GSTN ready for last-minute rush from taxpayers
Indian taxpayers typically wait till the last moment to file their tax returns. This habit is expected to linger in the regime of the goods and services tax (GST), which would be rolled out on the goods and services tax network (GSTN) throughout the country.
The GSTN anticipated this last-minute rush and designed its system to withstand a massive surge in transactions in the last few days.
“We have designed the system in a such a way that almost 50 per cent of the registered taxpayers with the GSTN can upload their files (invoices) concurrently in the last few days. Though it may take some time to process all files simultaneously, our system will not crash,” a confident Prakash Kumar, chief executive officer of the GSTN, told Business Standard, while demonstrating how the system would work.
Kumar said the GSTN had set up servers in Delhi and Bengaluru to handle the transactions through its portal. It is creating a capacity to handle three billion invoices a month.
Officials are also planning to launch awareness campaigns to educate taxpayers on uploading invoices in a timely manner. The ideal situation would be if taxpayers upload their invoices daily. Currently, around eight million traders and companies are registered with various state governments and the Centre. Of these, 5.65 million have registered with the GSTN. These taxpayers have been allotted a GST identification (ID) number — a 15digit number based on their income tax permanent account number (PAN) and the state of registration. This number serves as a unique identifier of the company and is used to track its transactions on both sides — as a buyer and as a seller.
Under the GST regime, a taxpayer will typically have to fill two types of returns each month — GSTR-1 for outward supplies made by the taxpayer and GSTR-2 for inward supplies received by the taxpayer. In GSTR-1, the firm will have to list invoice details. It will have to give the GSTN company ID of the firm to whom it is selling goods as well as details of the supplies. The data will reflect in GSTR-2 of the company to which it is selling.
On the basis of the supply side data, firms will be able to avail themselves of input tax credit.
Take, for example, the case of Maruti Suzuki. The company will upload invoices from outward sales in GSTR-1 and inward supplies received in GSTR-2. The details filled by Maruti in GSTR-1 will reflect in the GSTR-2 of its counterparts, and vice versa.
Now, firms have the right to either accept the information uploaded by its counterparty, edit it or reject it. If both parties accept the bills, another form, GSTR-3, will be automatically generated for claiming input tax credit.
Deadlines have been set to file these returns. GSTR-1 has to be filled by the 10th of the month, while GSTR-2 is to be filed by the 15th.
Every company would be required to file these three tax returns every month and all invoices will have to be uploaded in the system.
As companies can avail themselves of input tax credit only after their counterparties have uploaded their invoices and/or accepted them, the system has an inbuilt incentive for companies to push their counterparties to upload their tax details.
There are also other forms such as GSTR-5 for non-resident foreign taxpayers and GSTR-10 for government entities.
On the GSTN dashboard, a firm will be able to see the various taxes it has paid, notably Central GST, State GST, Integrated GST, and cesses. Officials of the GSTN said that the proceeds of the State GST would be routed to states via the Reserve Bank of India.
Firms will also be able to see the mismatches in the receiver and supplier data on their dashboard. A segmentwise breakup of invoices — business-to-business, business-to-consumer, exports, imports, etc — is also available.
The GSTN has also tied up with the Customs authority to be able to access data in order to maintain the integrity of the entire chain.
To deal with teething issues, big companies such as Maruti Suzuki or Hindustan Unilever, which generate hundreds and thousands of invoices, can use the services of GST Suvidha Providers (GSPs), which would act as intermediaries between companies and the GSTN.
And those concerned about the integration of small and medium-sized companies into the system, officials in the GSTN expect GSPs to assist a wide variety of taxpayers, including small and medium enterprises and small retail vendors. This would entail assistance in rearranging the purchase, sales register data in the GSTcompliant format, and integration of their accounting packages/ enterprise resource planning with the GST system.