GST July 1 deadline not realistic: Industry survey

While the Goods and Services Tax (GST) regime is to come into force from July 1, 2017, the industry is of the view that given the current level of government’s preparedness, this is not a realistic timeline for its implementation. The Industry’s preparedness survey by CNBC-TV18 and BMR Advisors showed that 62.5 percent respondents felt that July 1 is not realistic.

With the countdown to GST implementation getting narrower day by day, around 64 percent of the respondents believed that their organization is prepared at a level marked more than 50 percent for GST implementation from July 1.

However, the respondents were not confident on preparedness of their partners, that is, vendors and customers to ensure business continuity and minimum disruption.  Only 7 percent felt that their partners were more than 70 percent ready and 33 percent believed that their partners are less than 30 percent prepared for GST implementation from July 1.

Given that most of the business are skeptical about IT preparedness only 48 percent of populace responding wished to automate tax determination and invoicing vis-à-vis manual intervention to a level more than 80 percent. Further, around 33 percent wished it to be at a level between 50 to 80 percent.

When asked about their current IT preparedness, one half of the respondents believe that their IT systems preparedness is to a level between 50 to 80 percent and only 10 percent believe that their IT systems are more than 80 percent prepared to undertake compliances under GST.   Further, only 49 percent expects their IT vendors to provide them with robust GST solutions well in advance.

BMR Advisors undertook a poll in May 2017 with an exclusive selection of CEOs, MDs, Chairman, Presidents and CFOs of Corporate India that operate across industry sectors. The poll was designed to garner opinions from business leaders across divergent industries to assess the level of preparedness for GST roll-out in India.

While the government is ensuring to provide more and more materials to business well in advance to avoid any surprises, smooth transition to GST regime still seemed to be a distant dream.  When asked about whether the business have finalized their transition/ cutover strategy and inventory management, only 34 percent of the respondents replied in affirmative while 17 percent were undecided and 49 percent replying in negative.

To ensure a smooth sail to the new regime, the industry said that the government should adopt a lenient approach in invoking penal provisions during initial phase followed by establishing grievance cells and expert committees for addressing various legal and operational issues during the transition phase.

While the industry seems to be fairly positive and welcoming towards the revolutionary tax reform, majority have reservations about their preparedness to take the challenge heads on.  Industry has some genuine expectations from the Government for an adequate level of support to be provided for an easy transition to GST.  It remains to be seen the approach that government would adopt in GST implementation and meeting investor expectations globally.