Why Tax Automation is Critical for Business Success under GST

GST requires a synchronization between tax payer's application, an invoicing software, and the GST system, which without automation would be a rather difficult task

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One of the key priorities today is harmonisation of the existing complex, indirect tax system by replacing it with a uniform Goods and Service Tax (GST). GST is meant to simplify the Indian indirect tax regime by replacing a host of taxes by a single unified tax, thereby subsuming central excise, service tax, VAT, entry tax, etc.


Since the entire system of indirect taxation is undergoing a complete make-over, there are a plethora of challenges for its successful implementation and transitional issues will become particularly relevant. For taxpayers, challenges begin with understanding this transitional provisions to redesigning the supply chain and distribution strategy, forming new business policies and framework, studying the impact on cash-flow and profitability and addressing sector specific issues. GST regime necessitates a high level of synchronization between tax payer’s application, i.e. an ERP, an accounting or invoicing software, and the GST system, which without automation would be a rather difficult task. These include item level detail in invoices, maintenance of trail of all amended entries, reconciliation of sales and purchase register between vendors and buyers on a minimum three monthly returns and other events such as auto reversals demand or automation of tax compliance process within any tax entity. If anything is amiss, it will directly impact the business’s compliance rating and act as a deciding factor for the buyers, lenders and insurers, whether to deal with that business or not. Timely tax compliance will be critical for business success and a robust and scalable solution to manage GST compliance.

How Taxpayers Can Utilize GST?

The government has built an intuitive solution, however it does not have reconciliation functionality which will be needed for error free filling of GSTR2 and GSTR1A. It is also not possible to automate the filling process using the official portal. Taxpayers have two options; they can either utilize solution provided by the Government or private entities called GST Suvidha Provider (GSP) and Application Service Provider (ASP) for GST compliance. Such functionality, along with other value added features, will make the process more simpler. Till now, Goods and Services Network (GSTN), a private company set up to provide IT infrastructure to the government, taxpayers and stakeholders for GST implementation have appointed 34 GSPs which will offer support and services in form of GST APIs to help tax payers and businesses in compliance. They are needed to exchange information with GSTN’s servers.

How GST APIs can help the Taxpayers?

Functionalities available through GST APIs includes registration of tax payer and tax consultants, return filling (GSTR1 up to GSTR12), payments, ledger maintenance, etc. Then there are ASPs which are a more generic term for entities building return filling applications. An ASP need not be accredited by GSTN, although it must have a contract with a GSP to access GST APIs. Interestingly, almost all GSPs are also ASPs. In case few GSPs are not ready, their customers can use the (GSTN’s) offline tool to upload invoices. Taxpayers having small number of business to business invoices, like retailers and small traders, can do the data entry on (GSTN) portal itself. Factors such as intuitiveness of reconciliation, validation and tax determination engine, data security, storage and privacy policies etc. should be taken into consideration by taxpayers while choosing the right technology vendor to ensure smooth compliance.