The GSTN has been facing a lot of hiccups and hurdles altogether. This wasn’t surprising as the IT failure is a common thing when a system is put into operations. World over it has been seen that it takes easily six to nine months of trouble free shooting to get things right and work without any roadblocks.

We have a proposal where the GSTN could be simplified and would help make a simpler user interface.

Additions to the GSTN

The new system can come up with an Invoice generations system (IGS) which would be owned by the government. The firms would use the IGS to prepare the business invoice and pay various taxes. Then the companies would not generate invoices in their private systems as they are doing right now. This approach would help the government get the relevant data at the time of invoice generation.

For instance assume there are two GST registered companies, company P, and company Q. Company P agrees to sell 200 trousers to company Q from ₹ 500. GST rate on the trousers is 12%. In this case, the company P would use the IGS to generate the invoice by mentioning the company Q’s GSTN number. In addition to this, the details of the shirt such as price would also go in. Thus now the IGS would automatically fetch the GST rate from its system and the various required details of Firm B from the GST registration records to populate the invoice. The invoice would thus show that the firm B will have to pay ₹ 1,00,000 as the price of the trousers and ₹ 12,000 as GST. Eventually, company Q will have to accept the form online to state that it has accepted the invoice.

What could be the benefits of this new system?

IGS would help end the multiple registrations and returns. Retailers would be able to generate invoices immediately at the time of the sales. Thus the glitches will come down by the addition of the IGS.

Let us see the kind of issues that the GSTN has right now, even though it can handle as many as 300 crore invoices in a single day. It still faces issues as it crashes or slows down. For example, while processing an invoice with multiple items/rates, the GSTN only identifies the first item and feels that the rest is duplicate. Also, data is sometimes lost if the user switches windows to see the details of the supplier who is claiming input tax credit. The experts have also reported security issues such as access to independent firms.

The New System

Prime Minister Narendra Singh Modi has raised his voice earlier in Rajasva Gyan Sangam in New Delhi that even the small traders with an annual turnover of less than ₹ 20 Lakh should be brought under the GST. This would be a good move as right now unregistered firms are not allowed to export-import, sell on e-commerce platform or sell to other states.

GST related firms avoid buying from the unregistered firms now. Adoption of IGS will remove the difference between the actual and the reported business transactions. Tax collections would increase as there would be no unreported transactions. Audit and surveillance work would be less, and the adoption of IGS would eventually reduce the burden on GSTN servers.