GST Will Lead To A Massive Disruption For Business

GST will lead to a massive disruption for businesses in the short term.

- Dipak Mondal

With the announcement of tax rates for different goods and services, the government has entered the last lap of the race to implement the much-awaited Goods and Services Tax (GST) from July 1.

While the new tax rates for products and services may not have many surprises — barring the fact that services now come under four slabs as against a uniform 15 per cent rate earlier -- the very fact that the move to GST involves complete overhaul of the indirect tax system means impact on businesses, at least during the transition period, will be huge.

Under-preparation: Though the GST law has been under discussion for quite some time, it has been finalised and notified only in the last few weeks. Some states are, in fact, yet to notify their laws. With a month to go before the roll-out, there is still confusion about the rates. Besides, many companies are yet to put in place new systems and software such as ERP (enterprise resource planning).

Some big companies — even a few public sector companies — are still in the process of floating tenders for hiring financial consultants. Any under-preparation will lead to non-compliance with the tax laws and have economic consequences such as delayed availability of input credit and loss of business.