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Why GST automation is critical to your success


GST automation

India is undergoing one of the most crucial tax reforms in history. The Goods and Services Tax (GST) promises to change the way businesses function and push the Indian economy towards record growth. To achieve success, however, businesses must prepare for the transitional and technology-based requirements.

Challenges in the compliance process

India’s previous taxation system had many compliance issues. There were cases of fraudulent claims, duplication of input tax credit (ITC), mismatched ITC, and even cases of sellers not paying their tax liabilities.

Businesses will now need to comply with GST reform in an accurate and timely manner or risk jeopardizing their compliance rating. This compliance rating will serve as a parameter for buyers, lenders, and insurers in deciding whether to deal with that business.

With GST reform, returns can be filed both in manual mode or by automating the filing process by adopting cloud-based automation solutions through certified GSPs (GST Suvidha Providers) and ASPs (Application Service Providers).

Filing returns in manual mode, however, would require a company to increase its workforce, and then educate and train employees on the process. Not only would filing returns manually be a strain on a company’s resources, but there would be more opportunities for error.

To help businesses comply with GST in a timely and accurate manner, GST reform includes real-time solutions supported by a robust technology infrastructure. One of the technological innovations GST introduces is invoice matching between sellers and buyers, as it would be impossible to match billions of invoices manually each month. In addition to invoice matching, the new GST infrastructure will help businesses resolve other issues, such as:

  • Discerning item-level detail in invoices
  • Tracking all amended entries
  • Flagging corrections in incoming data
  • Synchronizing with the GST Network (GSTN)
  • Classifying and allocating ITC in a timely manner
  • Auto reversals

Why do you need GSP and ASP?

To facilitate a smooth transition to technological automation, government and private cloud-based solutions will rely on help from certified GSPs and ASPs. The primary objective of both ASPs and GSPs is to ensure compliance and governance under the new GST regime.

Cloud-based automation solutions through certified GSPs and ASPs reduce the chances for errors and have other benefits such as timely compliance, better decision making, and round-the-clock support.

How to choose the right ASP

To select the best technology vendor, be sure to carefully evaluate ASPs based on the following criteria:

  • Data privacy: Data privacy is the most important factor in choosing an ASP. Because there is so much confidential data involved in filing returns, make sure the ASP you choose guarantees data privacy. If data is misused, a business can run into serious trouble.
  • Storage capacity: An ASP should also provide large storage capacity and enable easy retrieval of data. (Data will need to be stored for eight years beyond the date of filing of the annual returns for the year.)
  • Accuracy: Because the major purpose of the automated return process is to reduce the chance of error, make sure the ASP you choose makes accuracy a priority.
  • Proper demarcation between various entities: You are not the only company an ASP will be serving. Make sure the ASP you choose will carefully isolate your data from that of other entities to avoid any hassles with incorrect returns or false tax liability.

Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application, Avalara TrustFile GST, can help you with GST compliance automation, contact us through  https://www.avalara.com/in/products/gst-returns-filing.


Avalara Author
CA Nayan Rijhwani
Avalara Author CA Nayan Rijhwani
Nayan is a Chartered Accountant by profession. She has also successfully completed Company secretary course. She is well versed with taxation concepts and keeps herself updated about recent developments in this field. In her free time, she likes creating learning material which simplifies complex concepts from the field of taxation and finance. She also loves teaching and takes lectures on weekends.