Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers between states and create a single market. It is a tax levied on goods and services with value addition at each stage having comprehensive and continuous chain of set of benefits from the producer’s / service provider’s point up to the retailers level where only the final consumer should bear the tax.”
It is estimated to boost GDP by 1.5 to 2%. ‘One India, One Tax’ will be the new reality with GST subsuming over ten indirect taxes and making India a common market.
Apart from elimination of cascading effect, the benefits of simplified compliance, technological backing and uniform process across India will contribute significantly to ‘Ease of doing Business’
GST Impact on current indirect taxation
The current tax system has been the way it is since independence so why now is there a need for changing the system? The answer is that the current tax system is unfair to the manufacturing sector or the producers, the different taxes at each stage of production added with the insufficient setting off mechanism results in a huge amount of tax being levied upon the producers. This was one reason, another reason for the introduction of GST is that the inefficient solutions mechanism has made it extremely difficult for the foreign companies who have invested in India especially in SEZs (Special Economic Zones) to get their grievances dealt with, this inefficiency has made them prefer China as their system is much more efficient and helpful. So what is this proposed GST structure? GST structure basically will be two tiered i.e. tax would be levied by both the Centre and the States on the intra supply of goods and services through CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax).
Are You Ready for GST?
While we see huge opportunities and potential in GST being implemented in India but at the same time we have many infrastructure challenges to accommodate the new change for tax payers. The success of one of the world’s largest and most complex tax reforms depends on the glitch-free performance of the goods and services tax network (GSTN) -- the IT backbone of the new system that will eliminate a complex web of state and federal taxes and make India a unified market. Every tax payer need to have an automated strong IT system that helps RETURN, ITC, Invoice upload etc.
Role of GSTN in GST:
The GSTN shall provide a shared IT infrastructure and services for implementation of GST to Central and State authorities. The functions of the GSTN would, inter alia, include:
- Forwarding the returns to Central and State authorities
- Computation and settlement of IGST
- Matching of tax payment details with banking network
- Providing various MIS reports to the Central and the State governments based on the tax payer return information
- Providing analysis of tax payers’ profile
- Running the matching engine for matching, reversal and reclaim of input tax credit
Role of GSP in GST
GST system is going to implement G2B portal which will allow taxpayers or users to approach GST systems.
GST Suvidha Provider(GSP) is third party applications (NSDL GSP) that enables tax payers to integrate the tax return system to GSTN via desktop, mobile, and other interfaces, and they’ll be able to interact with the GST system.
Role of ASP in GST
Taxpayer or users can file their GST taxes with the support of ASP partners (Like Trigitals “Easy Made GST” application) or existing software. ASPs can develop an end- to-end solution for corporates, consultants, and taxpayers. Through ASPs, the taxpayer and consultants can manage the sale or purchase of goods and services and GST filing. ASP will take care of five roles which are mentioned below:-
- Data Security :ASP will handle most of the sensitive data of an organization. This data includes who do you sell and where? What do you sell? How much do you sell and at what price? It’s not all. An ASP has also required information about purchases. Overall an ASP will gather data or information from the taxpayers for filing the returns.
- Data Authenticity :The details you submitted to ASP will be used for filing GST Returns. Make sure that details you have provided is true and authenticated as belonging to you without a doubt. Any mislead details or data can lead to incorrect returns which will lead to liabilities for the tax filing entity. The responsibility of filing correct returns lies with the company and its corporate officers.
- Data Warehousing :You ask yourself that ASP will provide long term Data Archiving and Retrieval? At ASP, you will store data 8 years beyond the date of filing of the annual returns for the year.
- Audit Features : ASP will maintain all information details in the system starting from the from the point of upload till the creation of the returns. Cross check the audit features that are available as a part of the ASP Platform.
- Application and Process :Filing return is the responsibility of the corporate officers. So it’s essential to establish and ASP will provide you full control of the process. Filing accurate returns is essential in the context of India because raising of all disputes in case of inconsistency is the responsibility of the filer. Not filing the dispute in particular time can lead to the material impact on the net tax liability.