A large, young, technically skilled workforce has been growing in India for decades. It’s the primary reason that developed nations around the world outsourced millions of jobs there over the course of the last twenty years. There’s been a significant change in the structure of India’s tax system this year, though, and it has created the need for entirely new compliance procedures for companies doing business in the country.
The new tax system is called the Goods and Services Tax (GST), and it has combined and replaced an array of existing local and central government taxes. The broad implications of the system mean that it directly affects many international businesses that conduct manufacturing in India, or have business service units within the country. In order to comply with the new tax code, domestic and foreign SMBs are turning to new technology and software innovations.
GST is a Nationwide Tax Overhaul
Beginning on July 1st at midnight, the new Indian GST tax system was rolled out nationwide. It included sweeping changes to a whole host of existing tax systems and subsumed or otherwise replaced many of them, including:
- Central Excise Duty
- Services Tax
- Additional Customs Duty
- State Value Added Tax
The overhaul also introduced complex new reporting and compliance measures, requiring the monthly filing of at least three different tax forms. The electronic filing system has at times been overwhelmed, leading to deadline extensions.
A Solution For SMBs
The complexity and frequency of the new reporting requirements have already left many small businesses and organizations racing to find cost-effective ways to comply with the GST tax system in India. Since the reporting involves the potential exposure of financial data, security is also of utmost importance. For this reason, many are opting to use newly developed GST cloud software solutions to handle the data and workload.
Addressing GST compliance in this manner allows small businesses that don’t have a large internal IT infrastructure to assure security while paying for only the processing power that their situation calls for. According to Jens Hagel of Hagel IT-services, “The software-as-a-service model, when combined with the power of public, private, or hybrid cloud services offers enterprise-grade capabilities at a price point that’s within reach of the SMB market.”
Keeping Ahead of the Curve
Turning to custom-built cloud solutions for managing GST taxes and reporting also provides some certainty for businesses in dealing with a new and evolving tax system. It removes the need for the companies to become expert in the details of the system, and to follow any potential changes to the reporting requirements that may be enacted in the future. After all, sweeping changes of this nature often go through growing pains and are revised as the situation plays out in the real world. When the alternative is developing internal processes and hiring dedicated staff, relying on an external solution is the obvious choice.