The Goods and Services Tax (GST) requires a whole new approach in which government tax systems as well as the companies are in continuous dialogue. So there is no end to the process or a one-time filing. In all this, the Application Service Provider or the ASP will play a crucial role. The proposed changes are although tax driven but they will affect the entire business cycle. The GST is India’s biggest indirect tax reform and brings in radical tax reform affecting Indian businesses of all sizes. Compliance gaps or lack of readiness could result in business failures. It is a truly paradigmatic shift as far as compliance is concerned. A major part of it is the electronic reporting of all compliance-related issues and transactions. There is provision for a two-way data flow along with a continuous dialogue with the GST Network.
What are the ASPs?
An ASP is basically an Application Service Provider. Its function is to prepare monthly as well as annual GST returns on the basis of taxpayer data. It also enables the reconciliation of returns for timely as well as appropriate credits. This functionality requires domain as well as sector knowledge in order to interpret the nuances inherent in the GST rules and regulations. The ASPs file returns for taxpayers through the authorized GSPs. The primary objective of the ASPs is to ensure proper governance and compliance under the GST regime. All this not only needs strong domain knowledge but also technology enablement.
An integral part of tax compliance in the GST is filing data on the network. The GST Network is the nodal agency which holds all the data and is also a reference point for both the central as well as the state governments, which hold a joint stake in the private company. The GSTN is guided by the sole objective of development as well as maintenance of information technology (IT) infrastructure for a successful implementation of the new tax law. This is in line with the Digital India initiative and for an automated tax compliance regime. Such automation and synchronization is expected to bring greater ease in doing business.
Understanding the role of GSPs
GSP is the full form of GST Suvidha Provider. A GSP will be an enabler so that a taxpayer is able to comply with the various provisions of the GST through the Web based platform. It is an online GST compliance platform. The GSPs are authorized and licensed by the GSTN to connect to the network using published APIs. They thus help taxpayers upload GST returns securely in the prescribed format. GSPs can also customize the products in order to address compliance needs of various segments of users.
“Let’s take an example. If XYZ is a private company running operations on Deskera ERP, all the records with regard to purchase and sales are maintained on it. Around the end of every month, several reports are generated from the ERP and which is then attached with tax returns and uploaded on the portal,” said Shashank Dixit, CEO, Deskera.
How would ASPs and GSPs operate in tandem?
“The government aims for a single and an automated workflow in which the ERP providers can erect an interface with the government’s portal. All the GST-related compliance is directly carried out through the company’s software,” added Shashank.
In all this, tax automation plays a critical role in order to meet the regulatory requirements as provided under the GST. Consequently, a high level of synchronization is required between a taxpayer’s system as well as the GST Network (GSTN). Invoicing details, auto-population of purchase registers, reconciliation of various sales registers, and auto reversal features are key to the smooth functioning of data-processing requirements under the new tax law.