Ramco Systems (Ramco) has enabled its ERP offering to comply with India’s Goods Services and Tax, or GST, regime. The GST came into force in India on July 1, 2017.
The new Indian GST is a major development in a country where individual state and internal border taxation has hobbled decades of growth. The GST aims to unify India’s 29 states (plus sundry ‘territories’) under one value added regime. After decades of inching towards the goal of an internal Indian ‘common market’ D-Day arrived on July 1st, with most businesses and consumers still wondering how it will work in practice.
Speaking on this, Virender Aggarwal, CEO, Ramco Systems, said, “Most businesses reach their end users through a value-add/distribution channel. In the GST-era, the ecosystem will benefit if every stakeholder is GST-compliant. Ramco ERP on Cloud is geared to address this statutory need holistically for a stakeholder with the ability to extend it across the value add network. With Ramco ERP on Cloud, customers will get the benefits of a comprehensive ERP solution coupled with the benefits of a scalable, flexible, and cost-effective cloud solution.
More on GST
To give an idea of the scale of what the Indian Government intends, consider the number of taxes which GST replaces or subsumes:
- at the Central level – Central Excise Duty, Additional Excise Duty, Service Tax, Additional Customs Duty (commonly known as Countervailing Duty) and Special Additional Duty of Customs.
- at the State level – State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry Tax, Purchase Tax, Luxury Tax, and taxes on lottery, betting and gambling.
GST ‘benefits’
The Government argues, on its GST website, that multiple advantages will accrue. For business and industry the benefits will be:
- easy compliance
- uniformity of tax rates and structures which are common across the country
- removal of cascading and is so doing a reduction in the hidden costs of doing business.
- improved competitiveness – reduced transaction costs will lead to an improved competitiveness
- comprehensive set-off of input goods and services will reduce the cost of locally manufactured goods and services.
For Central and State Governments, the advantages will be:
- simpler and easier tax administration (backed by a robust end-to-end IT system)
- improved ‘tax leakage control’ (tax compliance improves with a robust IT infrastructure and seamless transfer of input tax credits from one stage to another in the value chain)
- higher revenue efficiency (GST is expected to decrease the cost of collection of tax revenues and, therefore, to greater revenues collected at a lower cost)
For the consumer, there should also be attractions:
- a single and transparent tax proportionate to the value of goods and services, rather than the multitude of indirect taxes levied before July 1st
- transparency
- some relief in the overall tax burden (because efficiency gains and prevention of tax leakages should reduce the overall tax burden).
To support all this, Infosys has constructed a vast GST portal linked to an enormous GST infrastructure. Over 7 million businesses will use this after July 1st, though uncertainty reigns.
Ramco’s GST compliant Cloud ERP
The GST is not as simple as (say) many European value added tax regimes. In order to appease many of India’s State Governments, the Central Government had to make many concessions. This means that the GST is more complex to operate than it need be which has implications for accounting vendors.
Ramco had made itself a GST Suvidha Provider (GSP). As a cloud ERP and ASP provider Ramco is now able to provide a seamless GST-compliant transaction flow. This includes connectivity to the GST portal for filing of tax returns.
This should bring efficiency and heightened data confidentiality to the complete transaction process. Ramco summarises the benefits to customers as being:
- improved manufacturer-dealer-customer experiences
- one comprehensive suite to manage all business operations across Finance, HR and the supply chain
- greater operating efficiencies with improved employee productivity
- conformity with regulatory requirements
- the ability to realize input tax credits.
What does it mean?
For Ramco to offer a GST compliant solution is significant and a necessity for is existing customers. It may even be a source of new customers on the sub-continent who want third-party provided GST compliance. With its cloud-based ERP solutions, Ramco can equip customers with GST visibility, tighter controls and (potentially) improved profitability. Whether deployed on-premises or in the cloud, Ramco’s ERP claims it offers the functionality to enable a smooth transition for customers to the GST-era.
It is impossible to judge yet whether Ramco’s claims are valid. Too much awaits proof of execution. Ironically, even if Ramco’s GST compliance works (and this applies to all other GST compliant vendors), it may be irrelevant if the Indian Government GST portal and infrastructure do not work as advertised – or cannot cope with the workload.
Ironically, even if Ramco’s GST compliance works (and what follows applies to all other GST compliant vendors), it may be irrelevant. For theor solution to work the Indian Government’s GST portal and infrastructure must function as advertised. The big unknown is whether this can cope with a workload which goes from zero to 7 million businesses. Within 3 months, India should know.
