India GST Roll Out – Role of Chartered Accountants and Demand for Backend Software

India GST Roll Out – Role of Chartered Accountants and Demand for Backend Software

The GST Law slated to be introduced later this year is proposed to be run on a Backend Online Platform. In fact the very success of the GST compliances is said to be owing to the robust online mechanism that has been developed to capture both the Buy side and Sell side of transactions. The Goods and Services Tax Network (GSTN) which is the backend platform for the GST Law is also widely touted to be its backbone.

The GST regime aims to bring in more dealers into the tax fold and to tighten the noose around compliances. The methodology proposed is deviously simple. This can be easily explained with the help of a simple example. “X” a trader purchases goods from vendors “A” and “B” within the State of his registration. “X” would need to pay GST on the sales made by him. The GSTN has been developed in such a way so as to ensure that “X” would not be eligible for GST credit on materials purchased by him from “A” and “B” unless they have declared the GST paid on the sales made to “X”. In fact the platform has been designed in a way to allow for One to One correlation. The Purchases credit claimed by “X” will be matched to the GST paid on Sales declared by “A” and “B”.

Now while this looks quite simple, nothing can be further from the truth. For a couple of hundred transactions this level of compliance could be easily dealt with. But the nightmare starts when the transactions are in the hundreds of thousands as would be the case with the Retail, FMCG industry for example. Added to this are the other factors such as correct declaration of the “Place of Supply”, application of the correct rate of GST, determining the correct Point of taxation and a host of other factors.

It does not take much to realize that these are concept based requirements and technical in nature to say the least and this is where it is expected that there would be an open marketplace for Chartered Accountants to provide an understanding of the GST compliance requirements and also to come up with solutions to tackle these compliance requirements. Chartered Accountants can be expected to take a lead role in developing ways and means to capture required data, analyse the same and input the data into the Compliance database. Further post data submissions there would be issues that could arise such as mismatches which would require reconciliations of purchase and sales data and revision of the GST returns, disputes with the GST authorities regarding the Place of Supply, Rate of GST etc all of which would bring to the fore both the technical and compliance skills of a Chartered Accountant.

Further, since the GSTN requires that all purchase and sales transactions be captured along with other mandatory fields such as Tax Identification Numbers (TIN), location etc, in cases where there is a humungous data load and added to it multi location presence, manually keying the data fields into the GSTN backend software would be out of the question. This difficulty also presents an opportunity for Bridge Software which can be used to take data from the existing ERP of the dealer and convert it into a form which can be directly uploaded into the GSTN database. This would surely created a huge market space for such backend Software.

So overall it is evident that while the proposed GST law brings with it its own challenges the Silver lining would be the many opportunities arising for Chartered Accountants and for Backend software to mention a few. In fact Chartered Accountants being deeply involved with the GST implementation for their clients can develop their own backend mechanisms to meet this requirement.