The Right GST System for E-Commerce Sellers
Ever since GST saw the light of day, a lot of sobriquets have been attributed to it – “consumption based law”, “non-cascading tax norm”, “game changer” – the list is endless. However, one term has caught the most attention – “technology led law”. And rightfully so, because the law pertaining to GST has been laid out in such a manner, that technology adoption for any business – big or small, brick & mortar or e-commerce – is now inevitable.
Which poses the next big question – as an e-commerce seller, what is the right technology for GST one should look at? What are some of the aspects, one will need to tick off, when one makes that all important decision to invest in a GST system for e-commerce business?
Keeping in mind, the complexities of the typical Indian e-commerce business, and especially the fact that even small e-commerce players will need to embrace GST compliance in its entirety considering that they will not be eligible for composition scheme, the ideal GST system should make the following possible –
- Generate GST compliant artefacts: The first and foremost need for any e-commerce business would be to go for a GST system which generates all the important business documents – tax invoices, bill of supply, transactions and other relevant information – in the prescribed GST format. While this is a natural need for businesses, who handle compliance on their own – it will also augur well for most small businesses in the country who depend on a tax return preparer to maintain their books and audit their transactions. Working on a GST compliant format, is bound to save time for one and all.
- Allow multi-format data entry: In most cases, small businesses dealing in e-commerce will either feed the data required for compliance themselves, or pass on the same to a tax return preparer, who will then file the returns on their behalf. Needless to say, transaction data may be available in various formats – manual books, excel sheets (especially common when you use inventory management services), electronic format generated from disparate software. The ideal software for GST and e-commerce should thus be flexible enough to import data in multiple digital formats.
- Maintain updated masters: The GST law has defined rules in terms of levy of tax, place of supply of goods and services, time of supply, GSTIN parameters, schedule HSN/SAC codes – so on and so forth. The tax rates applicable on various transactions will also differ on the basis of all these parameters. To ensure that the right taxation is followed, the GST system for e-commerce needs to be a “master” in creating masters quickly and efficiently, and that too on the go. Several aspects of the master data – billing vs. shipping address, warehouse information, inventory information, item masters – for each customer needs to be up to date for business to run smoothly. Besides the system should be smart enough to stay updated of changes for e.g. – tax rate changes based on schedule HSN/SAC codes, addition / modification of existing taxes etc.
- Detect errors early: Given the stringency expected from the government in terms of GST compliant transaction and reporting, a major prerequisite for any GST system for e-commerce is to catch errors as early as possible. A software which is able to do that, and correct errors on a real-time basis, will end up saving a lot of time for the business by reducing rejections of returns and increasing accuracy of tax returns. Given the numerous forms which need to be filed and matched between both e-commerce operator and e-commerce supplier, detecting errors is a crucial need.
- Stay connected with GSTN: According to GST rules, online filing of GST returns is a must. For that to happen, clear records of transactions will need to be maintained electronically, but what is more important is – a seamless connectivity to the mother ship i.e. GSTN. This connectivity will ensure the entire GST experience – hassle free registrations, filing returns online, reconciliation with books of suppliers and buyers followed by reconciliation with GSTN data and finally e-payment of GST tax via net banking, credit & debit cards – all, from within the GST system itself.
So, as far as GST and e-commerce is concerned, finding the right technology indeed is going to be of utmost importance in managing your business compliance efficiently in the GST era. GST and technology should potentially walk hand in hand to make compliance a much better experience for e-commerce sellers in the time to come.
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Author: Pramit Pratim GhoshPramit, who has been with Tally since May 2012, is an integral part of the digital content team. As a member of Tally’s GST centre of excellence, he has written blogs on GST law, impact and opinions - for customer, tax practitioner and student audiences, as well as on generic themes such as - automation, accounting, inventory, business efficiency - for business owners.
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Pramit Pratim Ghosh
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