How To Choose The Right HRIS Solution

Human Resources Information Systems (HRIS) can be a precious tool for human resources managers and the complete organization. HRIS can organize the processes of compiling as well as filing information that is relevant to the organization such as performance reviews, hiring & training data, and vacation or sick day trailing. Having a high functionality, HRIS in place could lessen labor costs and make a company more competent as these crucial pieces of information become simpler to handle. Thus, not all HRIS are created equal. It is significant to take certain steps before choosing an HRIS so that the appropriate HRIS solution is selected.

Determine Needs

Surfing through varied HRIS vendors without first deciding the organizational requirements is putting the cart before the horse. HRIS solutions come with several different facets and not all facets might fit in with the requirements of the business. Buying the ‘top of the line’ HRIS and then exploring that mostly of the features are not required can be a lot of waste of money and also can waste employee time trying to filter through the programs. On the other hand, buying a cost-effective HRIS with lesser facets and then uncovering that many required facets are absent can also be unproductive. Listing all preferred facets in order of priority is a best method to begin the hunt for a new HRIS.

Consult All Affected Parties

In mostly companies, both HR as well as IT will be affected by the latest and advanced HRIS system. Other sections of the organization might also be affected, depending on the company. It is vital that all impacted parties get a chance to voice needs as well as concerns earlier to the selection of a new system. Not only will this help to decide needs and support with the selection procedure, it will also enhance the acceptance of the latest system throughout all the parts of the organization. Cooperation and acceptance throughout the whole organization can be precious when it comes time to implement the new and advance system.

Establish Budget

Whereas the decision of which HRIS to opt should not be based only on costs, the amount of capital that will be used to attain as well as execute a new system should be decided earlier to selection. When deciding budget, the Total Cost of Ownership (TCO) should be considered. The TCO might comprise of the original cost of the system, labor prices to execute the system, subscription costs, charges for software licenses, and prices to modernize the system in the future. The ROI should also be expected as well as considered as an offset to these costs.

Talk to Vendors

It is helpful to attain as much relevant information as possible about vendors and different kinds of software before choosing an HRIS. The steadiness of vendors, the experience and duration of time that the vendor has been in business, and the availability of tech assistance after the installation should all be established. In regards to the software, it is essential to decide who will own the data, what security measures are in place, and how simple the system will be to incorporate with current systems. Companies might also advantage from establishing a good working relationship with vendors, and might think the friendliness as well as professionalism of workforce throughout the procedure of compiling information.

Accept Demo Offers

Mostly vendors will proffer demos and these could be very helpful in selecting the appropriate HRIS solution. When companies come in to present demos, employees from all sections of the organization that will be impacted should attend. This will give professionals from diverse areas an opportunity to ask questions and will promote higher comprehending of the software throughout the organization. If a trail period is provided, companies can also advantage from taking benefit of the trial period to truly ensure that the chosen HRIS is correct for the company.

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4 Tips That Can Help You Select an HRIS That Matches Your Company's Needs

Choosing a latest HRIS can be very exciting, mainly with all of the new facets as well as offerings in the HR software world. Though, it can be very simple to get swept up in the momentum and pick avoidable aspects that put you over budget or cause you to overlook facets that would really be helpful in boosting productivity as well as mounting the impact to the bottom line. The subsequent are some tips that can facilitate you stay focused and make sure that the HRIS solution that you pick really matches your company’s requirements.

Brainstorm and Document Goals, then Get a Second Opinion

When HR professionals, employers, and managers begin brainstorming objectives, they are frequent underneath the impression that these objectives will automatically be agreed upon

and made priority. Unfortunately, this is frequent not the case as managers of varied departments have differing viewpoints completely based on what they see each day. In order to make sure concurrence, the best approach is for managers to brainstorm objectives, documents those objectives, and share them with chief managers using email or other traceable medium so that there is simply-to-chase, progressive goals list.

Use the ‘SMART’ Guide for Goal Setting

‘SMART’ stands for specific, measurable, achievable, relevant, and time-oriented and is used for aim setting for everything right from marketing to weight loss to choosing an HRIS vendor. If an aim is missing one of these aspects, it will not hold water when it comes down to the actual moment of HRIS selection. When working on defining goals for an advance HRIS, ensure each goal meets every one of the elements-this might also be helpful later on when trying to estimate return on investment.

Keep Goals at Hand during Demos and Trials

When it comes time to see an HRIS demo or take benefit of a trial period, it is simple to get sucked into marveling over the facets that the system does have-and vendor representatives will likely emphasize on these facets. Keeping the list of goals that has been fixed upon close at hand during these times can make it simpler to stay emphasized on the company’s real requirements so that you can apparently see where the HRIS does not meet organizational requirements. This can expedite the selection procedure and facilitate to make sure that the most compatible solution is chosen.

Allow Expandability for Future Development

Whereas it is not actually possible to predict the future, it might be helpful to choose an HRIS solution that will permit space for the company to mature. Choosing an HRIS that best

caters small companies when your company is very close to the benchmark for being considered a mid-sized company or selecting an HRIS that doesn’t proffer extra facets that you can see the company needing someday might work to smother business growth as well as success. Arranging for these eventualities may make it simpler for your company to make the essential transitions when the time comes.

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The Benefits Of Using A HR Information System (HRIS)

A Human Resource Information System (HRIS) is a well-designed software solution for petite to mid-sized businesses to facilitate automate and handle their HR, payroll, accounting, and management activities. Usually, it should offer the capability to efficiently plan, organize, and manage HR costs; attain enhanced efficiency as well as quality in HR decision making; and enhance employee and managerial productivity and efficacy.

Simple & Correct Entry of Data

One of the most often mentioned benefits of an HRIS is that you enter information only once for several HR related employee works and same you would require to modernize only one place when employee information modifications. Enhanced precision of data is also likely assuming data are entered appropriately. HRIS technology will aid in preventing errors such as double entries from complex departments and other human mistakes or inaccuracies.

There is a direct connection between the amount of paperwork processed and the number of inaccuracies incurred. The extra paperwork there is the more mistakes are made. This is due to erroneous deciphering of handwriting, non-standardization of data, data entry back-log, typing errors when transferring handwritten information, and manifolds data entry points. With an HRIS system, there is a general central data place and restricted data entry points. Your staff can enter few of their own personal data as well as benefits selection, therefore eliminating the middleman. HR staff can then invest their time checking and verifying information instead of putting it. Adding data validation tools to your HRIS can facilitate to setup data standards and norms. These tools comprise of address verification to lessen address mistakes and lookup values instead of free form text to diminish varying words that mean the similar thing.

Integration of Data

Several slices of the system are capable to interact with each other permitting a more meaningful reporting as well as analysis abilities, comprising of internal assessments and audits and preparation of data for management review.

Self Service

This facet can be a good timesaver for HR. Employees might enter the system to modify data such as edit their own addresses. Managers as well as supervisors might also enter the system to input/ retrieve data or performance review without the support of HR. Employee activities such as leave or time off request can be computerized, resulting in quicker approvals and minimal paperwork, which in turn saves paper as well as cost. Wage and hour violations and other varied employee fraud situations, can happen to companies of all sizes, but could be prevented and therefore greatly lessened with the implementation of a HRIS.

By making several HR works such as attendance electronic, employees have lesser opportunities for instances like buddy punching as well as charging for fake hours. This can give back hours of the HR administrator’s day earlier invest attending to routine employee requests.

Quicker Processing Time

When your workforce straight enters their data in an HRIS system, various steps are eliminated from the process. Paperwork is only collected when essential, data is not entered into manifolds systems, and alters can be speedily managed. An HRIS system that is incorporated to other business software systems such as payroll processors can lessen turnaround time for processes such as new employee boarding as well as changes in advantages. Compare the task of one person entering data for around 200 employees versus 200 employees putting their own data that they would have to do on a form anyway.

Hosting of Company-related Documents

The system could host such materials as employee handbooks, safety guidelines, and procedures. The materials are simply updated in one place. This will deter employees from being unaware of company rules and regulations or latest policies as it could be broadcast as well as referred to within the system.

Payroll

This is the most generic facet of any HRIS, and contained in any of them. A range of payroll systems exist in an HRIS comprising some that are can perform electronic fund transfers with all main banks at the single click of a button therefore lessening delays in payroll disbursement. When seeking for an HRIS be sure that the payroll aspect it contains is completely functional and contains the capability to review payroll information speedily as well as any other extra features your particular HRIS requirements may call for.

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Services On A Shared Service Centre Model - Megasoft SSC

Megasoft strongly believes in making Real Business Impact by integrating its Analytics & Technology Competencies with Complete Business Management Solutions.

Constant enhancement is very important element in any efficient business strategy. Whether these enhancements are big or small in scale, attained on the factory floor or in the back office, the objective is the similar – to better leverage the resources of the organization to generate optimal value for clients and other chief stakeholders. Enabled by quick advances in technology, the drive to attain best-in-class performance standards is resulting in creative structures, unmatched strategies, and best solutions to difficult business problems.

Shared services centres (SSCs) are being created in organization after organization as the best solution to the require to both lessen the cost and enhance the performance of Megasoft Solutions’s Shared Service Centre (SSC) can standardize as well as automate process work activities, whereas at the same time delivering higher value through process innovation, lessening the risk, and revealing latest sources of revenue for stakeholders.

As a SSC, we can manage particular operational works that comprise varied services in the Finance & Accounting and Human Resources. We work as multi-functional facility that is keen to a centralized point of service. It engages manifolds business units to consolidate one or more than one operation into a shared one.

Our Shared Service Centre also tailors our procedures with a strong focus to perk up effectiveness taking cost-efficient measures. Its precision is focused with the support of technology on the platform of Business Process Management (BPM). We seek to deliver our services with unmatched industry demands with a set of expert workforce working beneath us. Our platform stands as SaaS (Software-as-a-Service) that complements the service offered to suit varied requirements of esteemed clients worldwide also.

Advantages of Shared Services Model : -

• Standardization of Processes-Best Practices
• General Technology Platform
• Agreed upon Service Levels
• Economies of Scale
• Scalability
• Flexibility

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Why Cloud ERP Is Perfect For Your Start-Up

Spending in inventory and accounting ERP software could be a daunting task –especially for petite and start-up businesses as they struggle to establish procedures and spend in company growth while working to lessen investing and expenses. Thus, systems earlier only affordable by big, well established companies are now easily accessible for small as well as new businesses at minimal cost, thanks to the cloud. Cloud based ERP software (also known as hosted or SaaS) offers all the same advantages of on-premises ERP with the added advantage of predictable monthly fees, remote access, and diminished IT and hardware costs. Spending in ERP software is significant as it is a decision that will help to save costs down the road and enhance efficiencies for quicker company success as well as growth.

Here are top 5 reasons, why cloud ERP is perfect for your start-up : -

Minimum Implementation Costs

Implementation costs tend to make up an essential portion of the software purchase, as a result in a huge initial investment. Although each implementation will fluctuate, most comprise of 4 components: the installation, system configuration, employee training, and data migration. Within these components, data migration prices are among the highest due to difficult data formatting and the transfer of several years’ worth of data from one system to another. Thus, as a new business, there is often minimal, if any, historic data that requires to be transferred that importantly lessens the overall price of implementation.

Infrastructure Costs are Pushed to the Provider

With the support of cloud ERP software, the vendor installs as well as hosts the software on their own servers and takes responsibility for buying and sustaining all the hardware requirements. The customer does not have to worry about having latest and advance equipment or the physical storage space essential to house it all. This helps to further lessen the costs for start-ups in terms of both initial investments as well as on-going hardware maintenance.

No IT Department Required

A main facet in picking hosted ERP software is that an adroit IT department is not required as almost all IT issues are passed over to the cloud vendor. As stated above, the cloud vendor is completely responsible for dealing with and keeping all mandatory hardware as well as server requirements. This contains handling all regular back-ups as well. Customers no need to worry about employing IT workforce as they have access to a knowledgeable workforce of IT support representatives supplied by the vendor.

Predictable, Monthly Costs

One of the major differences between a Saas and on-premises software system is the cost structure. With an on-premises solution, you are paying a bigger upfront investment as you are buying the software licenses as well as paying for the implementation all at once. For SaaS applications, you give the same implementation costs but the software licenses are paid for on an on-going monthly basis – you are basically hiring the software from the vendor as opposed to purchasing the licenses outright. This means that you are responsible for paying on-going, expected, monthly fees that makes it simpler to budget prices and works to help enhance cash flow.

Ability to Quickly Add New Individual Users

New businesses require a software system in place that will facilitate them to mature speedily. With cloud ERP applications, businesses can leisurely and individual users onto the system very easily one user at a time. A set ‘cost per user’ will get additional to the monthly fees each time someone latest is added. This set cost makes it simpler to budget for new appoints.

Although, there is no correct answer when it comes to selecting between an on-premises and cloud based ERP system, there are several advantages to picking the cloud as a start-up. Apart from lesser costs, the cloud needs minimal resources and personnel to handle. Moreover, ensure you spend time reviewing both options to discover the one that is best for your business.

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Does ERP Fit In All Businesses?

Enterprise Resource Planning (ERP) system is used in mostly all type of organization. It doesn’t matter whether it’s big, petite or what industry it falls in. The main objective of ERP is to incorporate data and procedures from all areas of the organization and combine it, to offer easiness of access and well-organized work flow. ERP Systems generally achieve this through one single database that uses manifolds software modules.

ERP systems can cover over two functions and incorporate them into one combined Data Base. Human Resource, Financial, Warehouse Management functions, Customer Relations Management, Supply Chain Management, and Manufacturing functions can be found on new companies under one umbrella – the ERP system.

In today’s competitive business environment, ERP is becoming a necessary business application for mostly all the organizations.

The motive behind this is, for any business growth and success completely depends on having the capability to keep pace with swiftly varying customer and industry demands and perform in a very short span of time, the capability to rapidly seize latest opportunities and the flexibility to accomplish sustainable business growth.

In the transforming business environment, the time available for an organization to react to the market trend is very petite. To survive, the organization must act swiftly, collecting, and examining the data – both internal as well as external. Any mechanism that will automate this information collecting as well as examination process will improve the chances of the organization to beat the competition.

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Why ERP Is Considered To Be The Backbone Of E-Business?

Business enterprises and organizations in India are in the way of a major revolution due to globalization as well as the deregulation of Indian economy, along with fundamental transformations in the business models due to the emergence of Information Technology (IT) based business practices.

Mainly enterprises in developing countries like India are in the way of employing Enterprise Resource Planning (ERP) system in the configuration with organizational change as well as process of re-engineering initiatives. ERP system promise advantages that range from enhanced efficacy to alteration of quality, profitability, and productivity.

Thus, its implementation poses few unpredicted organizational challenges and modifications that could be cultural as well as structural in nature. ERP not only helps to setup best-in-class business practices and brings clearness to the organization but also demands for empowerment as well as flexibility in decision making procedure.

The most promising argument is that, to succeed or boom in the e-commerce world companies require to change their internal business procedure with the use of ERP system. Therefore, ERP is considered to be the backbone of e-business.

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3 Important Reasons Why Growing Businesses Need ERP

Enterprise Resource Planning is also known as ERP. It has been around the world for quite some time. It is highly famous notion, which implementing an ERP solution enhances the efficacy, offers a crystal clear outlook on productivity as well as growth. Here are three significant, why mounting businesses require ERP solutions.

Operational Efficacy for Mounting Businesses

When the business is very petite with around 50 employees or less than 50 and some defined processes, its simpler for managers to systemize, manage, and track things. But imagine when the business has matured little bit with more than 1000 employees, countless varied procedures, activities, several workflows and processes.

Out of these different procedures, some of them may be manual and few automated. Chances are less that these activities as well as procedures are well-documented. In this highly competitive world, this type of displaced and not so incorporated system will bring down the productivity as well as profitability. This in turn will affect the success and growth. Implementing an ERP solution could help businesses organize variety of processes, log them, and trail them on an hourly basis. Along with this, it lessens running and overhead expenses.

Enhanced Consistency & Accuracy

One more main benefit of implementing an ERP solution is that, it facilitates to sustain information in a constant as well as precise manner. Especially in organizations, where varied departments are not well incorporated, information is not consistent and sometime incorrect.

The views of varied departments vary and therefore, the information they offer the Manager will also be different. This sometimes leads to confusions as well as wrong decisions being made. All these troubles may impact revenues over a period of time, if not considered seriously. Implementing an enterprise resource planning solution will make sure that all information are sustained and handles in a constant manner across the departments.

A Helping Hand for Employees

Employing an ERP solution will make sure that the routine reporting work of employees at all levels lessened. RamcoOnDemand ERP, for example, permits field team to enter data on the go and thus it facilitates Managers to get exact information real-time.

Along with this, it helps chief decision makers of the company to comprehend their workforce in a better way – from examining individual performance all over different business sites to visualizing the overall performance of an intact operational zone. This facilitates organizations to take strategic decisions as well.

Overall, ERP solutions can cater as an outstanding information tool especially for medium as well as large businesses, for better decision making and achieving required goals. Therefore, it is must for every rising business.

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Cloud-Based ERP Has Many Advantages, Fewer Drawbacks

As your business matures in size as well as complexity, you will discover it useful to start using ERP (enterprise resource planning) to ensure that information runs in an integrated fashion throughout your company. ERP software facilitates your business to knot together your customer relations management, human resources department, supply chain logistics, internal employee data, manufacturing, accounting, and external data for supplier, vendors, and customers. Along with this, you can use ERP tools for project management and to manage user privileges in your system.

Once you decide that the time is ripe for your organization to take benefits of ERP software, you will need to determine whether you want to have your solution on-premise or if you may be better catered by having your ERP in the cloud. In several cases, you will discover that using Cloud ERP system has benefits over using on-premise ERP.

If your company has a comparatively small IT division, your workers likely already have their hands full just endeavoring to sustain your information technology systems and meeting the ongoing demands from your employees. If you are seeking to modernize your ERP software, you will need to ensure that you have sufficient staffing and services to sustain the system appropriately. Completely, depending upon your present infrastructure, your business might have to buy more computer equipment on which to operate as well as sustain the ERP software.

Fewer Headaches

Cloud computing links your business with servers over the Internet, facilitating you to operate your company without having to add extra computer infrastructure. What’s more, a Cloud based ERP service will have workforce who are continuously receiving training on how to sustain the ERP system. Because they help several companies with their ERP requirements, the Cloud ERP personnel will have much more experience that your IT division will have.

If something goes erroneous with the Cloud ERP, you will have 24-hours access to tech support that is very important when your company starts to become increasingly reliant on Enterprise Resource Planning software. Having to sustain your own IT personnel on-call can wrap up costing you much more than if you merely outsource these functions to a company offering cloud services.

Seeking at the bottom line, ERP in the Cloud Software has crystal clear benefits for your organization. You will save money by outsourcing it because you won’t have to purchase extra equipment. Also, you no need to worry about such logistical problems as modernizing the software or how to appropriately integrate it into your business.

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Cloud ERP vs On-Premise ERP – Which Is Better?

Selecting an ERP software or enterprise resource planning software, could be a challenging when you are flooded with choices. There are several advantages to each deployment way, and all of the choices frequent the basic functionality that you require and want in an ERP. One of the main facets to think is whether you wish an in-house ERP or a cloud based system. Examining the advantages as well as disadvantages of each can help you make this decision.

Advantages Of In-House

On-premise enterprise resource planning software sustains your business data close to

the source. You don’t need to worry about security threats, data leaks, and other data security related problems but you do need to allocate IT staff to supervise these things. With the support of in-house systems, the control is in your hands. If you have critical or sensitive business data, this might make the most sense.

Disadvantages Of In-House

When you pick for on-premise ERP software, you might get extra help with training, establishing the system, and selecting modules from the consultant. Afterward, once you are up and operating, thus, your business is on its own. In-house IT workforce become responsible for maintenance on the server.  Operating an ERP system might take their time and put other IT projects on the back burner. Ask yourself, if your IT workforce has the time, abilities, and skills to take this on.

Along with this, upfront costs with on-site systems are more, because you pay for all of the servers as well as infrastructure you may require, even if your present requirement is lesser. You may pay for capacity that never gets used, whereas a cloud enterprise resource planning system permits a more granular method. If something goes wrong, you have to pay maintenance, diagnostic, and repair costs.

Advantages Of Cloud-based ERP

Since cloud systems are hosted from anywhere, they relieve some of the pressures that come with selecting an on-premises system. You won’t have to execute maintenance on the server. The cloud-based ERP provider executes this task, and backs up your data in the system. When equipment requires to be replaced, the provider replaces it.

Cloud systems might be fewer expensive, because you can buy only the licensing, infrastructure, and service space that you require. When your business requires alter, it is very simple as well as easy to buy more space.

Disadvantages Of Cloud-based ERP

When you house the system, you perfectly know that it is physically safe as well as secure because you can handle who accesses your building. With the support of cloud-based server, you don’t know who has right to use to the building and consequently how protected your data really is. Security concerns are one area, where on-premise systems proffer highest safety than cloud-based systems. Do you wish to have someone else scrutinizing your business data, who might be supervising the security of several systems and thus slow to respond to a security attack, or have your own in-house IT people scrutinize authorization attempts as well as system access?

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Why You Need ERP For Your Business

So many small as well as mid-sized manufacturers think that they can do without an ERP system. They strongly believe that their operation is easy enough that they can manage it with some spreadsheets. Frequently, this is just not the case. Here are 9 significant reasons, why you should implement ERP system:

Real-time Information for Decisions

Without an ERP (enterprise resource planning) system, your team is flying blind. They make decisions completely based on guesswork and rules of thumb because they don’t have actual data they require. Sometimes, they are the perfect decisions, but more frequent, they are sub-optimum decisions that could cost you money and customer goodwill as well.

Best Practice Procedures

Software companies frequent design their ERP systems merely to support particular industries or verticals. As they add clients, they learn industry best practices and integrate them into the software. By employing an ERP system designed for your industry, you automatically make your business procedures more effective.

Enhanced Visibility

If clients need to know when their order will ship or if you want to know whether you have enough of a significant component to accept a rush order, an ERP system gives you immediate visibility into your operations as well as your supply chain.

Quicker Month-End Close

ERP systems automatically procedure transactions as well as make audit tracks and financial reports that can abridge period-end closings. They flag anomalies so you can examine swiftly, and they abridge repetitive journal entries and other related activities that make closing so difficult and time taking. Quicker closes mean you know the health of your business earlier.

Enhanced Customer Satisfaction

Clients like precise delivery dates, and ERP can help you provide them with enhanced inventory and shop floor visibility. In addition, the improved visibility as well as accuracy will help you to perk up your DIFOT rate (delivery in full timely), which helps keep esteemed clients glee.

Handled and Controlled Costs

ERP systems evaluate and collect costs so you always have an exact picture of your product cost as well as margins.

Better Operational Efficiency

Bu assisting you to sketch production more efficiently, your operational efficiency will enhance as you lessen setups as well as teardowns or pointless downtime.

Precise Records

The consistency of record data that an ERP system instills will help to make sure that your records are more exact, which will boost process accuracy across the board.

Diminished Lead Times and Improved Throughout

Better scheduling as well as precise records make sure that your schedules emphasize on priorities, leading to lesser lead times. Since you won’t have as many orders waiting for tooling or parts, your throughout will increase.

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BATTLE OF GST : STATE VS CENTER

Introduction

Goods and Services Tax (GST), the 122nd Constitutional Amendment Bill, 2014 tabled by Finance Minister Arun Jaitley has already passed in the Lok Sabha. However, due to conflicts between the States and Centre and the reason that the Centre is not having majority in Rajya Sabha; GST bill is lying on the tables of Rajya Sabha since past few months, awaiting the clearance therefrom. What are the reasons of conflicts between the States and Centre? What steps are taken by the Centre to make the States affirmative to GST implementation? Why the states are taking so much time to give green signals to GST bill? This article is an attempt to find answers to some of these questions.

Taxing Powers Of Centre & States – Present Status

Under present scenario, Centre is empowered to levy and collect following Indirect taxes:-

• Central Excise Duty – On manufacture of goods
• Customs Duty – On import of goods from abroad
• Service tax – On provision of services

Indirect Taxes levied and collected by States are as follows:-

• Value Added Tax (VAT) – On sale of goods
• Central Sales Tax (CST) – On interstate sale of goods
• State Excise – On manufacture of alcohol

Besides these taxes, State government is also empowered to levy other indirect taxes like Entry tax, Entertainment tax, Luxury tax, Electricity tax, stamp duty, etc which are normally entrusted to local bodies prevailing in the states.

Taxing Powers Of Centre & States – After Implementation Of GST

In the GST bill, the constitutional amendment has been proposed to empower the Centre and States simultaneously to levy and collect indirect taxes on the entire chain from the stage of manufacture till the sale to ultimate consumer of goods/services. Thus, after implementation of GST:-

• In the GST bill, dual GST has been proposed. Therefore, both Centre and states will be able to levy and collect GST simultaneously on the same set of transaction from the stage of manufacture till consumption.
• The taxable event will no longer be manufacture or sale of goods; rather it will be supply of goods/ services against a consideration.
• States will also receive revenue from transactions related to provision of services. Presently, states are not empowered to collect any amount in respect of provision of services.
• Centre will also receive revenue from supply of goods post manufacture. Presently, Centre is not empowered to collect any tax on any post manufacture activity.
• Taxes levied by local bodies like Purchase tax, entertainment tax, octroi, luxury tax, etc. will not be subsumed in GST, thus, these will continue to be collected by local bodies working under direct control of respective States.
• GST on petroleum crude and products will be levied on some future date as decided by GST Council. Till then, VAT will continue to be levied by States on sale of petroleum and products.
• 1% additional levy proposed in the GST bill will be collected by the Centre and will be distributed in the State in which the supply originates.

Fear Of States

As each thing has its own pros and cons the GST also brings with it many consequences which make its implementation a tough challenge for Modi Sarkar and the GST proposal is presently receiving severe opposition from some states even those ruled by the BJP government because of their very reasons. Here the important thing to consider is that Why the states are so worried about the upcoming GST? Some of the fears of States are:-

• States predict that there will be huge loss of revenue due to implementation of GST as those taxes which are their major source of revenue would get subsumed in GST. It is feared that the development of states will have adverse affect due to scarcity of funds.
• The revenue neutral rate (RNR), i.e. the rate at which neither any gain nor loss will occur to states initially; is yet to be decided and may be another reason of dispute between the Centre and States.
• Central Sales tax (CST) which is levied on interstate trade @ 2% is a major source of revenue of States. In the GST Regime, CST is to be replaced by 1% additional levy which will be levied for initial two years of implementation of GST. This period can be increased if the GST council decides. There is direct loss due to decrease in rate by 1% besides other projected losses. Tamil Nadu, for example, estimates its losses from scrapping CST as Rs. 3,500 crore annually.
• The GST bill proposes that there will be dual GST structure where the Centre and the States will administer independently the CGST and SGST, respectively. Since the same set of transactions will be subject to control by both authorities, it is feared by States that the Centre will be the dominating authority.

No Such Huge Loss To States – Centre’s Verdict

On the one hand, States are worried and opposing GST on the grounds that it will take them to the ocean of huge Revenue losses; on the other hand, the Centre says there will not be such a huge loss. The reasons stated by Centre for this verdict are summed as follows:-

• The proposed GST rate is also roaming between 18-22% which will generate more revenue to both Centre as well as the States.
• The scope of GST will be much wider than the existing tax structure. Thus, number of assesses in GST regime will be much more than registered at present. More the no. of assesses, more the tax collection.
• The loss suffered due to scrapping of VAT will be compensated mainly by the income derived from provision of services in the GST regime.
• Loss suffered by subsuming the CST will be fulfilled to some extent by 1% additional levy.
• The taxes like purchase tax, octroi, entertainment tax, etc. will not be subsumed in GST. Thus, there will be direct income from these taxes collected by local bodies which report to the States.
• The petroleum crude and petroleum products have been kept away from GST initially and will be brought under purview of GST in some future date as decided by GST council. Till then, the States will continue to charge VAT on the same.

Compensation Of Losses For 5 Years – A Step To Seek ‘Yes’ Of States

It has been assured by Finance Minister that States will not suffer much loss due to implementation of GST. The reasons for this assurance have already been discussed in the forgoing para. However, if there is any loss anyhow, the Centre has promised to compensate the same for first five years. The compensation will be as follows:-

For first 3 years – 100%

In fourth year – 75%

In fifth year – 50%

This assurance is said to be the most important step taken to make the States agree for implementation of GST. However, it is expected by Centre that all states may not require compensation for five years; particularly the Consuming states; which will enjoy the revenue increase with the implementation of GST.

While Parting

Introduction of GST have the drastic impact on the present taxation system of our country as it subsumes most of the Indirect Taxes. However, the States are not able to accept the change so easily. The provision of compensation for five years may make them affirmative towards GST. But at the same time, effective measures are required to be taken so that this provision may not be misused by the States. However, at present, what the Centre wants is only one “Yes” from the States. Once the GST bill is passed, it is hoped that all the demerits associated to it will be coped by effective drafting of the GST Act and its implementation.

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