Why is Technology the Epicentre of GST Implementation

Technology-assisted compliance is not an entirely new concept in India.  Way back in the 1990s, taxation departments used technology for tax administration. However, this was mainly as a backend mechanism. A major shift in behaviour 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.

Under the current taxation system, data or information broadly flows in one direction to the Government, which we can describe as a B to G or Business to Government data flow.  With the use of technology, the time and cost has reduced significantly while accuracy of compliance has been greatly enhanced.

Technology for GST compliance – what is different this time?

With technology already a driving force for compliance today, what then is the need to revisit issues that concern the right technology for GST implementation and compliance? Why will technology play a pivotal role in GST implementation and administration from both a government and business perspective?

With GST, the two major goals that the government intends to achieve are:

• Reduce tax evasion
• Simplify compliance for taxpayers

In the prevailing tax systems, there are several cases where the government has not been able to detect evasion and loss of tax revenues. As a result, it has become a challenge for the department concerned to track the input claims against the liability of the seller. There have also been numerous 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.

In order to overcome this, GST has introduced invoice matching of buyer and seller.

It has been estimated that the taxpayer base under #GST is around 8 million Click To TweetWith billions of invoices to be matched on a monthly basis, there is a critical need for a real time invoice matching capability, supported by robust IT infrastructure.

There is no way invoice matching at this scale can be achieved manually.

What is GSTN’s role in simplifying compliance for taxpayers?

The GSTN  is currently working on rolling out state-of-the art IT infrastructure that will introduce changes that are significantly different from the current system.  Equipped with an open API (Application Program Interface), the GSTN server will seamlessly connect with third party applications used by taxpayers, thus providing an all-user interface, and convenience via desktops, mobiles, and tablets. This will assist taxpayers to automate their invoice matching from within their software rather than by logging onto the portal. This will save time, and drive simplicity of compliance procedures. GST will drive a lot of discipline in filing returns at regular intervals, and automation will help businesses achieve this with less pain.

Use of technology will also enable efficient tax administration for registration, returns filing, data exchange, and effective investigation, monitoring, auditing and performance analysis with little or no human intervention. It will also provide several user-friendly features such as offline capabilities, alerting capabilities, mobile/tablet interface, and additional mechanisms to avoid duplicity of data.

As this tax system is being implemented for the first time in India, businesses will encounter several challenges during the initial stages of implementation. However, once systems are streamlined, the two important objectives envisaged – curbing tax evasion, and increasing tax revenue and ease of compliance for taxpayers will be achieved.

The success of this transformation will help our nation create history in the world of GST compliance.

So what should businesses do now?

The GST regime which begins on July 1, 2017, will ride on the strength of technology with seamless interface with the GSTN server. Businesses must automate their manual systems, and install software that is robust enough to interact with the GSTN system, and assist in immediate, accurate, and reliable compliance.

Invoice matching is a very critical requirement of GST. Because of the clear timelines dictated by GST, compliance will no longer be a month-end or quarter-end activity. Therefore, invoice matching and other compliance related activities cannot be achieved using a manual or a low-tech system. Speed and accuracy are both critical.

Businesses will have to start interacting frequently with the GSTN system. This will require a GSTN-enabled business application or accounting software so that the task ahead become seamless and efficient.

As a business, you should:

  • Start trying to understand the impact of technology on GST, and on your business
  • Appreciate the need for compliance discipline
  • Focus on the right choice of software to help achieve compliance

About the author

Pugal T & Yarab A


Comment Moderation Guidelines Share your thoughts
  • With Respect to dealers in medicines currently they are selling medicines & Drugs to Individual People( Who are not Registered) Charging Vat . Does the scenario remains same in GST.
    Question is Can sale be made to unregistered dealers/Persons ?
    Please Clarify

  • Can different series of sale bills can be generated, for example different series for export sale and different series for inland sale and likewise a different series for scrap sale.

    kindly please guide.

  • The article advocates the need to switch over to the new moderate tax system GST with technology based implementation.GST is single tax to replace multiple levies of Centre and States and will mitigate cascading of taxes and assures seamless transfer of input credit and assures greater transparency in tax administration. In GST, Invoice matching is the tedious process and if it will be solved by apt software the two objectives of tax compliance and removing tax evasion will be achieved by GST..Welcome GST to be rolled out from July 1.

  • Not only bills but the transit of goods by which transport also to be mentioned upload by the transport offices to check the unbilled goods and cross checking at gstn level

  • i my opinion small business of retail will be put to a lot of financial and manpower trouble, as the compliance cost is very high. what will happen to input of a dealer if the supplier has not uploaded his sales and paid taxes because of n no of reasons like death, injury, fire or a natural calamity and not to speak of bankruptcy . the purchasing dealer is put to a big trouble and will give rise to a new set of disputes between seller and purchasers. the business community must rise to the occassion and gauge the impact and seek easy remedial measures

  • Sir,
    Do we have to enter inventory wise details in GST or should we simply declare purchase/sale values. Because (take for example) there is a possibility that one person buys a refrigerator and issue sales invoice indicating commodity sold as Hardware item or mobile accessories or any other item.
    Reason behind doing this can be a person buys commodities for household purpose but asks for invoice to be drawn in the name of shop. Later he can use this as input credit and can simply issue a fake sale bill to third party without actually selling or actual transfer of commodity.
    In this way he can evade tax as well as generates black money and unethical business practices.

      • Is it mandatory to mention the HSN code of the product in all the selling Invoices. If so, it will be easy for the buyer to mention the same in their invoice accordingly. In an scenario where the first seller mention the wrong HSN code in his invoice what will be it’s impact

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