GST FAQs Answered – Transition and Technology
GST regime was implemented a month back now. And there are still some questions that need to be answered. In this blog, we attempt to bring clarity to GST compliance by explaining the transition and the role that technology plays.
How can one make the transition to the GST regime?
The transition to the GST regime is not just about having the GST solution providers on board and getting your IT systems ready. Making the transition to the GST regime requires adjustment of procedures and processes in the business to enable compliance along with following certain formats set for invoicing by the GSTN. It is also essential that one understand which category of the tax bracket that their organisation will fall in and enable the adjustment in tax calculations. For compliance to be possible, it is essential that these adjustments be made in the process before an organisation starts to get IT ready. The approach an organisation can take to make an effective transition is given below;
Step 1: Initiate registration process. For more details, you can visit our blog on registration and migration by clicking here.
Step 2: While the registration is in the process, start to understand the laws and tax regulations under GST. Build the position that your organisation will take and initiate the adaptations that need to be made in calculations for the same. During this step, one also needs to understand the adaptations that need to be made in the invoicing, accounting and record keeping ensuring that compliance is sustainable and return filing is seamless.
Based on all the learning at this stage, process changes need to be implemented across all the business units.
Step 3: Adapt your IT systems to the changed business processes. This involves the changes in the IT systems to generate all the data needed for GST return filing as per the formats set followed by on boarding service providers (ASP and GSP) uploading and downloading return filing data with the GSTN. Ensure adequate forward and backwards integration.
Step 4: Transfer all your past return filing information on to the GSTN by making the first return filing submission for which the date has been extended to 20th of August.
What are the changes to be implemented in the invoicing, accounting and record keeping?
The change in approach to return filing from yearly report filing to monthly invoice data reporting has also placed a need upon changing the way organisations manage invoicing, accounting and record keeping.
Invoicing format has been standardized with a single format that all organisations are expected to follow which is set by the GSTN. This format has been realised by the GSTN already and all organisations are recommended to adjust their invoices format to the same.
For accounting and record keeping, even though organisations have been given a set format, certain rules have been laid down to ensure transparency and keep the possibility of data falsification to a minimum. This has been done with the aim to minimize the probability of tax evasion. The CBEC rules laid out for the same dictate that organisations not only have to keep documentation for invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers and e-way bills at the principal place of business and related place of business, but will also have to maintain accounts and records separately for each activity including manufacturing, trading and provision of services. Along with keeping these records, organisations are required to keep online records of the same and every change made needs to be logged. Organisations are also expected to keep clear records of the stock received and supplied by them.
While this builds transparency into every business unit of an organisation, it also demands that organisations built sustainable process to ensure that they meet compliance regulations consistently every time.
What is the role of technology in GST compliance?
The first and immediate role that technology plays in GST compliance is visible in the adjustments of the billing systems and other IT processes an organisation has in place to enable invoicing and accounting. These systems will need to be upgraded or modified based on the organisations need.
The next phases where technology plays a crucial role is in the communication of this data to the GSTN and you can get a complete understanding of the same by clicking here to read our article on technology.
How secure is the data shared during the monthly return filing?
The GSTN has been constructed from the infrastructure level with security in mind. These security measures extend to the internal systems and processes along with the interaction of the GSTN with the external players in the ecosystem. To understand these security measures better, you can click here and follow the link to an article that explains the security measures in depth.
Do you have any more questions on technology and how use it an enabler to be compliant? Leave us a comment below.