The trend towards globalization is driving the manufacturing companies worldwide to change at a rapid pace. Companies have to manage demand, product mix and supply chain capability to achieve their business goals of profitability, market share and asset utilization. Today’s manufacturing ecosystem is no longer a linear vertically integrated supply chain; but has evolved to interlinked collaborative value networks that integrate to drive efficiency and deliver customer value. Manufacturing ecosystems have grown to include new entities such as overseas contract manufacturers, online supplier exchanges and logistics providers; collaboration with and among these entities is an important measure of success for an organization.

As businesses roll out global expansions with complex supply chains, diverse and increasingly stringent environmental and safety regulations which differ across the globe require sophisticated management of internal processes. Transfer of goods from one geographical location to other face a plethora of government regulations and tax statutes.

Manufacturing organizations see taxation challenges in the areas of central excise and customs duties, service tax and value added tax in addition to usual corporate taxation matters and matters concerning transfer pricing when units are located in different countries.

Central excise issues surface when organizations have upstream manufacturers, an ecosystem comprising of job-workers, downstream manufacturers and registered dealers. Most organizations import goods thereby inviting customs levies. Since they might also export, they usually take licenses from foreign trade directorates and need to fulfill export obligations if they are deriving benefit of reduced import duties.

These, and issues such as concessional rates have distinct central excise linkages as well in terms of processes and documentation submitted to the Government. Since the tertiary sector is deeply entrenched and provides several services to each manufacturer, the aspect of taking credit of the service tax paid and accounting for the same also poses challenges.

Finally there are the processes pertaining to levy of the value added tax. Presence of dealer / supplier networks across the country invites the Central Sales Tax and its attendant issues.