GST Impact Analysis

Getting GST Ready

GST will be significant change from current regime of multiple Central & State tax levies like Central Excise duty, Service Tax, VAT, Entry Tax etc. Businesses could therefore start with revisiting their existing business processes and examining the current indirect tax costs and the possibility of mitigating some of these costs under the GST system.

GST impact assessment on any business would involve a simultaneous analysis of changes in tax rates vis-à-vis credit flows. Preparatory ground work could include collating historic procurement/ distribution data and the tax costs/ credits presently incurred by the business.

This is likely to ensure easy population of the GST rates/ credits and an efficient comparison of the present tax costs vs. potential GST costs. It will hereby help in analyzing the potential GST impact and expedite employment of requisite measures to maximize the positive effects of GST.

Keeping in view the above an entity may need to decide on the followings:

  • Domestic Supplies Vs Imports

  • In House Vs Contract Manufacturing

  • Own Vs Outsource decision for services

  • Intra State Vs Inter State Procurements

  • Pricing Strategies

  • Warehousing / Stocking Locations

  • Direct Sales Vs Stock Transfers

Pertinently, a GST impact analysis could lead to implementation of measures that minimize tax costs, improve working capital efficiency, and more importantly, revise the product price. Needless to say, such an analysis and consequent downward revision in price can be crucial business advantage given the current competitive market scenario.

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