GSTN to handle 3.5 billion transactions a month: Chairman Navin Kumar
- Tripura assembly elections: Voting underway amid tight security
- Narendra Modi to inaugurate fourth container terminal of JNPT tomorrow
- Canadian PM Justin Trudeau begins week-long India visit
- PMO working on resolving PNB fraud, will try to extradite Nirav Modi: MoS finance
- Tibet’s most sacred Buddhist temple catches fire
India is scrambling to finalize technology to process as many as 3.5 billion invoices each month as it moves to roll out a landmark nationwide sales tax from 1 July.
The success of one of the world’s largest and most complex tax reforms depends on the glitch-free performance of the goods and services tax network (GSTN)—the information technology (IT) backbone of the new system that will eliminate a complex web of state and federal taxes and make India a unified market.
The system is expected to process 3.5 billion invoices every month, with the country’s 8 million direct taxpayers required to file up to 37 tax returns in a year.
Built over the last two years, it’s designed to be the common interface for federal and state governments, taxpayers, tax authorities and banks, chairman of the GSTN Navin Kumar said in an interview.
“India’s GST is the most complex of all the countries which have implemented GST,” Kumar said, noting that work on the system began two years ago when the only available guidance was draft laws. “Despite not having all the inputs, we have been working on it and we will be ready by July.”
The Parliament in April passed four bills to implement the tax, while the GST Council has finalized rules regarding tax refund, registration, invoice debit and credit. Those relating to input-tax credit, valuation, transitional provisions and composition will be finalized at the next GST Council meeting scheduled for 18 May, finance minister Arun Jaitley said on 31 March.
The sales tax will replace more than a dozen levies at the federal and state level, which the government says will reduce the cost of production and promote the free flow of trade in one of the world’s fastest-growing economies that’s home to 1.3 billion consumers.
It’s through this common portal that new users will register for the GST tax system and existing taxpayers will migrate to file returns. However this is only the front end of the system. In the back end, it will connect to all tax departments, which will also need to be upgraded to communicate with the GST system, Kumar said.
It’s also expected to give a significant boost to the low taxpayer base in India, where only 8 million pay taxes, largely due to systematic corruption and the massive size of informal and unorganized sector in India.
Skeptics warn that a poorly prepared IT system will lead to country-wide chaos.
“After 1 July, half of the people will fail to comply with the new system, especially small units and services industry as they won’t be ready,” said Sachin Menon, partner and head of indirect taxes at KPMG India. “Now when rules are not ready yet, how can you expect the GSTN to be fully prepared by July?”
Kumar defended the system, saying although it was a challenge to make the software without the taxation rules, it would be ready by the implementation date and would have its beta launch from May to check for any loopholes and strengthen the technology.
However, since there is still no clarity on rules, it is ambitious to expect the GSTN to be ready by the implementation date, said a council member of accounting regulator, the Institute of Chartered Accountants of India. Bloomberg