GST a Business to Government data flow. With
has been rolled out finally. But still confusions around the country. This article will review the how GST and
Information technology can go hand in hand. The past indirect tax system is complex,
with at least seven major multi-stage value added taxes levied on many
financial transactions. This has led to an unreasonable burden on taxpayers,
who have had to deal with administrative hassles, the detrimental effects of
double taxation, and confusion.
The GST aims to tackle many of the
issues with the past system by combining central and state indirect taxes.
Under the new system, transactions will have both State GST
and Central GST levied upon them. The
new system is expected to bring down the average costs of goods and services
across the country by eliminating double taxation.
The main huddle to bring the tax
payers in to the net is the documentation requirements for Input Tax Credits
and the stage at which said credit accrues. The objective of any value added
tax system (such as the GST) is the avoidance of double taxation. This is done
by providing credits along every step of the production chain, effectively
taxing only the extent of the value that has been added. IT Sophistication
can be the solution for this problem.
Indirect Tax collection in the country has been totally restructured. The long
pending demand of ‘One Nation, One Tax’ was finally realized now and the
country will be consolidated on the economic growth. With GST, the two major goals that the government
intends to achieve are:
Increase the Tax
Ease of the taxpaying mechanism
the the current taxation system, data’s are flows in one direction to the
Government, which will be described as a Business to Government data
flow. With the use of information technology, the time and cost has been
reduced significantly while accuracy of compliance greatly enhanced.
Technology-assisted compliance is not an entirely new concept in India. In
the early 1990’s taxation departments have began to use technology for tax
administration. But this was only as a backend mechanism. A major change occurred
when online filing of returns was introduced. This was largely a result of
different computer systems being integrated, thus enabling taxpayers to
directly interact with the tax department.
the previous systems, the government has not
been able to detect tax evasion and loss of revenues. Its daunting task to track
the input claims against the liability of the seller. There are also lot of
cases of duplication of claims on input tax, fraudulent claims, input tax
claims that do not correspond with tax liability declared by the seller, or
seller who has not furnished his tax liability.
order to overcome this, GST has introduced invoice matching of
buyer and seller.
In this process, the
biggest hurdle is the co-ordination between tax experts and the technology teams
in introducing and tuning the IT systems. In most cases some of the ERP
software that were provided by the IT companies has to be redesigned as the GST
rules keep updating. Companies are mainly upgrading their enterprise
resource planning (ERP) — a category of business-management software -so as to
accommodate the complexities of calculating GST. Enterprise Resource Planning is software that
helps companies manage everything in the organization including supply chain,
finance and human resources.
Oracle are the big players in the Indian ERP space. Many companies will have to
move from their current system, where every transaction is recorded separately. Companies will have
to move to a system where there is a correlation between every entry.
Invoice uploading and
accordingly the reconciliation of mismatches is an integral part of GST filing.
Large enterprises deal with billions of invoices and thus, uploading invoices
manually would be impossible. Moreover, the number of mismatches occurring
could be large. The large enterprises cannot afford to lose precious business
time to sort out minimal and time-consuming GST compliance issues. They need an
optimized automated system that will deal with the prerequisites and expedite
the rest of the process.
For the enterprises, ERP
integrated GST will take care of all their GST compliances, ensuring zero
disruption to the business. Synchronization of data from the ERP, converting it
into a GST supported format, uploading of invoice details, reconciliation of
minor mismatches and filing of the GST, everything will be automatized. When
billions of invoices, of the buyer and the seller, will be correspondingly
matched, numerous mismatches will occur. Some could be a minor value, while
others, a major value. The businesses will definitely require an application
that will reconcile the minor value mismatches automatically according to customization,
an efficient bulk-reconciliation tool. Such a tool will help in saving crucial
time, as the businesses can then focus on the major value mismatches and reconcile
them to file the GST returns successfully.
and Services Tax Network (GSTN) will act as a single window system where each
and every invoice’s details would be uploaded. Every taxpayer upon registration
with GSTN common portal is given a unique 15-digit, alpha-numeric id known as
GSTIN. It comprises of its PAN number and codes denoting the State it is
registered in, entity number in that particular state, alphabet ‘Z’ and a check
code of a single number. Thus a technology ecosystem needed to be established
which could efficiently handle the information transfer and dissemination.
The GSTN portal acts as a interaction between the GST taxpayers of the
country and the Department. This portal facilitates end-to-end compliances
regarding GST Tax which includes registration of the
taxpayers in order to receive the GSTIN to file Invoice details and
It would also facilitate payment of taxes by
the taxpayers and refunds, if any. It is to be noted that no part of the money
paid as tax is retained by the GSTN. It merely facilitates the payment gateway
through its infrastructure to the Department.
plans to achieve this through a network of GSPs (GST Suvidha Provider) and ASPs
(Application Service Provider). GSPs will basically act as channels that will
transfer the information between the GSTN server and the ASPs and shall provide
a secure network for it. An ASP, on the other hand, will be the application
that will perform all the activities that are needed for monthly return filing.
developed by ASPs will help taxpayers to interact with the GSTN. This will
necessarily require a computer connected to the internet from where the
invoices are being uploaded. Since all the tasks pertaining to GST compliance
will be done online, an ERP will prove to be beneficial to generate invoices.
With the application of the ASP installed, all the tasks of invoice uploading
and reconciliation of mismatches will be done easily. The success of businesses
will depend on the strength and ability of their technology systems to smoothly
interact with the GSTN server.
Invoice matching is an
important task of GST. Intelligent systems and networks will identify various
mismatches and provide a bulk solutions that will help in saving a considerable
amount of time and resources. Legacy systems and outdated technology will not
be able to cope with the deadlines directed by GST. Meeting the deadlines for
different returns, in time notifications to counter parties for mismatch
reconciliation and successful filing of returns, all will require the inclusion
of technology. Businesses will be frequently required to interact with the GSTN
system and that will only be facilitated by an advanced application that is
able to handle the entire process of transformation easily and make day-to-day
tasks quick and seamless. Thus, comprehending the importance of technology in
the GST regime and wisely choosing the right application for your business is
going to be the first step in achieving compliance.
With such an extensive
process to be done, the primary priority of businesses now should be the
installation of a robust ERP system that is fully GST compliant and is
efficiently integrated with an ASP application. The ability of their ERP
technology to quickly adapt to the GST regime will be the defining moment for a
majority of big players. Those who are able to adapt efficiently and seamlessly
to the upcoming indirect tax system will turn out to be the new market leaders.
Without uncertainty, the initiation of GST SYSTEM will end up
being the most critical and extensive taxation change that India has ever
observed. It will affect all trades and companies, some more than others. As
GST SYSTEM is new for the Indian companies and it is going to take some time
for the proper execution under the regime so the companies should start preparing for the GST at earliest. Implementing the new
IT systems may take 12 -14 months.IT companies have daunting task because IT
processes for every company will have to be customized
Prepare for GST SYSTEM Programming Modules
GST will have a greater impact on
information administration and tax collection, associations need to investigate
their present adaptations of fund arrangements. The redo practice is not going
to be a standard programming patch that can be connected to their frameworks at
one go. Organizations should be clear about which modules of their product will
be influenced, and how they will connect the progressions with GST.
Update existing ERP frameworks
Keeping in mind the end goal to
assess new expense structures, other cost suggestions, organizations need to
redesign their ERP frameworks.
Analyze and Understand the GST
GST Network (GSTN) is the one-stop
impose entrance that the Government has set up to give charge documenting and
input credit administrations. Organizations need to prepare their back offices
and acclimate them with the new controls by holding GSTN workshops and
Patch up IT and Accounting
Companies need to assess the effect
of GST on IT and bookkeeping frameworks. Bonding together with programming
organizations can make the move simpler and faster.