GSTN has 50 days to take off, says CEO Prakash Kumar

It has conducted a trial on 3,200 entities across country to rectified glitches, says Prakash Kumar

It’s like a war zone at the headquarters of the Goods and Services Tax Network (GSTN), the information technology backbone of the new indirect tax regime to be rolled out on July 1. 

In his fourth floor office in Aerocity, the business district next to the international airport in New Delhi, GSTN Chief Executive Officer Prakash Kumar is clearly a man in demand. Small traders to India Inc majors, policy makers to consultants and lawyers, everyone wants a clear picture of the new tax system going live in a little over 20 days. The phones are ringing nonstop as team GSTN across Delhi, Mumbai, Bengaluru and other cities shuffle from one meeting to another.

In an interaction with Business Standard on Thursday morning, in between all the meetings and the phone calls, Kumar said not 20 but 50 days were left for the system to take off. “The first lot of GST returns would be filed only in August, so we have that much more time.’’ 

However, from July 1, the invoicing mechanism has to be in place. The July date is firm, he said, rebutting the buzz that a September roll-out option was still being considered.

What if things don’t go as planned? Was there any plan B or C? 

Kumar refused to be drawn into any conversation on this. “We will do what needs to be done.’’ 

Although GST Suvidha Providers (GSPs), who would be the go-between for the taxpayers, have recently raised concern that the GSTN was yet to release 30 to 40 per cent of the application programming interface (API), Kumar said he didn’t want to talk numbers. But he added that GSPs were just one channel in the ecosystem.

The CEO argued the API took some time due to change in rules related to returns and transition. “If the rules change, they will have to be embedded in the software,” he said.

The GSTN has conducted a trial on 3,200 entities across the country so far and rectified the glitches. “We came across various glitches including compatibility with old servers,” said Kumar. For instance, the offline tool for filing returns did not work on old machines. The excel sheet also showed an error due to input date format. “It took us some time to figure out why it was happening. We rectified that too,” he said. 

The users also took a while to get used to the interactive portal. “Currently, when a return is filed, the processing is done later. But under this system, the validation is done then and there. The system will carry out checks for duplicate invoices during the same financial year and will show an error. That takes a few minutes. But now, we will provide a temporary reference number. The system will conduct checks and provide a final reference number,” said Kumar.

Replying to a question on the transition pain faced by small and medium businesses, the GSTN CEO argued that whether it’s value-added tax (VAT) or GST, the modality for paying taxes online would not change drastically. 

Analysts and industry watchers have pointed out that while big companies in India Inc have been able to get consultants and lawyers for a smooth transition to GST, small businesses don’t have the wherewithal. Replying to that, Kumar said, needs of big companies were more complex, as they dealt with other businesses across states and needed to settle issues related to reconciliation and return of goods. 

In comparison, small businesses were less complicated and that their chartered accountants could do the GST filing, he added. 

Officials in the finance ministry have said many small businesses may be wary of compliance, and therefore resisting the transition to the GST.

What of the plea for a phased introduction of the GST, as traders’ body CAIT has called for? “That’s impossible,” Kumar said. 

CAIT wants a pilot for 10 days before the GST is rolled out. 

Any international inspiration that he and his team have looked into? “India will have a unique model. There’s none in the world to look for inspiration,’’ said Kumar.

Even as Prime Minister Narendra Modi hasn’t made a trip to the GSTN offices so far, he reviewed the preparedness recently.

The GSPs are anxious over the lack of clarity on areas such as systems and documentation. 

“There are only 22 days left, so we hope to get some clarity on them,” said Archis Gupta, CEO, Cleartax. 

On GSTN saying returns will be filed only from August 1, Gupta said, “That we acknowledge. But, we need clarity to start testing for more anaylsis, more stability, that’s all. We are more worried for customers. As the GSTN represents the government, if it is not ready, the deadline will have to be extended.” 

It's another matter that GSTN is not looking at any extension at all, however stretched it may be. It's team of around 600 techies including at least 500 from Infosys is at work through day and night, preparing for a historic tax reform.