So, what could be the possible advantages of customizing an ERP for taxation? The answers to this would be:
•Single database & control in ERP related to data transactions.
•Utilization of IT team & having projects completed within the SBU
•Control over ERP-wherever law changes.. With the help of Taxation expertise changes can be implemented within the same code base or data set.
However, when we do a cost benefit analysis with respect to the money and effort spent, the outcome is not always positive
The main focus of any enterprise resource planning (ERP) package is to provide a set of processes covering the various functionalities in an organization, be it Materials, Finance, Sales , Production, HR, etc These processes can be customized to meet specific business requirements.
Processes in Taxation are subject to frequent updates as per government norms.
Some considerations that the management have before a customization are:
· What is the aim of the implementation?
· Can the required periodic returns, registers and e-filings like Excise ER-1,5 ,6, Depot FORM-II, VAT & CST , Service tax & TDS be obtained?
· Can all the processes required for taxation is implemented with necessary master & transactions process settings or configurations?
· Is the information to be obtained sufficient to meet the requirements of Finance department, Internal & external auditors?
· After doing all exercise is any manual work required?
Why not think out of box & opt for a third party solution like iTAX?
· No need to customize your ERP with respect to Indian taxation, thereby enabling the same ERP blueprint across the globe with a singularity of data
· Maintain data integrity & accuracy using time-tested integration methods.
· Data qualification and configuration - the delta capture facility to allow maintenance and validation of missing information required for Taxation purpose.
· Meet the auditor requirements in time - all reports & returns as per statutory formats available at one’s finger tips.
· No effort required to keep abreast with latest changes - assured and tested updates from the vendor for iTAX ( Udyog Software) available for changes in tax rules or norms from Government
· Long term Return of Investment is low.
At the end, I have seen companies who have spent considerable efforts to customize their ERPs. However, most of these customizations have not been effective with, their taxation teams still extracting the data in excel sheets, building their logic & filing the return manually, and this is because keeping with changes in taxation norms require re-customizations and therefore introducing new issues Also, customizations are successful if the effects of any changes are understood functionally and technically and this involves some effort and cost, which becomes high on the longer run said by Pravin Sawant (VP-Direct sales, Udyog Software (I) Ltd)
If the aim is to capture the data in ERP & not use any other application or export data outside ERP, then customization would be something to plan for. However, before any attempt is made, it would be imperative to weigh the pros and cons of this approach and the long term benefits A Third party taxation solution like iTAX would be an ideal choice and a stable tax framework for the future.
Let 2013 bring in new possibilities for your business; improve profitability and effectiveness by automating existing processes, including tax processes. We are with you in your tax automation endeavours.