gst compliance through technology

By Jyoti | 4 min read

What's in the page

Shared Services Centre

Current Scenario

Goods and Services tax has manifested to become one of the major reforms in the Indian taxation system since its inception. It was implemented on 1st July 2017 and for 4 years indirect tax compliance has been growing with this reform. As the laws are growing complex with each meeting, it’s now more evident that GST has become more dependent on technology than ever.

The key aspects of compliance starting from generating e-invoices, GST registration and filing the return, filing of the refund claim, etc. are all dependent on technology. The interrelation of all these aspects on a Pan India basis has also been dependent on technological advancements.

In order to balance equity in the monetary freedom of State and Central Government,  a double GST structure was proposed, under which State GST just as Central GST will be appropriate. Even though at a rudimentary level this may seem, by all accounts, to be essential, the IT area may have some considerable changes that should be fixed with the likes of online expense tracking software being developed.

 

Business Process Changes due to GST

Under GST, which is an object-based expense, the charge is gathered by the state where the products or services are accessed. However, most IT organizations are enrolled distinctly with the Central Service Tax specialists, and normally all charging and cloud accounting software assessments are completed from a localized area. 

Service providers should enlist themselves for all the states that they are servicing in, through accessing their client list. IT service providers, therefore, should divide their services and appropriately charge their clients dependent on the basis of place of access.

GST & Technological Compliance

  • Single Pan – Multiple Business

Multi-GSTIN businesses, Import data at GSTIN level or for PAN that Import all data at GSTIN or PAN level effortlessly for single or multiple months. Reconcile invoices across all GSTINs under PAN as a result nobody misses any tax credit by matching invoices by suppliers under multiple GSTINs for PAN. Comparing invoices, credits, summaries for a PAN (Perform smart reporting and analysis for the entire GSTIN set under a PAN)

  • E-Invoicing

The translocation of goods between places has been made feasible by ‘E-Way Bills’ filing on the common GST portal. E-Way bills not only automate multi-purpose reporting but also offers various modes through which e-invoice can be generated by the companies such as API integrations, Excel, or the FTP/SFTP mode. The user can enjoy numerous value additions such as reconciliation vis-a-vis e-way bill and GSTR-1 data, insightful reports, customized print template for e-invoice, data archiving, etc. through E-Invoicing.

  • E-way bill

E-Way Bill is an Electronic Waybill for the movement of goods to be generated on the e-Way Bill Portal. A GST registered person cannot transport goods in a vehicle whose value exceeds Rs 50,000 (Single Invoice/bill/delivery challan) without an e-way bill that is generated on ewaybillgst.gov.in.
Alternatively, E-way bills can also be generated or canceled through SMS, Android App, and site-to-site integration through API.
When an e-way bill is generated, a unique E-way Bill Number (EBN) is allocated and is available to the supplier, recipient, and transporter.

Can technological incompatability be the reason for non-compliance?

  • It is very difficult to reconcile the transaction details from the buyer’s side and seller’s side.
  • GSTN is good but the accounting systems which the informal sector has can hardly match the technological status of GST. The result is that the compliance cost of GST has gone dramatically up. For example, the railway itself has a team of five people to handle the GST regime whereas service tax was used to be handled by a single person.
  • For small businesses enterprises keeping such an organization that is completely dedicated to the purpose of GST is a big burden. The result is either their expenditure on chartered accountants has gone up or they are simply exhausted complying with GST.

Conclusion

These steps can lead to growth at a time when the entire world is affected by the COVID-19 pandemic. Implementing e-invoicing and new returns, GST rates cut, reducing litigations related to transitional credits, centralizing authority, having a single jurisdiction for audits and investigations, and strengthening the GSTN system would be the key areas to watch out for in the near future

India needs to focus on helping businesses to maintain liquidity with faster processing of refunds, faster dispute reconciliation resolution, and better utilization of input tax credit. With some further modifications in GST to ensure ease of business in the country for both domestic as well as international businesses and anti-China sentiments vibed throughout the pandemic, this could be the push India needed.

 

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