The only constant thing in life is Change and as such all change requires some adjustment. Even your eyes need to adjust to new spectacles.
The pre-existing taxes like central excise duty, services tax, surcharges, state-level value added tax etc., were replaced with GST (Goods and Service Taxes). There is a famous quote by Albert Einstein, “if there is one thing that is most difficult to understand, it is income tax.” Goods and Services Tax(GST) will create transparency and provide better indirect tax administration. India proposed to follow a dual GST, which was set up in July, 2017, which is one of the biggest tax reforms in the country’s tax structure in decades. This guide, will provide you an overview on GST Suvidha Provider (GSP) and its Eco-System along with GSP Functionalities.
The goods and services tax (GST) is an indirect sales tax that is applied to the cost of certain goods and services. For example, a business adds GST to the price of a product and then the customer who buys the product would pay the sales price along with GST. The GST collected by the business or the seller is then forwarded to the government.
After the GST system was implemented, the taxes paid at each stage right from manufacturing stage till final consumption stage were available in the subsequent value addition stages of the product. That means GST ensures that the tax paid at each stage acts as a value addition in the succeeding stages of manufacturing till the final product is out. For Example – It take 4 stages to manufacture a machine and the GST paid during 1st stage is spent on the 2nd stage of manufacturing process and then on 3rd and 4th stages. So, the consumer would only be paying the GST charged by the last dealer in the supply chain, which would ensure that there is no ‘tax on tax’ in the country.
GSP stands for GST Suvidha Provider. There are 34 Suvidha Providers (GSPs) that are appointed by the Government of India. who are responsible for developing simple applications for tax payers to correspond with the Goods and Service Tax Network (GSTN). GSTN is a non-profit organization that was incorporated on March 23, 2013 and holds all the GST data for both central and state governments. GSTN receives the returns filed by companies via GST GSP, which is a web platform that assists tax payers in being GST compliant and all the GST returns filed will be managed by the GSTN
Under the new GST regime, the GSP’s s play a strategic role. The GSTN has made efforts to build the GSP eco system so that it contributes to the success of GST, through a transparent framework for talented enterprises and entrepreneurs. The GST system has a G2B portal to allow the tax payers access the GST system. GSP’s cannot modify or read any data. However, they could use the Application Service Providers (ASPs) given by GSTN to create better systems and assist tax payers.
In the GSTN, the Government of India holds a 24.5% equity share that includes all States of the Indian Union, NCT of Delhi and Puducherry. The Authorised Committee of State Finance Ministers (EC), together hold another 24.5% share. The remaining 51% equity is with non-Government financial institutions.
Application Service Providers are where the taxpayers can file their GST returns with the support of ASP partner ASPs develop end-to-end solutions for consultants, corporates and tax payers so that the entire management of sale or purchase of goods and services can be made through ASPs. The organizations have to share their data with regards to purchase and sale of goods and services to the ASP, after which the GST returns will be prepared by the ASP. Lastly the returns are filed through GSP.
GSP deals in high level of data synchronization, as the transfer of data is between the tax payer and the GSTN system. So, application providers cater to every need starting from registration, Invoice details uploading, filing GST returns etc The GSTN interacts with the GSP only.
The procedure of filing GST returns, payments etc., are very time consuming as, the tax payer is expected to file almost 37 returns in a year. So, the tax payer is expected to maintain key information like details of all invoices in a certain format for various returns in the form of a huge database.
GST Suvidha Providers provide end to end GST compliance solutions. The major functionalities of GSP’s are:
GSP system provides services to tax payers through a web platform approach. GSPs create third-party applications and allow ASP’s to create desktop, mobile, etc. applications, that allow the user the ability to interact with the GST system.
All third-party applications are designed to connect with the GST system via secure GST System APIs. Thus, the GSPs together with the ASPs are expected to provide innovative and convenient methods to taxpayers along with other stakeholders, for interacting with GST Systems for various services starting from registration to uploading of invoice details and filing of returns.
The success of the GST regime will be dependent on the taxpayer’s convenience and the ability to freely choose an Application Provider or GSP of their choice, irrespective of the other. A tax payer, can choose a set of services from one GSP and the rest from another GSP. For example, a tax payer can get GST registration through one GSP or ASP, while filing their GST return through another GSP or ASP. The conceptual diagram is given as below.
However, as there are a wide variety of tax payers like SMEs, Small retain vendor, Large Enterprise etc. the users require various facilities or options like data registration in GST compliant format, Accounting Packages integration with GST system etc or any other specific needs of the industry.
So, it’s the GSP who provides GST compliant services through their innovative and state-of-the-art solutions.
To be eligible as a GSP, a company must be registered under Banking, IT enabled services, IT, Financial and Insurance Services. A contract would be established between the GSTN and the company after which a licence key would be provided that has access to GST data. There are 2 batches of licences where 3 factors are considered:Financial Strength, Demonstrated Capabilities and Technical Capabilities
|Eligibility Criteria||GSP Licence Batch 1||GSP Licence Batch 2|
|Financial Strength||Company to have paid up/raised capital of Rs. 5 crores||Company to have paid up/raised capital of Rs. 2 crores|
|Company to have a turnover of Rs. 10 crores for previous 3 financial years||Average turn over for previous 3 financial years should be 5 crores|
|Demonstration of Capabilities||Technical capability in terms of handling large traffic, infra for same etc||Security design|
|Multiple mapping of roles to 1 GSTIN||Invoice upload by tax payers|
|Mobile interface||GST Return, preparation and filing|
|Security design||Alert generation to tax payers|
|E-sign / DSC integration for signing of return||Multiple mapping of roles to 1 GSTIN|
|GST Return, preparation and filing||Mobile interface|
|Invoice upload by tax payers||UI / UX|
|GSTR 2 reconciliation with register||GSTR 2 reconciliation with register|
|UI / UX||E-sign / DSC integration for signing of return|
|Generation of alerts to tax payers||Technical capability in terms of handling large traffic, infra for same etc|
|Showing data security measures capability as it has been stated in IT act||Showing data security measures capability as it has been stated in IT act|
With GST, the government aims to achieve the two major goals: Reduce tax evasion & Simplify compliance for tax payers. In the prevailing tax system the government couldn’t detect evasion of tax and tracking input claims against a seller’s liability was a challenge.
The success of the GST regime would depend upon the significant players: GSP’s and ASP’s. As the initial hurdles are overcome and systems streamlined, the objectives of the government to curb tax evasion, increase tax revenue compliance by making it convenient for the taxpayer.
Taking a step ahead towards the aim of achieving digital India, H&R Block supports this endeavor through its wide range of GST related services. To file your GST returns, enlist the aid of the GST experts at H&R Block India.