GST or the Goods and Services Tax is one of India’s most significant indirect tax reforms. It was introduced in a bid to regulate unorganized sectors of the economy, as well as to remove cascading taxes. GST is now a single tax across the country in place of varied taxes applied by different states in the country.
The GST system is expected to improve the ease of doing business as it removes the numerous, hidden and varied taxes by States. It also eliminates the tax-on-tax effect – that is, the situation where the same product is taxed several times due to varied layers of taxation.
The GST system uses a Harmonized System of Nomenclature or HSN, which is an eight-digit code to classify products into internationally recognized categories. This standardization helps to reduce confusion about taxes for different categories of products. The corresponding code for services is called the SAC or Services Accounting Code.
The system is designed to digitize business activities like tax registration, filing returns, tax payment, all of which can be completely handled online. This provides more transparency in the taxation system.
Key steps in filing GST
The Indian Government’s GST portal, www.gst.gov.in outlines several key steps in filing online GST returns.
- First, based on your PAN number and State code, you are issued a 15-digit GST identification number.
- Next, you will need to upload all your business invoices on to the portal, with each invoice having a unique reference number.
- You will need to file all outward returns, inward returns, and cumulative monthly returns – all have to be mandatorily filed online.
a) Outward returns have to be filed in the GSTR-1 form on or before the 10th of the following month.
b) Outward supplies furnished by the supplier are available in the GSTR-2A to the recipient.
c) The recipient can verify the details of the outward supplies and make any modifications if required. The recipient also needs to file details of credit, debit notes, bill of supply, receipt vouchers, etc., and ensure they are in the correct format as required by the GST portal.
d) The recipient has to file inward supplies in the GSTR-2 form.
e) The supplier can either accept or reject the modifications of the details of inward supplies made by the recipient in GSTR-1A.
It is clear from the above process that business owners have been forced to play an active role in the GST filing system. In the earlier system of filing tax returns, the business owner could leave most of the work to a tax consultant or to an accounts department.
Many businesses have had to make far-ranging changes to their accounting processes to maintain GST compliance and ensure that the GST filing process works seamlessly.
GST filing needs to be done frequently, with up to 4 separate forms to be filed each time. It is a tedious, time-consuming, and sometimes confusing process if handled manually.
Let us look at some of the challenges in filing GST manually:
The GST filing process is highly prone to manual errors due to its very nature.
The GSTR-1 form must reflect accurate records of all invoices you have raised. In addition, you also need to ensure that the format of all the invoices are compliant with the requirements of the GST filing portal.
The invoice details you provide need to match those in your supplier’s returns as these are automatically reflected in the GSTR -2 form.
Finally, the GSTR-3, which is the summary level of all invoices/purchases, must match the invoice-level details from GSTR-1 and GSTR-2.
Details of inward and outward invoices usually reside in the company’s ERP or accounting software systems. This data needs to be accessed from the original source, collated into a GSTR-compliant format, and reconciled.
A high level of accuracy is required to ensure that you are not liable for any penalties. The reconciliation process is also critical, as it requires that the supplier and purchaser inputs match perfectly. The means that both parties involved in any transaction must file their respective returns correctly and the other party must accept any modifications made by one. The GST system thus makes the supplier and purchaser inter-dependent – the recipient can only claim the ITC (Input Tax Credit) after the supplier has filed returns accurately and cleared the resultant tax payments.
Incorrect GST filing can prove costly to the business
Delays in GST filings of course attract late fees. More importantly, if your returns are filed incorrectly, your customers may not be able to avail of their ITC, leading to problems in your relationships with your customers. This can prove bad for future business. Non-compliances in GST filing results in a poor GST Compliance Rating. This reflects badly on your business, as it is visible to future business prospects as well as your current customers.
GST Filing is highly amenable to Robotic Process Automation
The GST filing process has many challenges when handled manually. Various software solutions are available that can simplify the process significantly, save time, and put in checks and balances to ensure accuracy.
Since the filing is a repetitive, frequent, and mundane process, it is highly amenable to RPA or Robotic Process Automation.
At Sapours, we have developed a GST Filing Bot that automates most of the key, high-frequency tasks in GST filing.
Owing to our extensive experience with ERP implementations, we have a first-hand experience and understanding of the challenges faced by CAs and accounting teams in complying with GST filing requirements. Combining this with our expertise in the area of automation, we were able to build a bot, which could take on most of the tedious and time-consuming activities. We were successful in making the bot flexible, 10x faster than manual processing and 100% error-free. Using an automated bot mitigates the risks of penalties due to non-compliance or delays.
Available on the Automation Anywhere Bot Store, this GST Filing Bot will fast-track your business’s technology adoption and ensure that you adapt to the new compliance regime brought in by GST.