‘Single Tax Slab Would Have Been A Fast Track To Inflation’
GST simply accepts on the onset that different types of goods and services need to be taxed at different rates to stimulate investment and growth
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After the GST rollout, many businesses are finding it difficult to match steps with the new tax regime. Thus, application service providers (ASPs) come into play to provide much-needed support to taxpayers in the IT ecosystem for GST. In an exclusive interview with BW Businessworld, William Rau, Senior director, engineering, Avalara, a business leader in indirect tax automation speaks about IT infrastructure for GST compliance, multiple tax slabs and more:
- What kind of IT infrastructure do you provide for GST compliance?
As a long-time SaaS provider, Avalara hosts our GST solution on Amazon Web Services (AWS). We have specifically architected our solution to leverage the cloud services provided by AWS for scalability, better support, security, and availability.
- Do you think the businesses especially, the MSMEs are GST ready? If not, what should be done to make them GST ready?
We have seen a lot of businesses who are deferring their readiness to their CA, a consultant or are planning to use the semi-automated processes offered by the GSTN. Those organizations feel they are “ready” because these are the behaviors that have always made them ready before. GST is a game changer in the true sense, in that the solutions that worked before are not going to suffice for a healthy business going forward. Automation is the only way to handle the volumes that were unforeseen hitherto, in the Transaction Level reporting in GST.
We expect many of these to return to the search for an ASP solution to guide them through the returns compliance cycle and provide the right level of automation that is sustainable over the long term.
- Do you believe multiple tax slabs have complicated GST compliance?
No. India needed tax reform, but a single slab would have been a fast track to significant inflation. GST simply accepts on the onset that different types of goods and services need to be taxed at different rates to stimulate investment and growth in those areas where it is socially necessary. Most of the rest of the world benefits from the presence of tax determination services for these reasons, and India will be no different in the long term.
- Why is it important to have a right ASP partner?
Domain expertise alone is not sufficient to provide the right level of GST compliance automation. Technical ability without a deep domain understanding will provide one size fits none sorts of approaches. What is required in an ASP partner is an organization that can understand and appreciate the unique needs of any given customer, and then provide a technical solution flexible enough to meet specific needs, delivered on a common platform for scalability, supportability, and performance.
- You focus more on paperless compliance. How can this help?
GST in its core is a fully paperless tax system. The GSTR return PDFs published by the GSTN do not in practice actually exist – those are provided as a mental crutch to help in the adoption of GST. The filing of an actual return is a computer making an application interface call. Given this, there is no choice as to whether or not a company will shift to paperless compliance under GST – that shifts if absolutely required. Avalara’s long history of helping customers move their tax compliance into the cloud and off any form of paper gives us a unique position with India GST. We are accustomed to translating business to technical requirements in a way that allows customers to own and maintain their own paperless compliance quickly and without error.
- What is the pay per use model that you are offering?
Charging for what customers actually use is more and more becoming the only acceptable billing model in today’s society. We have come to expect this for our entertainment, our cell phones, and our electricity, so it only makes sense that a cloud based indirect tax regime like GST should adopt the same cost structure. Customers should expect a per return fee for Avalara compliance solution that is easy to understand and scales with their business.
- What kind of benefits do you think GST will give or is giving to Indian businesses?
The immediate benefit of GST’s cloud-based compliance structure will be the level indirect tax playing field created by the transparency and tamper resistance provided. India will get a clear picture of its overall tax landscape, and individual businesses can clearly see what their counterparties report, and how that affects their bottom line. The system is also well designed to both self-police, as the transactions reported by each party much match to avail credits, as well as encourage good behavior once the GSTN and ASP begins publishing GST approval ratings. Pretty quickly, companies will begin to use data from the returns process, either provide by the GSTN or by forward looking ASPs who use the data generated by the returns process to provide business analytics to help companies make all sorts of decisions, not the least of which will be from whom they purchase goods and services.