at the time of filing of the returns. As the data is being updated on a near real-time basis, the purchasing department will have a complete picture of the upload of invoices by the suppliers from time to time.


Reconciliation is a tedious activity, and it requires a lot of patience and concentration. To steam line this activity, the large taxpayers should think of automating this whole process by making necessary changes to their ERP / Accounting software wherever possible or go for third party solutions with proper integrations. Alternatively, they can also outsource this activity and concentre on their business only. This will be a win-win situation as it creates more employment and at the same time, improve productivity.


As per the latest changes in the existing input tax credit mechanism and with the New Returns, the input tax credit is available only after matching. To keep track of the invoices which are matched and which are not matched, the accounting policies also have to be changed accordingly. The accounting entry at the time of receipt of goods or invoice entry should be debiting the interim / suspense account for respective taxes. At the time of matching the actual credit, the entry should be updated. This process will ensure you have to checks and balances in the system and also minimize the outflow of cash. Here also automation can help a lot; check if your accounting / ERP has this feature and if not explore for the option of customization and implement the same.

Additional Fund Requirements

As input tax credit is available only matching, this means there will be a requirement of funds in the short run. The additional requirement of funds should be projected accordingly and also make necessary arrangements for the same.  Arrangement of additional funds also takes time and cost; this has to be factored accordingly.

Apart from this, the automation process and training also involve cost; budgets should be allocated for the same accordingly.

Management Blessing

The top management and the key decision-makers should be appraised of the upcoming changes in the return filing system along with the implications. Management approvals are required in every organization and this will also help them in the decision-making process. In any organization, the implementation of the new process or change is possible to be implemented successfully if it is a top-down approach. This will give the finance/tax team to implement the same easily.

On the face of it, New Returns looks to be simple but the undergoing changes are tremendous and it requires proper planning and execution. For the adoption of new returns to be successful, the organizations have to strive hard and at the same time, ensure that there also lapses in compliance. If all the organizations adopt the same with full vigor and efforts, we can envisage the bouncy in the tax collections, which can result in tax rates reduction of goods and services.



Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the author may or may not be associated with in professional or personal capacity unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

This article is published in the Supervisor released during the Third National Seminar on Taxation held on Bhubaneswar in Dec 2019.


Demystifying the reasons for mismatch between Supplier’s GSTR – 1 and Recipients GSTR – 2

It is almost 120 days after the rollout of GST and we are yet to file the first month returns, i.e., for the month of July 2017. Is technology the main culprit for this delay? The answer is “Yes” and “No.” Yes, in case of taxpayers who have a large number of invoices and becomes really tough to match the data entered and filed by the supplier and match it with the inward supplies. This is applicable in cases where the inward supplies are more than 500+ transactions per month. The answer in case of “No” is lack of understanding of the GST Law and implementation of the same. In either case, we do not have a choice but to file a valid return.

Some of the common reasons for the data mismatch are

  1. Invoicing Date – the goods or services might have been billed or shipped at the fag end of the month. This could have resulted in the tax invoices not reaching the finance/accounts department.
  2. Goods not yet received – this also could be one the reasons, the supplier must have shipped the goods, but the same is not yet received by the recipient on account of distance, longer travel time or breakdown of the vehicle or some reasons beyond the control of both the parties.
  3. Wrong GSTIN – there could be cases where the supplier must have entered the GSTIN of the recipient wrongly. In such cases, the data will not be reflected in the actual recipient’s GST return. The date entry issues are caused as there might not be a proper accounting or ERP software with interfaces for the filing of returns, and manually data has to be entered. Manual data entry sometime lead to errors.
  4. Material received but not accounted – This is one of the most common cases, in many manufacturing organizations, there is a time lag between the receipt entry or creation and accounting in finance. Personal experience shows that it will take about 20 – 45 days minimum for the Material Receipt Note (MRN) or Goods Receipt Note (GRN) to reach finance/accounts department. If this time lag is reduced, it will definitely ease the pressure on working capital requirements of the organization. It also helps the recipient to process the payments to suppliers as most of the recipients pay from the date of accounting in the books of accounts for the purchases / inward supplies.
  5. Improper accounting of invoices/debit notes/credit notes – this is another major reason for the mismatch between the supplier’s and recipient’s records. Normally in our country, we account for the net amount payable to the supplier and thereby causing the mismatch. Under GST the provisions are very clear that supplier of goods or services only issues the debit note or credit note. Under GST, the recipient has to account for the full amount of the invoice issued by the supplier and then take it up for the differential amount on account of shortages/breakages / quality issues or price differential.
  6. GSTR – 1 of the supplier, is not submitted – it is also observed that many of the suppliers are not aware of the process of filing of the GSTR – 1 or in some cases the erstwhile tax regime returns have not be filed, as a result they were not able to carry forward the closing balances, or C forms are pending from the customers. Some of the taxpayers are not filing the same as they have to pay the differential amount for the non-receipt of C forms or other forms. This is also causing the hardships in the GST return filing process.
  7. GSTR – 1 of the supplier is not filed as GST is a new system many of the vendors or suppliers in the MSME sector are not fully aware of the GST and process of filing of returns. As a result of this, it is observed that in some case, the supplier of goods or services has only submitted the return but not filed, this will lead to a mismatch between the records. In some cases, it is observed that the GSTR – 1 has been only submitted not filed.
  8. Accounted as imprest or in IOU – it is a normal business process to have inward supplies of goods or services through imprest basis at factories or at sites. Normally they are submitted at periodic intervals to the head office or any other office, for reimbursement. Purchases from a registered taxpayer are made in one month, and the statement is submitted in the subsequent month, this also causes the mismatch between the records.
  9. Software upgradation – As GST is a new tax regime and most of the accounting or ERP’s are not upgraded to carter the requirements of GST. This has also caused some issues in the initial days of data capturing and updates. In some cases, it is also observed that the upgrades have been done, but the solutions are not developed. As a result, some gaps are there.
  10. Knowledge of GST – As it is a new system many of the suppliers and recipients in the MSME segment are not fully aware of the GST and its implications. There is also a lack of trained manpower on GST, and some organizations have implemented on their own with understanding issues. This also has resulted in some wrong filing and mismatch of records. Frequent changes in the new law is also causing some understanding issues, to avoid this, professional should be engaged.
  11. Frequent Changes – as it is a new law and everyone is in the learning process and based on the feedback of the trade and industry there are some changes. The changes are in tax rates or process of GST or on reverse charge front etc.,
  12. Not fully operations GSTN Software – the GSTN software is not operational fully and few bugs are also observed, this is also causing some issues in the filing of the GST returns.
  13. Wrong data entry – as the return filing process is at the transactional level, there are understanding issues, and data is being entered wrongly in the returns, this has also resulted in a mismatch of the records. Like invoice amount being entered in the taxable amount columns or tax amounts entered wrongly at the time of filing of returns.

The above are some of the major reasons for the mismatch between the supplier’s returns and recipient’s returns. In view of the above challenges, the government is also responding and extending the due dates of filing of returns from time to time. One thing we all should keep in mind is that the for matching of the returns there is a window period of two months and not required to be matched in the same month/period of return filing.  As it is a new system, it takes time to stabilize and also for the taxpayers to understand the same. No new system is stable, and change is also difficult to adopt either for the taxpayers or for the consumers or for the tax officials. The recent experience in Malaysia where GST was rolled out on 1st April 2015, took one year for the same to stabilize and for us, only four months have passed after the rollout. One good thing in our country is all the stakeholders are responding positively to the changes and striving for the successful implementation.

Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

Impact on Enterprise Resource Planning – Transition to GST

Implementation of Goods and Service Tax in India is not a tax reform a but business reform, the way business has to be done under GST will undergo a sea change, and the company need not worry about the tax implications for setting up of new business or running the business. Business thrives well when there is business process under place. For running these business process, IT plays a vital role, and with the implementation of GST, there will be a complete transformation of the business process.  Implementing GST is not like the implementation of any tax like Education Cess, or Secondary Higher Education Cess or Swach Bharath Cess or Krishi Kalyan Cess. It requires a considerable amount of time and efforts to adopt the same else the market is lost to the competition.

Most of the organizations have implemented the Enterprise Resource Planning in their companies apart from the Supply Chain Management tool or Customer Relationship Management tools etc. to run the business efficiently and to take decisions on time. Implementation of GST wherever ERP’s are implemented is like re-implementation of ERP or up gradation from a lower release/version to higher release /version.

There is a lot of uncertainty in the implementation date of GST as well as the requirements under GST. Say, for example, software is defined as service in the Model GST Law released in June 2016 but the same brought in the dimension of ambiguity or confusion in the revised Model GST Law published in November 2016. Or in the treatment of free goods, in the previous law it defined as taxable, but in the revised, Model GST Law it is defined as non-taxable for the purpose of valuation under GST. With this level of changes, it will be challenging to design a solution by the ERP / accounting software vendors. So the first problem we see is, the software itself will not be ready completely due to the changing requirements, with this constraint the organizations are required to pre a roadmap and implement the same for running the business smoothly without any disruptions from the day one of the implementation of GST in India.


Similarly, to the first time implementation of ERP in the organization, the same model can be adopted with some changes.  As the tax and regulatory requirements are still not in place fully, mapping the same in the same in the ERP will be a challenge. In this context, we need to have a plan factoring this also. The core group has to be reconstituted again with people having taxation as well as ERP knowledge.

As described in Figure 1, the core team has to be constituted, and they are expected to review the requirements under GST and conclude on the impact of the same on the Master Data and Transaction Processing. This amounts to a change of business process to a large extent. Say for example under the current Central Excise or Value Added Tax or Central Sales Tax there is no requirement to issue a tax invoice/receipt voucher for receipt of advance from the customer for the supply of goods but under GST the same is required. This also results in the changes the ERP / accounting software. Now the ERP should be having a provision to issue a tax invoice on the receipt of money from the customer and also to generate a tax invoice. The series for the tax invoice number can be different from the regular tax invoices. There should also be a provision to upload the tax invoice for receipt on the GST portal to generate reference number.

To implement these changes in the ERP, the requirements can be broadly categorized into four different categories, and they are


Master Data

Master Data is critical to any transaction in the digital world be it in an ERP or an SCM for a CRM.  Master Data comprises the key data which is used on the transactions for it to be compliant as per the regulatory requirements in place from time to time.

For any ERP to functional efficiently from the day one of the GST rollout the following are to be in place

  1. Registration Number – the existing registration numbers will be replaced with new registration number called GSTIN, and it is state based. The registration number of the implementing company, the business stakeholders like the Customers, Suppliers, Bankers, etc. have to be captured in the system at the State Level.
  1. Tax Codes – Tax Codes – there will be a new set of tax codes to be defined for GST, and these codes are new once, and the same has to be supported by the ERP vendor. The tax codes required for GST are Central Goods and Service Tax (CGST), State Goods and Service Tax (SGST), Integrated Goods and Service Tax (IGST), Cess applicable on sin goods, luxury goods and on the aerated drinks, Tax Deducted at Source Tax Codes for CGST, SGST, IGST and not sure of the cess.

          Likewise, for the Tax Collected at Source for CGST, SGST, and IGST. These are the                     basic tax codes to be provided in the system by the ERP vendor and defined in the                   ERP.


          The codes should be defined separately for the reverse charge taxes, as they are                        required to be reported separately.

            The tax codes for goods and services can be defined separately as there are some                     reporting requirements specific to goods and services or if they can be flagged at the             transaction level to classify it is line relating to the supply of goods or services.

  1. Tax Rates – the ERP should provide provision to define tax rates for the tax above defined tax codes at the state level. This is required keeping in view of the following
  • In future, there may be bandwidth given to states to determine the tax rates
  • Based access control, users are given access to these data based on the state or location
  1. Chart of Accounts – new accounts have to be added to track and trace the recovery accounts, liability accounts, interim credit account, etc. for the tax codes mentioned above state wise. This makes reporting easy.
  1. HSN Code – all items have to be associated with the Harmonized System Nomenclature for all the taxes. Currently, HSN codes are known as Excise Tariff Codes, and the reporting under GST is based on HSN codes. Quantitate details are also required to be provided by HSN in the GST Returns. The Item Master data for each and every item must be defined with an HSN Code.
  1. SAC Code – Services accounting codes are associated with the supply of services, and they are similar to service categories in the current service tax regime. Reporting under GST is done at the transaction level, and this has to be captured at a master data level and defaulted on the transactions, most of the ERP’s do not have this feature currently for Indian Taxes. The same needed to be explained to the ERP vendors and ensured that the same is available in the product before the rollout of GST.
  1. Tax Defaulting – the defaulting in GST is based on the “Ship To” location, as GST is a destination-based taxation. Ensure with the ERP / accounting package vendor that the same is supported in the product else take up the same with them and get the same developed and released for testing much before the rollout of GST as it requires a lot of time for testing.

Transaction Data

1. There are no changes for creation and approval of purchase order/sales orders etc. and receipt of goods for the regular supply of goods or services or both. There are changes in the areas of tax invoice generation and issue and along with the processing of input tax credit.

2. Input Tax Credit – under GST, the input tax credit can be take only on the payment of taxes by the supplier and receipt of goods or services, and the buyer is in possession of the tax invoice. The input tax credit has to be processed based on the data given in the GSTN.

Under GST, the input tax credit can be taken only on the payment of taxes by the supplier and receipt of goods or services, and the buyer is in possession of the tax invoice. The input tax credit has to be processed based on the data given in the GSTN. A new process/session /form has to be provided by the ERP / accounting package vendor to avail in the input tax credit.


There are also restrictions on the utilization of the input tax credit. These restrictions have to be built in the ERP or the accounting package.

Check with the ERP vendor for having a provision to avail input tax credit on the provisional basis, if the organization decides to avail input tax credit on the provisional basis. The organization has to take a decision for availing the input tax credit on payment of taxes by the supplier or provisional basis, and the users must be trained accordingly for processing the input tax credit.

3. Reversal of Input Tax Credit – there should be a provision in the system to reverse the input tax credit availed on inward supplies of services if the payment to the supplier is not made in 3 months. Similar provisions are there in the existing service tax.

4. Tax Invoice – as per the Model GST requirements, tax invoice has to be issued based on the “Time of Supply for Goods and Services.” Proper care should be taken at the time of transaction processing as there is no provision of tax invoice cancellation. The end users must be trained accordingly.

There is also only one document for communication between the buyer, seller, and tax authorities and that document is the tax invoice. In the current ERP’s, there are two different document numbers for the sales transactions, and this creates a lot of confusion and reconciliation issues. Proper care should be taken to educate the users about the same.

There is also a requirement as per the MGL to issue a tax invoice for the purchase of goods or services from the unregistered taxpayers and on the notified goods and services. Check with the ERP vendor if the provision for the same is provided, if not ensure to have the same in the system before the rollout of GST. This is a tricky requirement as the tax invoice has to be issued on the earliest of the following dates, date of receipt of goods /services or the date of accounting or date of payment. As it touches both the purchasing and inventory module along with the finance modules, it has to be developed properly and through testing has to be done.

For enabling the mobile check posts to authenticate the supply of goods, a reference number is required to be printed on the tax invoice. This reference number is obtained on uploading the tax invoice data in Jason file format on the GST portal. Check with your ERP vendor if the same is provided or not, if not get the same provided else it will be next to impossible to ship the goods without this reference number.

5. Reference Number for advance receipts – under GST, all the tax invoices or receipt vouchers issued under GST have to be uploaded on the GSTN during the month of receipt of the advance. The same has to be given as reference on the final invoice of supply of goods and services. Check with the ERP / accounting package vendor if the same is provided in the system if not ask for the tentative delivery of the same.


The reporting requirements under GST are different from the current tax reporting. Transaction level reporting is the requirement under GST. The returns under GST have to filed per registration number.

There are three returns to be filed on a monthly basis and one annual return for regular taxpayers, and in the case of taxpayers who have works contract deductions, a separate return has to be filed on a monthly basis. In the case of service distributor, a separate return has to be filed on a monthly basis. Check with your ERP vendor if the same are being provided or not.

The returns under GST have to be filed through a GST Suvidha Provider(GSP), and there will be some nominal charges also. Before rollout of GST, engage with GSP and ensure that all the data required for the return filing is available in the system.




As reporting is very complex and data has to be provided in various groupings which will be next to impossible to generate such reports in any ERP / accounting software. To file the returns, ensure that two primary reports, one for inward supplies and another for outward supplies are provided in the system.  The file format of the reports can be in xls or any other format which is user-friendly.  The data file generated in the respective format has to be mapped one time with the format given by the GSP. The GSP then process the data and submits it to the GST servers for validation of the returns. This mapping is a one-time activity, but the filing of return is a monthly basis, so ensure that all period close is done in the ERP as per process and then only data is generated.


  1. Data Migration

The next crucial step is migration. Though data is available in the ERP system but still migration is required for the open purchase/sales orders etc.  These documents are created with Excise / VAT / Service Tax but when the receipt or shipment is taken post-rollout of GST, the taxes will be as per GST. Check with your ERP / application vendor that the migration of open documents will be done automatically or to be done manually. Based on the reply, make provisions in the system and then plan the activity

On the accounting date I.e. on the date of the rollout of GST, there will be some receipts which have been made but not accounted, ensure that there are no such cases and input tax credit is taken. If not then the same is not part of the returns before the accounting date and not in the closing balance, as a result, the same cannot be carried forward to GST as opening balance of input tax credit. This would have a great impact on the cash flows and working capital.  Ensure that there are no receipts pending for accounting at least two or three days before the accounting date.

  1. Operations

Another important thing is to plan your procurement accordingly, ensure that there are no goods in transit on the accounting date, else it will be tough to manage the same and if there are any such cases account the same immediately, expedite the QA process and pass on the documents to finance.

Check if all the existing balance of taxes are eligible to be carried forward to GST regime as opening balance, if not try to utilize the same before the rollout of GST so that the same is not reflected in the P & L as an expense, thereby straining the bottom line.

Minimize or stop all the incoming at least two to three weeks before the accounting date, so that there are no migration transactions. For this plan the procurement accordingly. Similarly, on the outbound side also, ensure that the shipments are minimized or stopped before at least one week before the accounting date or ensure that the goods reach the customers’ place before the accounting date and he completes all the accounting activities before the rollout date.

  1. Training

For successful migration to GST and smooth transition, engage all the stakeholders from the beginning. Train the vendors and customers who are in the medium and small segment as they do not have the required infrastructure and resources. Train them and have change management sessions so that you will not have any surprises after rollout. The reason is, the returns under GST will be validated only if the buyer and seller record matches else it will be treated as invalid returns. This will have an impact on the compliance rating. If the compliance rating is reduced, it will have a negative impact on the sales and this will impact the bottom lines.

Training is also required to be provided to the end users, as they are the owners and run the system on a day to day basis. Training has to be provided for them on the GST point of view, from the systems point of view and also from the business point of view. If there is any GAP in any of these three points, then a lot of challenges will be there after rollout.

  1. Working Capital Assessment

Have a provision for one of the most scarce resources called cash as the input tax credit under GST will be available on payment of taxes that means there is a time lag in the availing the input tax credit. Ensure to have additional working capital requirements in the form of owners funds infusion or enhanced working capital limits. Increasing the working capital limits is not an overnight job, it has to be planned and executed at least two or three months earlier, as it requires board approvals from the organization and banks.

The cash flows statements have to be reworked and a conservative approach must be taken for the initial period, as the sales may take a hit on account of migration to new system, and provision for input tax credit has to be made as input tax credit under GST is not available on receipt of goods like in current central excise.

  1. Re-engineering Business Process

The business process has to be re-engineered to adapt to the changes to the GST regulations. Say for example in GST, if there are any shortages or rejection of goods, the credit note has to be issued by the supplier only and not by the recipient. This means the existing practice of creating the invoice for the purchases for the net amount only has to be changed.  There are many such business processes which are required to be evaluated in detail and changed to meet the requirements under GST.

The core team has first to evaluate all the existing business process and then see the impact of each business process under GST and make an assessment. If there are any changes to the business process, the same has to discussed with the senior/top management and take their concurrence for the changes. Once this activity is completed, the same had to be updated in the standard operating procedures and explained to the users. The changes required are to be evaluated in the ERP and seen if the same is supported or not, if no then the same has to be discussed with the ERP vendors to provide the same.

  1. Post go live support

Once the users are trained and on the accounting date, the GST is rolled out, there will be some unforeseen issues arising due to last minute changes in the rules or understanding or for any other reason, in such cases there should a core team in place to evaluate the same and suggest the next course of action, this ensures smooth running of the business.

There can be some user mistakes also due to new requirements from the compliance perspective, changes in the ERP, new business process, etc. to rectify the errors, there should be a 24X7 support team to tide over such mistakes.

Implementation of Goods and Service Tax is not the implementation of tax reform but a business process change. The same is evident from the above lines; the above things are described at a high level for generic business process and the same may change from organization to organization and based on the nature of the industry.



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