Now, I am going to share 7 Reasons Why You Shouldn’t Ignore GST Impact on Vendor Management.
1. Procurement from registered vendors will be cheaper.
2. Reverse charge liability for procurement from unregistered vendors
3. Avoid procuring from vendors who are availing composition scheme
- The vendor is not able to take the credit of GST paid on raw material or finished goods which are being supplied to you and the same will constitute the cost of goods.
- 1% tax levied by the vendor will not be available as input credit to you.
4. Unorganized vendor is not likely to pass on the price benefits due to GST
5. Agreements or contracts with vendors require relook
6. Practice of making advance payment to be relooked
7. Vendor selection strategy
- Check the compliance rating of vendors. It will take some time before the compliance rating starts reflecting in the public domain which is expected to be largely based on the criteria like timely deposit of taxes and returns.
- Logistic cost for supply of goods or services
- Category of GST registration of vendor, i.e. Registered, Unregistered, Composition Scheme etc.
In short, it’s a high time that you gear up to take control and assess your vendor management strategy to insulate your business from the potential risks.
If you wish to discuss any aspect of this article, please feel free to reach out atchandan.goyal@