The Goods and Services Tax (GST), India’s biggest indirect tax reform brings in radical tax reform that affects all, particularly Indian businesses of all sizes. Big corporates will be as much affected by the GST rollout as small and medium enterprises (SMEs) or startups—backbone of the Indian economy. India has a total of 36 million SMEs and, globally, the country can boast of 3,100 startups—one of the highest in the world. No doubt, all businesses will be affected. Therefore, the change is huge and the canvas extensive. The GST Network (GSTN) is expected to throw up 5 billion invoices a month. Add to it the 50 million enterprises in India together with 15 million retailers that need to go for digitization of sales.
An integral part of tax compliances in the GST is filing data on the network. The GST Network is the nodal agency which holds all the data and is also a reference point for both the central as well as the state governments, which hold a joint stake in the private company. The GSTN is guided by the sole objective of development as well as maintenance of information technology (IT) infrastructure for a successful implementation of the new tax law. This is in line with the Digital India initiative and for an automated tax compliance regime. Such automation and synchronization is expected to bring greater ease in doing business.
What exactly is a GSP?
“Let’s take an example. If XYZ is a private company running operations on Deskera ERP, all the records with regard to purchase and sales are maintained on it. Around the end of every month, several reports are generated from the ERP and which is then attached with tax returns and uploaded on the portal,” said Shashank Dixit, CEO, Deskera.
GSP is the full form of GST Suvidha Provider. A GSP will be an enabler so that a taxpayer is able to comply with the various provisions of the GST through the Web based platform. It is an online GST compliance platform.
“The government aims for a single and an automated workflow in which the ERP providers can erect an interface with the government’s portal. All the GST-related compliance is directly carried out through the company’s software,” added Shashank.
In all this, tax automation plays a critical role in order to meet the regulatory requirements as provided under the Goods and Services Tax (GST). Consequently, a high level of synchronization is required between a taxpayer’s system as well as the GST Network (GSTN). Invoicing details, auto-population of purchase registers, reconciliation of various sales registers, as well as auto reversal features are key to the smooth functioning of data-processing requirements under the new tax law. Not only can ERP providers can be a GSP but also startups or technology companies which have expertise in building web applications.