IMPORTANCE OF GOODS AND SERVICES TAX NETWORK (GSTN) &
GST SUVIDHA PROVIDERS (GSP)

Goods and Services Tax Network (GSTN) – Role and Importance

Goods and Services Tax Network (GSTN) is a not for -profit, non-government, private limited company. It was incorporated on March 28, 2013. GSTN has been set up primarily to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).

The authorised capital of GSTN is Rs. 10 crore (US$1.6 million) in which Central Government holds 24.5 per cent of shares while all the states including NCT of Delhi and Puducherry  and the Empowered committee of Finance Ministers together hold 24.5 per cent. Balance 51% of the equity is with non-Government financial institutions.

Structure of GSTN

• The GST System Project is a unique and complex IT initiative. It is unique as it seeks, for the first time to establish a uniform interface for the taxpayer and a common and shared IT infrastructure between the Centre and States. Prior to introduction of GST, the Centre and State indirect tax administrations worked under different laws, regulations, procedures and formats and consequently the IT systems worked as independent sites.
• Integrating them for GST implementation was complex since it involved integrating the entire indirect tax ecosystem so as to bring all the tax administrations (Centre, State and Union Territories) to the same level of IT maturity with uniform formats and interfaces for taxpayers and other external stakeholders.
• Besides, GST being a destination based tax, the inter- state trade of goods and services (IGST) would need a robust settlement mechanism amongst the States and the Centre. This is possible only when there is a strong IT Infrastructure and Service backbone which enables capture, processing and exchange of information amongst the stakeholders (including taxpayers, States and Central Governments, Accounting Offices, Banks and RBI).
• The Government of India approved the proposal for setting up a Special Purpose Vehicle to be called Goods and Services Tax Network.
• As a result, GST Network was registered as a non-government, not-for-profit, private limited company under section 8 (under new companies Act, not for profit companies are governed under section 8) of the Companies Act, 1956 with the following equity structure:

Central Government	24.5%
State Governments & EC	24.5%
HDFC	10%
HDFC Bank	10%
ICICI Bank	10%
NSE Strategic Investment Co.	10%
LIC Housing Finance Ltd.	11%

• The decision to structure GSTN in its current form was taken after approval of the Empowered Committee of State Finance Ministers and the Union Government after due deliberations over a long period of time.
• As per decision of GST Council, the shares held by non-Government Financial Institutions are being transferred to Central and State Governments so that both hold 50% shares each of GSTN and it becomes a 100% government owned company

Relationship of GSTN with Tax Administrators

• The common GST Portal developed by GSTN functions as the front-end of the overall GST IT eco-system.
• The IT systems of CBIC and State Tax Departments function as back-ends that would handle tax administration functions such as registration approval, assessment, audit, adjudication etc.
• Nine States and CBEC are developing/have developed their backend systems themselves.
• GSTN is doing the backend for 20 States and 5 UTs.
• GSTN has been interacting with CBIC and States for ensuring mutual interaction between the front-end that would be operated by GSTN and the back-end of the tax administration. During the operation phase as well GSTN will continue the interaction with CBIC and states and extend help wherever necessary.

GST IT Strategy: Role assigned to GSTN

Creation of common and shared IT infrastructure for functions facing taxpayers has been assigned to GSTN and these are filing of registration application, filing of return, creation of challan for tax payment, settlement of IGST payment (like a clearing house), generation of business intelligence and analytics. All statutory functions to be performed by tax officials under GST like approval of registration, assessment, audit, appeal, enforcement etc. will remain with the respective tax departments.

Role of GSTN in PAYMENT of GST

• Under GST, all challans are required to be prepared by taxpayers on the GST portal only. This has been done to ensure that bank tellers do not enter wrong TIN number from hand written challans. Once Challan is created with GSTIN, name of taxpayer, amount under various tax heads and sub-heads, the taxpayer has following two options to pay the tax:
1. He can choose online option under which, he will have to choose one of the agency banks (i.e. banks authorized by RBI to collect GST on their behalf) from the dropdown menu and after that he will be taken to the website of chosen bank to make payment by providing user ID and password of bank. After completion of payment, he will be brought back to GST portal from where he can download the paid challan, which is generated by GST System on confirmation from the Bank.
2. The other option of tax payment is to print the challan and present the same in the relevant bank for ‘Over the Counter Payment’ (OTC). The bank after realising the payment will transfer the money to RBI and send confirmation of payment to GST Portal for accounting.
• At the end of the day, the GST portal will prepare a summary of all payment confirmations received by it from Banks and share the same with RBI and accounting authorities for reconciliation. No tax money will ever come to GSTN in any manner. GSTN will only get conformation of payment from the Banks.

Role of GSTN in filing of RETURNS under GST

• Under GST, there are common returns for CGST, SGST and IGST, eliminating the need to file separate tax returns with Central and state GST authorities.
• Checking of claim of Input Tax Credit (ITC) is one of the fundamental pillars of GST, for which data of Business to Business (B2B) invoices have to be uploaded and matched.
• The Common GST Portal created and managed by GSTN is required to do this matching on the basis of invoice level data filed as part of return by all taxpayers.
• Similar exercise is done for inter-State supplies where goods or services will move from the state of origin to the State of consumption and so will the taxes. The claim of IGST and its utilization will be settled based on returns filed at the Common GST portal.

Role of GSTN in REGISTRATION under GST

• Under GST, the registration of taxpayers is common under Central and State GST and hence, one place of filing application for the same i.e. the Common GST portal.
• The application so received is checked for its completeness by the GST portal, which will also carry out validation of data like PAN from CBDT, CIN/DIN from MCA and Aadhaar of promoters, if provided, from UIDAI.
• After completion of validation, the registration application is shared with respective central and state tax authorities.
• Query of tax authorities, if any and their final decision is communicated to GST portal which in turn communicates the same to the taxpayer.
• The Common GST Portal, is the single interface for all taxpayers from any part of the country. Only in case where a taxpayer is picked up for scrutiny or audit, and such cases are expected to be small in number, he will interface with the respective tax authority issuing the notice under the Act. For all other cases, which is expected to be around 95%, the Common GST Portal will be the only taxpayer interface.

GST Suvidha Provider (GSP) Role and Importance

• The GST System is required to have a G2B portal for taxpayers access.. However, this is not the only way of interacting with the GST system as the taxpayer via his choice of third party applications, which will provide all user interfaces and convenience via desktop, mobile, other interfaces, will be able to interact with the GST system.
• The third party applications can connect with GST system via secure GST System APIs. All such applications are expected to be developed by third party service providers who have been given a generic name, GST Suvidha Provider or GSP.
• The GSPs are envisaged to provide innovative and convenient methods to taxpayers and other stakeholders in interacting with the GST Systems from registration of entity to uploading of invoice details to filing of returns.
• Thus two sets of interactions are envisaged,

• one between the App user and the GSP and
• the second between the GSP and the GST System.

It is envisaged that App provider and GSP could be the same entity. Another version could where data in required format directly goes to GSP-GST Server.

In the evolving environment of the new GST regime it is envisioned that the GST Suvidha Providers (GSP) concept is going to play a very important and strategic role. It is the endeavour of GSTN to build the GSP eco system, ensure its success by putting in place an open, transparent and participative framework for capable and motivated enterprises and entrepreneurs.

GST Compliance Requirement by the Taxpayer

It had been envisaged that the taxpayer under GST Regime will have to provide following information at regular intervals:

• Invoice data upload (B2B and large value B2C)
• Upload GSTR-1 (return containing supply data) which will be created based on invoice data and some other data provided by the taxpayer.
• Download data on inward supplies (receipts or purchase) in the form of Draft GSTR-2 from GST Portal created by the Portal based on GSTR-1 filed by corresponding suppliers.
• Do matching of purchases made and that downloaded from GST portal. Finalize the same based on his own purchase (inward supply data) and upload GSTR-2
• File GSTR-3 created by GST Portal based on GSTR-1 and 2 and other info and tax paid.
• Similarly there are other returns for other categories of taxpayers like casual taxpayer or composition taxpayers.

However, it may be noted that only GSTR-1 has been made operational by GSTN along with summary return in GSTR-3B. The data matching on the portal for filing GSTR-2 and GSTR-3 has not become operational due to various technical issues.  The system generated forms GSTR-2A(dynamic) and GSTR-2B(static) are now made available to the taxpayers for matching of the data related to Input Tax Credit. The system generated ITC available is also reflected in Table 8A of Annual Return in Form GSTR-9.

A new system of filing of Returns had been proposed w.e.f. 01 October 2020, but the same has been deferred/shelved off as of now.

GSP Concept

It is envisaged that the GSPs shall provide the taxpayers with all services mentioned above in addition to maintaining their individual business ledgers (sales ledger and purchase ledger) and other value added services around the same. Another important service expected from GSPs is the automatic reconciliation of purchase made and entered in the purchase register and data downloaded in the form of GSTR-2 / 2A / 2B from the GST portal. In additional there will be sector-specific or trade specific needs which the GSPs are expected to fulfil.

While the GST System is envisaged to have a G2B portal for taxpayers to access the GST System there will be a wide variety of tax payers (SME, Large Enterprise, Small retail vendor etc.) who will require different kind of facilities like converting their purchase/sales register data in GST compliant format, integration of their Accounting Packages/ERP with GST System. Similarly, the specific needs of an industry or trade could be met by GSP. In short, the GSP can help the taxpayers in GST compliance through their innovative solutions.

Services Provided by GSP and ASP (Application Service Providers)

GSPs acting as ASPs are envisaged to enable taxpayers to comply with the provisions of GST law through their web platform. These application service providers should provide taxpayers and other stakeholders with innovative and convenient methods of interacting with the GST Systems, from registration, to uploading invoice details, to filing returns.

ASPs can come up with an application to provide GST filing facility in existing software, or, with the help of ASP partners, they can develop an end-to-end solution with which corporates, consultants, and taxpayers can manage their sale/purchase and GST filing: e.g., an offline utility-like spreadsheet; taxpayers could fill out their invoice details and then upload it on the GST portal for processing.

Similarly, for tax consultants (TC), ASPs can provide a dashboard that displays a list of all his/her clients. Clicking on a client would give the TC a snapshot of the client’s actions/ pending actions.

GSP and ASPs in Action

With respect to the GST IT ecosystem, taxpayers can be divided into three broad categories, namely:

• Users with standalone or networked systems that are not connected to the Internet
• Users with applications with API interfaces such as Tally, SAP, Oracle, Ramco ERP, Microsoft ERP and many more.
• Users with applications that are in the cloud and can work in both offline and online mode, have well-defined API based architecture, and use latest technologies.

Users in the first category will necessarily need a third party (GSP/ASP) to help them upload invoice data, file returns, etc., generated from their accounting software. However, many in the other two categories will prefer to have GST Access in a user-friendly enriched form through the GSP/ASP network, even though they may be in a position to directly consume APIs in the form provided by GSTN.

Other projects of GSTN include

➤ E-way Bills

• E-way bill is a mechanism to ensure that goods being transported comply with the GST Law and is an effective tool to track movement of goods and check tax evasion. The e-way bill provisions aim to remove the ills of the erstwhile way bill system prevailing under VAT in different states, which was a major contributor to the bottlenecks at the check posts. Moreover different states prescribed different e-way bill rules which made compliance difficult.
• The e-way bill provisions under GST aim to implement  a uniform e-way bill rule which is applicable throughout the country. The physical interface is paving the way for digital interface which will facilitate faster movement of goods.
• It is bound to improve the turnaround time of vehicles and help the logistics industry by increasing the average distances travelled, reducing the travel time as well as costs.
• The separate portal for eway bill is https://ewaybillgst.gov.in

➤ E-invoice

• ‘e-invoicing’ essentially involves reporting details of specified GST documents to a Government-notified portal and obtaining a reference number.
• e-invoicing has many advantages for businesses such as standardisation, inter-operability, auto-population of invoice details into GST return and other forms (like e-way bill), reduction in processing costs, reduction in disputes, improvement in payment cycles and thereby improving overall business efficiency.
• Huge advancements in technology sophistication, increased penetration of internet along with availability of computer systems at reasonable cost has made ‘e-invoice’, a popular choice worldwide.
• Separate portals designed for e-invoice from
  https://einvoice1.gst.gov.in  to  https://einvoice10.gst.gov.in  .

➤ Tinxsys

• Tax Information Exchange System (TINXSYS) is a centralized system facilitating information exchange among Commercial Tax Departments (CTDs) of all States for better administration of inter-state trade.
• TINXSYS is the repository of information pertaining to dealers in various States, registered under the Central Sales Tax (CST) Act. Dealers can use TINXSYS to verify the counter party dealer in any other State. Apart from dealer verification, Commercial Tax Department officials can use TINXSYS for verification of Statutory Forms issued by various State Commercial Tax Departments, submitted by the dealers in support of their claim for concessions.
• TINXSYS also provides Management Information System (MIS) and Business Intelligence (BI) Reports for monitoring of inter-state trade/movement by Commercial Tax Departments and Empowered Committee of State Finance Ministers (EC).

Conclusion

An important part of GST compliance is filing data with the GSTN. A strong IT ecosystem under GST, through a network of GSPs and ASPs, can help corporate and tax consultants achieve better data-based compliance under the GST regime.