Role of Technology in GST 2.0

Let’s discuss the key areas which help the digitalization to be more effective for the changes which are taking place in GST.

It has been about 30 months since Goods and Service Tax (GST) was rolled out in India. It is one of the major indirect tax reform, but in reality, it is a business process reform.  Government directives to use data analytics to find out errant taxpayers is in place, and technology has made it a reality. To face this new era, trade and industry must come forward and adapt to evolve and be better prepared to implement new regulatory needs as they come.

As we are in the era of digitalization, embracing technology will impact the top line and bottom line of the businesses,  Adoption of technology for the GST Compliances also allows revisiting the business process along with automation. Let’s discuss the key areas which help the digitalization to be more effective for the changes which are taking place in GST.


Invoice Reference Number (IRN) can be issued either by uploading the invoice in the Jason format on the invoice Registration Portal (IRP) or by using the APIs. If the number of invoices issued is small in number, the Jason upload would be viable but in case of organizations that have to issue invoices in a larger number, it is recommended to use the API model as it will reduce the manual intervention and also saves time. Most of the organizations are generating e-waybills using API’s and with the e-invoice adoption, the same has to be modified as the e-invoice is expected to update the Part A of the e-waybills.

The APIs for the e-invoice is available and access to the sandbox is provided to selected taxpayers; alternatively, the taxpayers can access them through GSP’s. Though it is mandatory from 1st April 2020, the impact analysis on the existing systems has to carried out and rolled out accordingly. The IRN generated by the iRP has to be captured in the existing ERPs.  As the implementation differs from one ERP to another, it is recommended to approach the OEMs directly or through their partners.

Input Tax Credit 

As a part of anti-tax evasion measures, the Government has rolled out matching for availing the input tax credit. In the existing returns, the taxpayers can avail input tax credit only when the data of suppliers is reflected in GSTR -2A and the taxpayers have to match their purchase register with the GSTR-2A. Matching can be done manually but it is time-consuming, prone to errors and the users have to check the GSTR-2A’s of the previous months if the suppliers have filed the GSTR – 1 for the previous periods. To make the process effective and error-free, the taxpayers can use various tools provided by various IT companies like Logo Infosoft, Tax Genie, etc. In case if the users have taken input tax credit erroneously the same has to be reversed with interest of 24% or it is reversed on account of notice issued by the department under Sections 73 or 74 of CGST Act 2017, then penalty will also be applicable, which is again a cost to the company and also drains time and efforts of the taxation teams.

New Returns 

The new returns under GST are to be rolled out from 1st April 2020 and few changes are required to be made in the data to be uploaded. In the new return format, reporting of HSN codes is required for all transactions except for the B2C transactions. The existing return filing data extract utility has to be modified to support the same apart from the other changes. Input tax credit (ITC) can be availed only when the user accepts the invoices; it is tough to do at the end of the month and the tax person may not be aware of the nitty-gritty of the transactions. It can be addressed by having a flag at the invoice level or the GRN/ MRN level for the availing credit. Automation here helps again to claim the credit as per law and also allows utilisation of the working capital more effectively and being GST compliant. A call has to be taken on modifying the existing tools being used or new tools to be purchased or developed or outsource the entire process of report filing, matching and follow up with vendors who have not filed the returns to external partners.

Technological intervention will help with GST Compliances as it will increase the efficiency of the organizations and also help in revisiting the business process to be in tune with the statutory requirements. The taxpayers can go on a CAPEX model or use cloud based solutions under the S-a-a-S model as it will help you to use the scarce working capital more effectively. A judicious call has to be taken by the organizations by involving the users from the IT, Finance, Supply Chain, Taxation, Purchase department, and inputs can also be taken from the Internal Auditors as well as the Statutory auditors. All these above changes need to be addressed together as they are interdependent. For instance, e-invoice API’s will be updating the Anx-1 also, if the return filing utility does not have a condition to exclude such transactions, then it may be updated twice. Or when the data is uploaded it will show error message for the duplicate records and again users have to spend additional time for cleaning the data. As we are racing against time, organizations have to start working in the direction that yields the most efficient results in compliance and tax obligations.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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