With the passing of the Goods and Services Tax (GST) by the both houses of the parliament, the stage is set for the development of a robust Information Technology mechanism to deal with various aspects of the complex tax structure. In this article, we will examine the role of IT in GST along with how interstate transactions and imports will be affected.

How will Information Technology be used for the implementation of GST?

The central and state government have jointly registered Goods and Services Tax Network (GSTN) as a non-profit government company, which will provide shared IT infrastructure and service to both central and state governments including tax payers and other stakeholders.

The main objective of GSTN is to provide a standard and uniform interface to the taxpayers in addition to shared infrastructure and services to Central and State/UT Governments.

In the meantime, the GSTN is currently working on the development of a state of the art comprehensive IT infrastructure. This includes the common GST portal, which provides the following functions.

  • Frontend services of registration
  • Returns and payments to all taxpayers
  • Processing of returns, registrations, audits, assessments, and appeals

Meanwhile, all states, accounting bodies, RBI, and banks are also working to prepare IT infrastructure for the administration of GST.

You need not have to manually file returns. You will be provided with a detailed portal for the payment of taxes online. You need not have to worry about mismatched returns since it would be auto generated without any manual intervention.

How will be interstate Transactions of Goods and Services be taxed under GST in terms of IGST method?

In the case of interstate transactions, the Centre would charge and collect the Integrated Goods and Services Tax (IGST) on all interstate supplies of goods and services under Article 269A(1) of the Constitution. The IGST would roughly be equal to CGST plus SGST. This tax is applicable to online purchases made through Flipkart, Amazon, Snapdeal, and others.

The IGST has been designed and structured in such a way to ensure seamless flow of input tax credit from one State to another. The interstate seller would pay IGST on the sale of his goods to the Central Government after adjusting credit of IGST, CGST and SGST on the purchases.

The exporting state will transfer to the Centre the credit of SGST used in payment of IGST. The importing dealer will claim a credit of IGST while discharging his output tax liability (both CGST and SGST) in his own State.

The Centre will transfer to the importing State the credit of IGST used in payment of SGST. Since GST is a destination based tax, all SGST on the final product will ordinarily accrue to the consuming State.

How will imports be taxed under GST?

In the case of imports from foreign countries, the Additional Duty of Excise or CVD and the Special Additional Duty or SAD presently being levied will be integrated into the GST. As per Article 269A (1), IGST will be applicable on all imports into the Indian territory. The stated where imported goods are consumed will now gain their share from this IGST paid on imported goods.