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India's biggest tax reform, the Goods and Services Tax (GST) subsuming all forms of direct and indirect taxation has become effective sinceJuly 1, 2017. The new tax regime is expected to bring in greater transparency and efficiency in business operations.

Broadly, the impact of GST on the infrastructure sectors seems to be a mixed bag with transport, mining and roads sectors positively impacted and electricity, water supply and sewerage, aviation, and oil and gas sectors negatively. One of the biggest beneficiaries of the GST would be the transportation sector, which is expected to benefit significantly from reduced logistics costs. Mining sector too would benefit from the unified tax regime as it currently attracts a number of indirect taxes. On the other hand, electricity generation companies will continue to have indirect taxes as a significant cost factor post GST.

Much of the success of GST now depends on its implementation, which seems challenging owing to a host of factors. Thus, infrastructure companies need to gear up and prepare for the biggest tax reform in India.

The biggest issue that companies are currently facing is the synchronisation of GST with business processes. Currently, most companies are finding it difficult to link their enterprise resource planning software and supply chain models with new GST-compliant modules. Unless this is done, it will be tough for businesses to understand their new working capital requirements and cash flow needs. Companies are also facing challenges of performing an analysis of procurement costs and pricing of goods and services pre and post-GST.

With GST, the traditional tax administration and accounting landscape is experiencing disruptive changes. Even the basic requirement of data upload and reconciliation on the Goods and Services Tax Network (GSTN) is pending in most companies. Tackling these challenges demands requires the companies to modify their entire IT framework. This is very important to generate GST invoices and extract the required reports.

Since the companies will now be filing multiple returns, timely compliance needs to be ensured from registered suppliers to ensure there is no loss of input credit.

Further, there is an additional burden on the companies to provide training to their personnel and also to look for tax and accounting professionals with sound knowledge on the subject.

The GST landscape is constantly evolving. Caterogarisation of goods and services in various cases is still pending. Provisions for anti-profiteering and the implementation of the e-way bill (which tracks consignments of goods) are still unclear.

It is a mammoth task for companies to track the notifications and circulars and ensure that these are adhered into the IT systems and processes. The need of the hour for organizations thus is to focus on making the GST transition seamless by harmonising operations and aligning business and IT processes under the new regime across verticals, vendors and customers. 

Against this background, India Infrastructure is organising a workshop to review the impact of the new GST regime on different infrastructure sectors and highlight the new implementation challenges brought on by GST. The workshop will also identify the key concern areas that require industry attention. It will provide an opportunity for the industry to interact with legal/tax experts, seek their opinion and discuss future strategies.

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