India will adopt its most comprehensive indirect tax reform—the goods and services tax (GST)—on July 1. As the deadline draws closer, there is a mad rush to get ready for a revamp which most find too complex and tedious.

From the government to small businesses, all stakeholders are anxious for a smooth rollout of the GST. We list below the preparations going on at various levels for the July 1 deadline:

The government

The GST Council is not done with its business yet. It has yet to finalise several remaining issues that include taxation of lotteries and controversial e-way bills, which relate to transport of goods across state lines and might be delayed. A committee of officials is also finalising the mechanism for the anti-profiteering law, though it is not necessarily linked to the rollout.

All the ministries and departments are setting up GST facilitation cells to help resolve sectoral concerns of the industry. The cells will be in constant touch with major industry and business associations relating to the respective ministry/department and provide all possible support.

Micro, small and medium enterprises (MSME) will now be able file GST-related grievances online, with the government putting in place a monitoring mechanism. The units can put forth their suggestions, complaints and seek guidance or information pertaining to the new indirect tax regime using the Internet Grievance Monitoring Mechanism established by the MSME Ministry.

The Union government has also started a new Twitter handle—@askGST_GoI—to answer industry queries related to the GST. The Revenue Department plans to promote 116 IRS officers to the commissioner grade to ensure sufficient logistics.

The Central government is attempting to reach out to businesses and industry through special townhall meetings by the revenue secretary. The next meeting is proposed to be held in Uttar Pradesh, which has a large small taxpayer base. The Central Board of Excise and Customs has written to field officials to be GST ready and ensure a smooth transition. It has listed a number of action points that include assisting businesses to migrate to the new regime.

The banks

Banks have been caught unawares as they had hoped the government would allow them centralised registration under the GST. Now that they are required to register in each state, both public and private banks are frantically trying to change their information technology (IT) systems. Some of the bigger private and multinational banks started modifying their IT systems about four months ago and expect to be ready by July 1. The challenge for banks under GST is to register in each state, maintain state-wise revenue data and operate IT solutions to raise invoices for their business clients. According to experts, without GST-compatible IT systems, banks won’t be able to raise invoices and customers may not get input credits.

All banks have customer-facing front-end systems for specific operations such as forex, treasury and broking and backend systems to take care of accounting and tax. Most backend systems are ERPs (enterprise resource planning), which need significant reconfiguration or a software patch to comply with GST. Banks will be required to provide statewise data and compute state-wise tax payments, which they didn’t have to do previously. Many banks have roped in big IT companies such as Wipro and Infosys to upgrade their systems.

Small businesses and corporates

Small businesses will be impacted the most by the GST rollout as most of them are not organised enough to comply with complex GST procedures. There is a mad rush to make sense of the new tax regime. They are busy with chartered accountants and trying to figure out various new software which make filing tax returns easy. Big companies are trying to train their suppliers and vendors so that there is no disruption in their business once the GST comes into effect. For instance, Walmart India Private, a wholly-owned subsidiary of Wal-Mart Stores Inc, has structured training programs and started series of workshops for its small and medium-sized (SME) suppliers, which will help them to evaluate their GST compliance levels and prepare for the transition.

The retailers

Most retailers of white goods are doling out huge discounts to clear inventory before GST is rolled out. Retailers say they would make a loss of about 6 per cent on unsold stock purchased before May, and about 14 per cent on one-year-old inventories, against which input credits cannot be availed. 40 per cent central GST will not be credited to them on unsold inventory. Television-sets, refrigerators, air-conditioners and washing machines now have their price tags slashed.

Enablers

There are two categories of enablers: application service providers (ASPs) and GST Suvidha Providers (GSPs). Taxpayers can access the GSTN website for filing their returns directly or through ASPs and GSPs which would make the task easier and quicker. While ASPs will help process the sale and purchase data into returns, GSPs will file the return on behalf of the taxpayers to the GST Network (GSTN). GSPs will provide linkages to the GSTN servers. Several such facilitators are coming up in response to a huge demand, given the complexity of the GST filing procedures.

While Dell is offering GST-ready computers, accounting software company Tally Solutions has come up with a new GST-compliant software. Tax-filing portal ClearTax.in has launched GST Pro and GST Biz software recently. The portal offers a bouquet of services, including cloud-based GST software, an end-to-end platform for filing GST returns and GST-compliant billing supported by integrated learning modules.

Taxmann has also introduced One Solution, an integrated software that does all the GST-related compliances. Many smaller outfits such as GSTsamadhan.in helps in registration formalities and also conducts training workshops for companies. Many big companies such as Infosys, HDFC Bank and Flipkart are in the long queue of applicants to become GSPs. EY, Deloitte, Tata Consultancy Services, Reliance Corporate IT Park and several other companies have already been selected as GSPs.

The GST Network

After July 1, nearly 8.5 million registered taxpayers will move to the Goods and Service Tax Network (GSTN). The GSTN needs to have robust technological infrastructure to handle billions of transactions. Even small glitches can mean major disruptions. When it opened its portal to taxpayer registration in November, it suffered a cyber attack aimed at disrupting services and bringing down the host system.

It suffered another cyber attack in which a malware creates a Trojan, which can execute unwanted actions from the user’s end. GSTN has put in place systems to prevent malware attacks. It is setting up a hi-tech security monitoring and analytics centre to forewarn on cyber threats and secure the IT system handling over 300 crore invoices a month.

The GSTN is also trying to achieve perfect coordination with the GSPs. Recently, it met all the GSPs and explained the method and manner in which the GSPs would be able to integrate with the GST system to be able to submit all the return forms on behalf of their clients and tax payers. There are 34 GSPs that have been selected by GSTN to provide additional channel of filing returns and other compliances related to GST. GSTN is ensuring that all the GSPs are working flawlessly before the rollout.

Industry bodies/groups

Industry bodies and associations have been lobbying with the GST Council for lower tax rates. Now they are busy spreading the word. Several associations such the Confederation of All India Traders (CAIT) and the Retailers Association of India (RAI) are holding workshops to train people in the new procedures under the GST. Small businesses, especially traders, need guidance as the GST involves technology and has a very complex structure. Most of such taxpayers are not tech-savvy. Training workshops not only explains the GST to them but also show them how to use various technologies such as apps to prepare returns.

Source: Economic Times