With the quest to dig deeper into the tax and technology and discover the “Whats, Whys and Hows”, Cygnet Infotech presents: “Tax pe Charcha with Shivpriya“.
Shivpriya Sumbha – our Portfolio Marketing Manager, Marketing and Communications hosts this exclusive chat series. She discussed multiple tax-related concerns, updates, and information with industry and tax experts in every episode.
In this episode, we would like to introduce our in-house tax tech expert – Krunal Shah. He talks extensively about a recent GSTN meeting that highlighted the committee’s interest in adopting private fintech companies as an IRP and the reasons behind this interest. You can quickly watch the video: https://youtu.be/LEgNijdIPeU.
Please have a look at expert from the chat show.
Shivpriya: As per a recent meeting among the GSTN officials, they discussed whether the private fintech company should be allocated the IRN or not. What is your view?
Krunal: GSTN, in its last meeting, has conveyed its intention to adopt private fintech firms to act as an IRP. The reason is that it gradually wants to bring down the threshold for e-Invoice generation, which was 58 crores earlier and now it is 50 crores. The officials are looking for ways to reduce it even more. This reduction will lead to an increase in the transaction with small and medium sized companies coming in scope.
Bringing the private IRPs would allow the system to handle this huge amount of transaction. It will distant our ecosystem from a single point of failure making it easier for us to handle the volume. This is precisely the main intention. Also, the e-Invoicing is likely to be extended for B2C transaction moving forward.
Shivpriya: In that case, what do you think will be the service model for those private IRPs?
Krunal: Private IRPs will be allowed the generation of e-invoices that would be free of cost. But, additionally, they should be allowed to charge over the top services in form of compliance services and so on. That will be a source of revenue for them. But one thing for sure, this is going to bring a lot of innovation to the table in this industry.
Shivpriya: So, do you think this will increase the revenue?
Krunal: Yes, it will, because our government will have to deal with a lot of data to analyze. This can also be linked to their e-Invoices, their GST returns and so on. Therefore, with the increase in compliance needs, the revenue collection will surely increase.
Shivpriya: Can you also brief me about how is this going to raise the tax collection?
Krunal: More and more taxpayers are reporting the transactions and increasing the reconciliation of input tax credit because of e-Invoicing and IRN numbers. So, it will reduce the fictitious claim of ITC, short reporting of the sales and outward tax liabilities. This is how it will increase the collection in the due course.
Shivpriya: When do you think it will be commenced?
Krunal: No specific timeline was mentioned, but GSTN, in its recent meeting, claims that it will be introduced in the next 8 to 12 months. GSTN has not committed to anything for now.
Shivpriya: What should be the expectation from GST collection in July?
Krunal: Looking at the current trend and the economic activity, collection in July, which will be reported in 1st or 2nd August, is likely to cross the benchmark of 1 lakh crore.
Shivpriya: To sum up, what do you think about this decision? Can we expect anything positive out of this decision?
Krunal: This will encourage private companies to allow value-added services that will gradually offer clients benefits. It will encourage innovations. On the other hand, the government will benefit from volumes of data coming into the system. As the base increases, the single point of failure can be avoided. This will help us as we will not experience any services failures with multiple IRPs to choose from. The client will also have various options.
Shivpriya: Thank you for sharing the knowledge. We will catch back again soon and discuss another significant happening in the tax world.