Technology-assisted compliance is not a completely new concept for Indians. Even in 1990s, taxation departments used to administer taxes by way of technology. But, this was at the backend. The major change was introduced when the online return filing concept was introduced for the tax-payers. Many of the computer systems were integrated and finally taxpayers were enabled to directly interact with the department. Thus, for GST implementation the government is again proposing technology-based compliance. But, let us see what’s different this time.
Technology for GST Compliance – What’s new?
Why will technology play a crucial and significant role in GST compliance? How will it be impactful from both government and business point of view?
In the present tax system, there are number of cases, where the government is not able to detect tax evasion and loss to the revenue department. This has become a challenge for the taxation authorities to track the same. They need critically track the input tax credit claimed against the liability of the seller. Many a times, there have been cases reported for duplication of claims, fraudulent claims and claims that do not correspond with the liability declared by the seller.
In GST scenario, the taxation authorities are aspiring to achieve two major goals which are as under:
- Reduce evasion of tax
- Simplification of Compliance for the tax-payers
To achieve these goals and overcome the issues with the present tax system, GST has introduced complete matching of all the invoices of buyers and sellers.
With the billions of invoices to be matched on a monthly basis there is a significant need for an invoice matching potential on a real time basis supported by a strong IT infrastructure. It is impossible and rather impractical to consider invoice matching at this level on manual basis.
How should businesses be ready?
With the GST implementation soon becoming a reality now as the government proposes to implement GST from July 01, 2017, the businesses are expected to get ready. Business must think about automation and upgrading their manual systems. They need to install softwares that will work in-line with the GSTN system and portal.
Business will have to interact regularly with GSTN system and thus they will require GSTN-enabled business application and accounting software so that their future tasks becomes seamless and efficient.
As a business, one should:
- One should get acquainted with GST model law and understand the impact of technology on GST
- Be comfortable and appreciate the need for compliance discipline
- Make right choice of software and technology that will work seamlessly with GSTN and help achieve compliance.