GST – A fortune cookie for India’s IT services
10 Mar, 2016
Over the past couple of years, almost India’s entire industrial ecosystem has been looking forward to the implementation of Goods & Services Tax or GST bill. GST will replace multiple taxation policies of State and Central governments for good and services sold within India with a unified tax framework based on globally accepted best practices. Formulated by the Government of India as early as 2007, GST was seen as the replacement or successor to the Value Added Tax or VAT practice followed by taxation authorities in India. GST is poised to redesign, re-engineer and rationalize the draconian complexities present in India’s Tax system.
GST is predicted to contribute to an additional minimum of 1 per cent to India’s Gross Domestic Product once implemented. Such a huge purpose can only be met through a technology enabled solution which allows all stakeholders to transparently exchange tax data. For this purpose the Government of India has set up the Goods & Service Tax Network (GSTN), a not-for-profit company with stakeholders from both Central and State governments.
I was given a tremendous opportunity to understand the full potential of GSTN at the GST Eco System Workshop held at Bangalore in January 2016. The workshop also shed light on the huge potential for IT service providers to partner with the Government and Indian businesses to help transition the existing legacy tax system into GST.
GSTN has the responsibility to build a scalable IT infrastructure to roll out GST in India. The ideal IT platform will be a shared portal with access provisions to Central and State governments, Tax authorities and premier financial regulators like the Reserve Bank of India. The GST IT system will allow tax payers to submit their returns on customized tax payment systems. The system would be developed by third party partners while the centralized GST IT system would offer them with the requisite access provisions to the GST Network.
GSTN has already partnered with Infosys to create the GST IT platform on which the entire GST architecture would rely on. As for the Tax payment gateways, GSTN has opened up a brand new avenue for private players in the IT industry. It is to create a customized information exchange gateways for businesses to pay their taxes and submit mandatory documents. These private players would be known as GST Suvidha Providers and they will be the fore runners in enabling enterprises to migrate their tax systems into the GST regime.
I certainly believe that this is an opportunity for private players in IT to capitalize on their capabilities in Cloud Computing, Big Data Analytics and Mobility to create scalable tax filing solutions for enterprises. With all hopes high on rolling out GST in 2016 both the government and the Indian economy is aiming for a milestone transformation for one of its key economic indicators – a friendly tax environment that equally benefits consumers, companies and the government machinery.