GST is already 2 years old and we have seen a major shift in the way taxes are filed in this period. GST was launched with an intention to bring the whole system of indirect tax filing and compliances online. It majorly targeted the micro, small and medium enterprises in the country that account for a very large chunk of the economy of the country to go the digital way.
Most of the flourishing economies of the world have shifted to digitalization when it comes to tax compliances and GST is no exception. The transparency that these procedures will bring about will ultimately lead to reduced tax evasion and smooth economy. As more businesses shift to the digital platforms the overall ecosystem will improve and lead to an equal distribution of wealth and reduction in Black Money too.
Here are a few ways in which GST has gone online digitalized the taxation in the country and brought about a giant shift in the way businesses are done.
Uploading all invoices on the GSTN portal
The onset of GST required all those who are registered taxpayers under GST to upload all the sales transactions in the form of invoices, formats of which were pre-defined by the GSTN, to be uploaded on the portal. This meant that even if you are doing the business offline the return filing process required you to report all your invoices online. This was required for both sales and purchase invoices initially but now with the new Simplified Returns coming in, businesses would be required to file only the sales invoices. This was a major shift in the way small and medium enterprises were run especially with lack of education and awareness of digitization.
It also has brought about a lot more transparency in doing businesses and shifting from cash transactions that weren’t billed to transactions that have proper invoice backing and are recorded in the books of accounts.
Not only this but even the credit and debit notes that are raised against sales invoices need to be uploaded on the portal to give effect to the sales returns and purchase returns transactions.
Filing GST returns online vs paper returns earlier
Filing GST tax returns online is mandatory under the GST regime and this requires an understanding of the online filing process. This shift is a major shift from the erstwhile system where paper filing was allowed. The system although running for the past two years has been having some roadblocks with the industry being resistant to change. This has been majorly due to lack of training the staff.
The GST Council has brought about many changes to ease the burden on the industry and has been reducing the number of forms required to be filed for online tax filing of GST returns.
Introduction of Electronic Waybills – E-Way bills
The major digitization that came about was the introduction of E-way bills that replaced the traditional physical delivery challans that needed to be carried by transporters and copies were needed to be kept by the consignor and consignee as well. These were completely replaced by E-way bills that needed to be produced on the E-way bill portal for every transport of goods above the value Rs 50,000. The rules governing generation and management of E-way bills were defined by the GST law and every E-way bill had a unique EWB number that was generated against each invoice of goods that were transported.
This system did away with the requirement to maintain physical copies of delivery challans and also made the transport on highways smoother and faster with no need to check physical copies. Sooner or later these E-way bills will be integrated with NHAI’s FASTag mechanism and DMICDC’s Logistics Data Bank (LDB) services, to facilitate faster movement of goods and check GST evasion. The proposal, according to officials, will improve operational efficiencies across the country’s logistic landscape. the vehicles will be monitored.
Introduction of e-invoicing
The GST Council in its 35th Council Meeting also announced that e-invoicing, which essentially means the generation of sales invoices directly on the GST portal would be made mandatory for certain B2B businesses having a turnover above a set threshold from January 2020. This is another step towards digitization of tax compliances where invoices would be directly prepared on the portal and there would be no need to report them separately. An IRN – Invoice reference number would also be generated on the portal against each invoice that will be used to quote against the invoice. This IRN will eventually also replace E-Way bills too.
The Indian taxation system is rapidly moving towards complete digitization through these moves and eventually aims at bringing in more transparency in the business dealings as well as curbing tax evasion by businesses. Ultimately this will also lead to the streamlining of the tax payments and save money for users through the tax credit system.
The systems are still evolving and will take a while to stabilize but will lead to a robust and workable solution for all.