Wednesday 10 August 2016

GSTN - Building the World's Largest Tax System

India's Loksabha and RajyaSabha has passed Constitution Amendment Bill ( 122nd ) in bid to welcome Goods and Service Tax in India. It was a stepping stone for India's biggest tax reform since independence. GST will replace indirect taxes like excise, VAT, entertainment tax, luxury tax etc. A stronger and efficient GST requires software which is able to handle large complex data. GST would need the best of technology from the IT capital of the world. The team of technology specialists and tax experts are already are working on a robust  country-wide information system under GSTN.

Goods and Service Tax Network (GSTN) is Section 25, non-government, private limited company. GSTN was setup as a non-government not for profit private limited company in 2013 to create robust IT backbone to enable real time tax payee registrations, filing returns, handling of invoices, executing inter state tax settlements etc. The services will be available to all stakeholders such as central tax departments, state tax departments, banks, Central Board for Excise and Customs, RBI and taxpayers. The Government of India holds 24.5% equity, all states and union territories hold 24.5% and other non-government financial institutions namely NSE, HDFC, HDFC Bank, ICICI Bank and LIC Housing holds 51% equity in GSTN. The role of non-government financial institutions as a decision making power is unclear.

GSTN had called an application for Request For Proposal (RFP) from major IT firms in India to develop IT infrastructure in physical and software form. India's second largest IT firm, Infosys has won the contract worth Rs. 1,380 crores to develop GST Network, beating its rivals TCS, Wipro and Tech Mahindra. GSTN would be placing the order for hardware which required to build the platform. The hardware will be imported and then installed and then checked whether it is ready to run the software. The software is expected to be ready by October and the inclusion from software to hardware would take another 2 months. The Beta of GSTN would be running by February, 2017. New registrations of tax payers on the GSTN system will begin from the implementation day. GSTN is also working with 19 states for creating front-end.

Migration of existing taxpayers of VAT which number about more than 65 lakh and about 20 lakh of service tax payers and about 3-4 lakh of central excise taxpayers - their migration starts sometime in October and it will go on until February. - Chairman, GSTN

Building the world's largest and most complex tax system in few months is a herculean task. GSTN would help in PAN-based registration of traders, besides filing of tax returns and payment system. In other words, the portal itself will be a one stop for filing and processing of all taxes for almost 65 to 70 lakh tax-payers in the country and is being designed by a specialised design unit of Infosys.

Today, not all taxes in India are paid in electronic form. After GST, all taxes whether big or small will be have to be paid in electronic form. Smaller tax payers are not aware of the existing system and they consult their CA for the same. GSTN is in talks with various IT firms to develop simple multi-lingual mobile application that would enable small tax payers to file returns easily.

GSTN is surely the organisation for national importance. The simplicity and efficiency of the software would add to 'Ease of Doing Business'. All the stakeholders including SME taxpayers should be given training under the Financial Literacy program. A mobile app for easier returns is encouraging and but we should also you other platforms like Youtube, TwitterSeva and Email Ticket raising which appeal the masses. As CGST and IGST pass in coming winter session, the role of GSTN as implementing and customer service body would be more clear.

- Chaitanya Kulkarni ( )

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