New Delhi: Goods and Services Tax Network (GSTN), the IT infrastructure firm that will manage millions of invoices filed by about 8 million indirect taxpayers, has a key role to play in making the rollout of goods and services tax (GST) a success. GSTN chairman Navin Kumar, an experienced bureaucrat who has steered many e-governance missions of the Bihar government, including the one on the state’s value-added tax (VAT) system, says GSTN’s information technology system is designed to be convenient for even the smallest taxpayer in the remotest part of the country. Edited excerpts:
How does introduction of GST change the way indirect taxes are paid and returns are filed by businesses and traders?
One basic difference between GST and existing value-added tax (VAT) systems such as central excise, state VAT and service tax is that GST payers have to submit invoice-level data on business-to-business transactions. This is not required in the existing system. We noted that a business may file an average of 137 invoices a month. For designing our system, we took three times that number as a benchmark, that is roughly 400 invoices per month by a business. That means 80 lakh taxpayers may file about 320 crore invoices per month under GST. Data of so many invoices cannot be uploaded in the conventional manner. Our software has to enable every class of taxpayer to upload data. The system allows entering data in the GSTN website itself, which may be convenient for small businesses, but manual data entry may not be feasible for large businesses that may need to upload say, 50,000 invoices a month. For them, we have an offline tool which could be downloaded from our website. It draws data from the excel sheet in the taxpayer’s system and uploads to the GSTN system. It can handle 19,000 invoices in less than half a minute.
In the current system, businesses file both sale and purchase data. But in GST, only sellers need to upload sales data while our system automatically fills the buyer’s purchase register. All that buyers need to do is accept the auto-generated return or modify it if there is a mistake. This makes compliance easy.
How confident are you about the preparedness of small and medium scale industry and of small traders for the 1 July rollout of GST?
The offline tool I mentioned was developed keeping in mind the requirement of the large number of small businesses and traders, especially those in remote areas, where internet connectivity may not be good. They can use the offline tool; whenever they have connectivity, can upload the data. The enrolment of existing indirect taxpayers into GSTN went on from November 2016 to April. We again opened the enrolment window in the first fortnight of this month. About 66 lakh indirect taxpayers of the 80 lakh have activated their account at the GSTN portal.
Data shows that many of these taxpayers are from far flung areas, including the North East. That shows that in spite of connectivity issues, they have been able to access the GSTN portal. This was made possible due to the mission mode project taken up by the centre for computerization of commercial taxes. With the centre’s financial assistance, all states have computerized their commercial tax systems.
Over the past decade, taxpayers have thus got used to e-filing and electronic compliance.
How about GSTN’s readiness?
Yes, we are ready. For GST rollout, there are two pre-requisites. One, all existing indirect taxpayers have to migrate to GST. Second, there should be facility for registration of new taxpayers. Eighty percent of existing taxpayers have activated their GSTN accounts. The registration window will remain open again from 25 June for three months. The module for registering new taxpayers is ready and will remain open from 25 June. We will also have a help desk to assist new taxpayers.
How do changes in tax administration arising from GST help in improving the ease of doing business?
The multiplicity of taxes at present which require taxpayers to report to different authorities will give way to reporting to a single authority under GST. It will unite the country into a common market. We are hoping all check posts at state borders will go away. Many states have already removed; others have said they will do so. The economy will benefit from this.
GSTN is expected to generate a lot of valuable data about supply of goods and services. How will this data help both direct and indirect tax administrations in widening the tax base?
That is one of our declared objectives. We will be carrying out business analytics once we have enough data in our system. When we have data of transactions for a year, we will collaborate with the income tax department and the others so that we can use their data and they can use ours.
Do you expect teething problems in the initial months of GST rollout?
In a complex system like this, there will be teething problems. We have made arrangements to resolve those, including by setting up help desks.
Will GSTN be a self sufficient entity? What are the revenue streams for GSTN?
Our revenue stream is based on user charges collected from the government for the services rendered to tax officers and taxpayers. Taxpayers will not be charged. Central and state governments will pay on their behalf.
Your message to taxpayers?
I would like to urge taxpayers to use the help materials such as videos and illustrations we have posted in our website. That will make working on GSTN portal very easy. They should also read about the system requirements for their computers. We are going to release some ‘dos and don’ts’ to guide taxpayers.