The Goods and Services Tax will come into effect July 1 onwards and is pegged to be one of the most significant economic tax reforms carried out by PM Narendra Modi.
While it will usher in greater transparency and create a simplified channel for tracking through data, it has also spawned the need for ERP and data analytics solutions. Other IT solutions include building capabilities such as billing software and payment gateways, thus creating plentiful opportunities across the IT spectrum. Industry experts say there is a $1 billion opportunity for IT vendors over the next two years.
According to an industry expert, GST will a) remove tax barriers in a fragmented market b) will introduce a transparent and predictable tax regime and boost local and foreign investment in India c) integrate existing multiple taxes into a single GST.
In terms of data analytics, the GST rollout is expected to become a “data analytics powerhouse”. According to Goods and Services Tax Network, a not-for-profit organization operated by the government and private players jointly, GST will give enormous amount of data to the tax department to work with, that will eventually rule out discrepancies and help tax sleuths to go after tax evaders. “Once sufficient amount of data is generated, we will be able to generate analytics based on the requirements of various stakeholders,” said Navin Kumar, chairman, GSTN. Infosys is expected to build programmes and analytical tools as per the data requirements of both central and state tax departments. The data generated could be on real-time basis, if not near real time.
According to GSTN, the body is building the “information technology backbone for the goods and services tax (GST)”
- The platform is expected to store information related to relevant transactions
- Based on the data filed by millions of taxpayers that will migrate to the system, analytics will help in identifying leakages and ensure more focused economic-policymaking.
- As per the GST system architecture, the decision-making will be based on data rather than assumptions
- The system shall feature more meta tags so that the time taken by various functions in capturing/entering the data is verified.
IT vendors rush to provide data analytics & automation tools to SMBs
According to news reports, Infosys has won a five-year contract to build and maintain the technology network for implementing the goods and services tax (GST) system across the country. .And the wider roll-out of GST has spawned many opportunities in IT, such as developing ERP packages for the 5 million SMBs that are not yet digitally-empowered. SMBs need to record the GST transactions, upload invoices and do the return filing. This spells a big opportunity for IT vendors who are quick to fill the gap with their enterprise ready solutions. According to news sources, the government expects close to nine million returns to be filed in the first month of its roll-out.
Here’s a look at some enterprise ready solutions:
SAP HANA: Earlier in the year, SAP announced ‘GST in a Box’, an all-inclusive solution portfolio, to help Indian organizations of all sizes and across industry verticals to become GST compliant. The solution It also enables organizations to effectively manage suppliers, customer engagement and supply chain in the new tax regime. According to Neeraj Athalye, Head, S/4HANA & GST Adoption Drive, SAP India, businesses need to go digital. “Out of an estimated 4-5 billion invoice uploads that will happen every month, since more than 40% of transactions will pass through an SAP system, it is upon us to not only help Indian corporates swiftly get compliant with this new law, but also ensure that businesses benefit from the GST vision,” he said.
Microsoft India: EasemyGST, a cloud-based comprehensive GST compliance platform that integrates with ERP, and Microsoft India teamed up together last month to provide a “simple and affordable platform that will ease their GST requirements, thus, saving them from the expense of separate compliance products”. EasemyGST will integrate its solution with Microsoft’s core business products including Office 365, Dynamics Navision and Axapta. The solutions will run in Microsoft Azure, from India data centres to ensure data sovereignty.
Intuit: infact, Intuit is betting big on GST rollout, and expects revenues to double. Intuit’s QuickBooks, a cloud-based accounting software for small businesses will help SMBs to stay on top of their business in real time and get paid faster. The company’s cloud-based accounting software QuickBooks already has a slew of big companies on board that will use the ERP system.
Security in cloud at risk
In a rush to meet the deadline to become GST compliant, many organizations are facing threats on several grounds – data leak, third party involvement and changes to master data. According to news reports, PwC’s cyber security team revealed several vulnerabilities in the IT systems of many companies, that could potentially lead to cyberattacks. PwC experts point out that in order to de-risk, companies have to adopt a new approach to governance, monitoring and cyber security. While some companies already leverage predictive analytics to forecast cases of cyber threats, most have to upgrade current IT infrastructure to implement GST reforms. According to Rajeev Banduni, Co-founder and CEO GrowthEnabler, in view of the rushed deadline to meet GST implementation, suppliers and buyers should review thee information security practices of the Application Service Providers (ASP) and GST Suvidha Providers (GSP).