Role of Technology in the GST Implementation

Disha Jain

With the introduction of GST, the questions on how it’s going to be implemented? how will the Government bring about a smooth transition to GST? and how will the compliance be achieved? were raised. Each of these questions were answered only by making use of one word that is Technology. It was identified that across multiple Tax Systems, Technology has been of great help for obtaining Tax Compliances. Same way for bringing about a GST Transformation, a right Tax Technology is all you need. In this context, the question that arises is that in what way has this Technology been used which has made GST a Technology-led Tax Reform?

The Information Technology Backbone behind the GST Implementation is the Goods and Services Tax Network, commonly referred to as GSTN. It’s regarded as a backbone because it’s with the help of this that all the GST functions are being handled on a single portal thus, serving as a gateway for around crores of taxpayers out there. Thus, all the businesses and taxpayers file their return, make payment of their Indirect Tax Liabilities by logging into www.gst.gov.in

Under GST, for Tax Payment and Filing of Return, a Tax- Payer is required to file a number of Return Forms, Upload Invoices on a Monthly and Quarterly Basis and Create Challans. In this context, it was identified that when looked at the Multi-National Corporations, mid-size and large sized firms this compliance undertaking is rather challenging as there is a high probability for them to have a large number of purchase and sale invoices and thus, putting in the details of the purchase and sale of goods along with how much amount of tax has been paid and collected, the entire acceptance, modification, rejection process before uploading it on the GST Portal was found to be very tedious. Thus, in order to make this entire return preparation and filing process for taxpayers particularly the Multi-National Corporations, mid-size and large sized firms less burdensome, less manual and for them to be able to meet their compliance obligations periodically, some sort of automation was needed.

This led to the introduction of two Service Providers. They are the Goods and Service Suvidha Providers (GSPs) and the Application Service Providers (ASPs). With GSPs, the Multi-National Corporations and mid-size and large sized firms can file their tax returns straight to GSTN via it. This means that before the taxpayer had to access the GST website every now and then for getting access to different services like sometimes he would access the website for Return Filing or sometimes he would access the website for GST refund etc. Moreover, for each of these services and their fulfilment, he would have to file a number of forms within a certain time frame. So, for making this entire process less time-consuming and brief, GPS was found to be very useful as it served as a single stop shop for all GST related services.

The role of GSP is limited in nature. All that its required to do is serve as a secure access point for taxpayer’s information to be communicated to the GSTN. As mentioned before, when it comes to filing returns, it might be difficult for the taxpayer to fulfil all the pre-requisites like data collection of inward and onward supplies, putting in that format which the GSTN requires, complying with the time-frame. So, therefore, for these reasons, taxpayers are made to interact with the GSTN indirectly via the GSP. So, all the taxpayer has to do is upload their information after which the GSP securely puts them on GSTN.

Now, this information that is put up by the taxpayer is nothing but raw information of the customer’s purchases and sales. GST Returns cannot be filed just with this because as mentioned before, there is a certain format that is to be followed while filing for tax returns. This is where the Application Service Providers (ASPs) come into picture. ASPs main function is creation of a software with the help of which taxpayers can upload and get their information verified for GST Returns.

Hence, it can be said that it is the ASPs that prepare the taxpayer’s monthly and annual Returns on the basis of the raw information provided by them. Once the same is prepared, ASPs file the returns via the GSPs. Thus, ASPs are the ones that help in converting the sale and purchase information into a GST Returns Format by performing the following functions on behalf of the tax-payers

‘Helps in putting up the invoice data;

Aids in uploading GSTR 1 return that has outward supply data;

Helps in downloading data pertaining to inward supplies that is in the form of Draft GSTR 2;

Ensures matching of purchase register with GSTR 2 draft; and

Lastly, uploading the final GSTR 2 on the GST Portal so that the taxpayers then would be able to file for GSTR 3. [1]’

Therefore, while GSPs are a link between the tax payers and GSTN, ASPs are a link between the tax payers and GSPs. With the help of GSPs, the sale and purchase information that is converted into the GST Return Format is uploaded securely on GSTN and the ASPs are said to convert this raw information into a GST Return Format by filling in all the forms within the prescribed time frame.

As a result, what can be inferred from this is that Tax Compliance in India requires a lot of manual work as it includes filing of returns in a format as prescribed by the Tax Authority. Therefore, a need arose to make this entire compliance process less burdensome and less manual for the tax-payers. And this was achieved with the introduction of GSPs and ASPs which are said to make use of robust technology for performing its functions of providing smooth return filing digitally and in a user-friendly way and ensuring data security and integrity.

To understand how beneficial a GSP + ASP offering is, let’s look at some of the big 4 and their Automation Tool that were developed with an intention of making Tax Compliance less burdensome and manual.

Ernst and Young (E&Y) launchedDigiGST which is nothing but an integration of both the services that are the GST Suvidha Provider (GSP) and the Application Service Provider (ASP). This DigiGST is said to be ‘a combination of technology expertise and tax knowledge in such a way that it adds value to businesses, helping them fully realize the benefits of GST while meeting compliance requirements in the most digital and user-friendly way.’ [2] The GST Software that DigiGST is built on is Microsoft Azure which is said to make use of intelligent tax automation and resilient and reliable technology platform for the purpose of being able to handle large volumes of data; and

KPMG, another big 4 launched KPMG GST Compliance Pilot which is again an integration of both the services that are the GST Suvidha Provider (GSP) and the Application Service Provider (ASP). Its major function is to collect raw data from its clients and process the same in the KPMG GST Compliance Pilot Tool. This includes preparing GSTRs for GST Returns, reconciling etc.[3]

Current status of Faceless Assessment for Indirect/ GST Tax Regime

With the introduction of GST, not only did all the kinds of Indirect Taxes fell under one umbrella but also the GST Return Filing, Audit Statements, Reconciliation, everything was already digitized and was happening online. And so, it was observed that once this Faceless Assessment Facility is be adopted, the chain of digital interactions would be complete. Currently, if asked the current status of Faceless Assessment under GST Law, the answer to this is that at present, discussions are taking place for the same. A rough idea on how the Faceless Assessment would happen for GST has been put forth.

As per this, what the Government is planning on doing is to bring this Faceless Assessment Facility via a portal that is going to be independent of the GST Portal and the GSTN that already exists and that serves as a facilitation portal for the taxpayers. So now, if there are any show cause notices or red flags or any kind of assessment notices, they would be notified to the taxpayer by putting it up on the new portal and the taxpayer’s response on the same would be recorded digitally thus, requiring no face-to-face communication. [4]

Moreover, taxpayers that fall under the jurisdiction of the Centre, would be assessed by any officer belonging to any country and taxpayers that are belong to States would be assessed by an officer belonging to that particular state. The entire purpose of having this kind of arrangement is to make sure that not one fixed officer that has been in touch with the taxpayer at the Centre and State Level does the assessment. [5]

As said, no decision with respect to Faceless Assessment for GST has been made so far but again it would be a step in the right direction as this would ensure more transparency, accountability, will make the administration of tax bias free and eliminate any kind of subjectivity that would arise due to the personal interaction between the Tax Authorities and the taxpayer and lastly, it would overall help in bringing about an improvement in the tax collection

Thus, from this it can be inferred that nothing of this would be possible without the help of Technology. It is with the help of technology that we are able to bring about customizations in everything, make compliance convenient and hassle free for our clients and lastly go digital which is the need of the hour considering the circumstances.