GST 2.0: Are Enterprises Ready for GST Compliance Yet?
Further simplification of the current GST regime with a new GST return system will help businesses with hassle-free and timely filing.
With 2 years of GST being in existence and 35 GST council meetings happened, the way the government is addressing our concerns about our indirect tax makes the road ahead very promising. This clearly indicates the need for corporations to gear up and be ready for tax automation.
More than a dozen of indirect taxes was abolished and in lieu one single tax on both goods and services was introduced. GST was introduced to not just eliminate the additional and redundant taxes but also the cascading effect which was present in the earlier regime. In the past, consumers were quite unaware of type of taxes they ended up paying. But today, the consumer is well aware of the rate of the tax being charged as it has been standardized throughout the country.
With the 2019 budget, our honorable finance minister Nirmala Sitharaman announced that the government is considering further simplification of the current GST regime with a new GST return system, fully automated GST refund module, single instead of multiple tax ledgers, and a central system for capturing invoice data. A Composition Scheme has been proposed for suppliers of services with annual turnover of up to ₹50 Lakh in the preceding financial year. Earlier, this option was not available to suppliers of services and they had to register themselves as regular taxpayers.
While there are still many improvements to be made to the e-way bill system, we cannot ignore the fact that with the introduction of the e-way bill, the entire supply chain and logistics industry went through a major transformation, resulting in simplifying the overall ability to move goods. E-way bill site has seen a significant development in terms of the user interface since its inception. Taxpayers who have not filed GST returns for two consecutive months are also prohibited from generating e-way bills. This has acted as another measure to curb tax evasion.
As a nation, we are looking at regulations that will drive businesses towards digitization and process automation to ensure greater levels of tax compliance. Everything is online in the world of goods and services tax and thus traders had to change their way of doing business. In the initial days, they faced problems even with the simple task of raising invoices due to lack of knowledge. According to the government, specified suppliers are to mandatorily provide their mode of electronic payment to recipients which in turn promotes a cashless payment structure.
By introducing the proposal of facility to transfer any amount of interest, tax, penalty and fee from one head to another has eased the way for doing business in India. It is also proposed that a National Authority of advance rulings should be created with the objective of enabling appeals being heard against conflicting GST advance rulings in case of distinct persons. This will ensure uniformity across different states.
It’s now time for enterprises to gear up for automation as the new return filing system ensures reporting at a transaction level. Not too long ago, there were many situations in which the complex reconciliation process resulted in a loss of credit for large corporations.
With the new mechanism of invoice reporting coupled with tax automation, real-time invoice reconciliation will be easy, and errors can be resolved immediately. But this mechanism also puts the onus of compliance by their suppliers on the corporations. Without automation, it could be challenging for these businesses to analyze a large number of invoices on a day-to-day basis and determine the acceptance or eligibility of credit.
Moreover, reconciliation could be complicated by the legacy processes followed by corporations where issuance, acceptance, and recording cycle of invoices is time-consuming.
Integrated tax automation solution provides the level of readiness required to be GST compliant, which is especially important for large enterprises that cannot risk their industry reputation by getting red-flagged due to non-compliance.
About the author: Manjula Muthukrishnan, Managing Director, Avalara India
Source : ETCFO
