| |March 201819CIOReviewn July 2017, India replaced over fif-teen existing indirect taxes with a single Goods and Services Tax (GST) structure. While this new tax regime is a notable economic and geopolitical event, the in-formation technology (IT) implications of India GST are also both immediate and long reach-ing for every company operating in India, as well as any global cloud solution provider. Those that have found India a challenging market in the past should take note of the changes forced by GST. How GST changes everythingGST was designed to address a number of problems. The actual size of the country's economy been difficult to gauge, with millions of unregistered organizations do-ing business largely in cash against paper ledgers. GST flattened the tax landscape by eliminating the disjointed indirect taxes and combining them into a single set of tax laws, rules, and rates that span the entire country. Shift-ing to destination based taxation and eliminating border taxes, revenue flows to those states in which consump-tion occurs, and barriers to interstate business dissolve. But the biggest transformation lies in the flow and man-agement of input tax credits and the IT infrastructure created to manage GST returns.An integral part of the new GST tax laws is the compliance mechanisms dictated by those laws, which created a public information utility called the Goods and Services Tax Network (GSTN), responsible for the GST IT backbone. GST compliance requires monthly tax returns for every organization, broken into three separate filings, each with its own deadline in the month: liabilities, credits, and the final return. Two additional system attributes truly drive the IT requirements for this system: · Transaction-level, digital reporting: All financial transactions (AR & AP invoices, credit notes, advance payments, etc.) are communicated to the government via the GSTN's REST web APIs. There are no paper forms filed. The three monthly filings are also transmit-ted by REST APIs after being digitally signed. · Counterparties must agree electronically: Credits claimed by the buyer must be collected first from the GSTN based on the data reported earlier in the month by their vendors. Buyers must digitally indicate via API call that they agree with the vendor-reported details.Thus all sales transactions are ideally reported in near real time, and input tax credits cannot be claimed unless both agree on the details. This is similar to the system Brazil has for GST, but rather than requiring govern-ment approval upfront, India's version creates a self-po-licing system. Any discrepancies can be digitally reported by the buyer, but again require seller approval for cred-its to be claimed. Over time, buyers will favor vendors who report their sales in a timely, accurate fashion. The GSTN also plans to publish rating scores for organiza-tions based on their filing behaviors, which adds an ele-ment of reputation management to this system. Short term implications of GSTMost companies in India are actively seeking an Ap-plication Service Provider (ASP) for their GST filings.They are preparing their financial data to be transmit-ted to the GSTN's cloud APIs. With tax rates up to 28% on some goods and services, companies will real-ize very quickly that rapid GST reporting and recon-ciliation makes a big difference to their available op-erating capital. This will make GST implications part of each company's day to day decision making, along with the automation required of internal systems to facilitate GST returns. OCXO INSIGHTSGST WILL OPEN THE DOOR TO CLOUD ADOPTION IN THE INDIAN MARKETBy William Rau, Senior Director - Engineering, Avalara
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