The Goods and Services Tax (GST) is one of the most comprehensive tax changes that India has ever seen. It has upended the entire tax regime and provided businesses with a clear and transparent way to conduct business and pay their taxes.
Under the old system, the various taxes which existed had to be computed and collected by separate parties under the govt. This resulted in a lot of problems for businesses, especially small businesses that don’t have much manpower or resources.
With the advent of the Goods and Services Tax, the system has become much easier due to the GST system being under a single central authority. The whole system has been subsumed under one authority who computes, collects and records the tax filings made by businesses.
The backbone of this system of tax collection is the GSTN or the Goods and Services Tax Network. Due to everything becoming digital, the government has decided to make the Goods and Services Tax system digital as well.
The GSTN is the Information Technology network that provides the computing resources to power the entire system of tax collection and filing required by the GST system. It is maintained by the National Informatics Center.
The GST Portal is accessible to the tax authorities and it provides a complete snapshot of every transaction as well as giving taxpayers information about their tax returns. It is owned by the government as well as some nongovernmental entities.
GSTN Network Functions
The main purpose of the GSTN is to provide Information Technology infrastructure for the GST system. The necessary infrastructure required for such a vast system of suppliers, tax authorities, taxpayers requires a massive network that is safe and secure, for this reason, a dedicated system like the GSTN was set up.
Since there were various tax bodies that had to be connected together with wildly different systems of technology, a robust and resilient system was required to make sure it functions well.
Since such a massive and complex system covering the entire country was being put in place, the number of parties that would need to have access to this information was massive. There are Central Governments, State Governments, Banks, as well as the RBI, who all need access to this database and system.
This scale of information sharing in a safe and secure way can only be accomplished with a dedicated tax network. Therefore, the GSTN provides the country with a secure information-sharing network.
Tax Payer System
One of the most important cogs in the GST system is the taxpayer itself, in this case, businesses. Businesses need a secure platform where they can compute and file their taxes in a fast and safe manner. The GST portal does exactly that. IT provides the taxpayer with a portal to handle all information regarding their business and GST in one place.
GST Suvidha Services
The government has encouraged more digital applications to be developed alongside the tax network. Since the launch of Digital India, many new digital applications and services have popped up to help businesses. The GSTN is the backbone of these services when pertaining to the GST.
Research and Development
The GSTN allows various stakeholders to do research and development on the various aspects of taxation and information technology. This allows for the creation of best practices and industry standards. Since technology and tax are both nascent in the country, the more research, and development that is carried out the better it is for the economy.
Backend Technology Services
The tax departments of our country have been slow to adopt technology and mainly relied on paper records to complete their work. This was not only inefficient, but it also created a lot of problems for taxpayers as many records used to get lost or damaged.
The GSTN has changed that because now the network spans the entire tax department so all of the records have become digitized leading to a much more efficient operation. There are a few issues with the network with respect to this aspect, but in the long run, they should be ironed out.
Since the country is becoming digitally inclined, a lot of business is being conducted digitally. This is also being encouraged by the government to make tax compliance better. The GSTN is being used as a testbed for fully digital government service.
Since the network is so vast and complex, the way it is handled will give valuable data to the government as to how to go about creating a digital government network spanning many departments.
Cyber attacks are the norm now in the modern world. Hackers everywhere are trying various tricks to get into banks, ATM’s and other digital financial services to try and steal data and money.
A strong Information Technology infrastructure is required to withstand a cyberattack, that is why a centrally managed resilient IT network is critical to managing the country’s financial services and is one of the GSTN’s main functions.
Natural disasters are also another threat that is increasing in the modern world. Threats from floods, earthquakes as well as storms are serious and can cause a lot of damage. A strong system of back up and disaster management is important and that is a major function of the GSTN as well.
Overall, the Goods and Services Tax Network was developed to ensure a safe and secure system for financial transactions with respect to the GST. It helps connect the taxpayer as well as the taxing authority in a transparent manner.
The GSTN also allows taxpayers to calculate and file taxes in a safe and secure manner as well as access all of the relevant information pertaining to their situation. This is a work in progress and more changes in the future are likely, especially with increasing the scope of the GSTN. Checking regularly to see what is being offered is very important.