Road to digital governance carved by GST

This may seem tough, but it will set the stage for India's $10-trillion economy target

The introduction of the goods and services tax (GST) may just be one of the most challenging reforms that the government has undertaken; a mountain that has not been scaled before, yet leading to a summit worth striving for. Let’s be cognisant of the fact that this is not the first time a country has attempted to overhaul its tax structure; several countries in Asia have been down this path before. In Malaysia, the government planned a similar new tax model in 2011, but because local businesses were not GST-ready and lacked an understanding of the impact it would have on day-to-day operations, the entire process took five years and was finally implemented in April 2015.  India can take heed here and encourage businesses to get their information technology systems, processes and human resources in place to accelerate the implementation process. Today, while going digital under the new tax regime may seem tough, it will set the stage to achieve the $10-trillion economy that India is targeting.

 
While GST aims to overhaul the complex system of indirect taxes that had plagued India since Independence, its implementation has been quite discordant, as expected of any radical economic transformation. There was, and remains a sense of panic, especially among small and medium business owners. For them, GST appears to be unnecessarily burdensome, in addition to normal business hassles.  On the other hand, large organisations may face collateral damage because their suppliers are not GST-ready.
 
However, most businesses across the country have responded positively to the new interface, with a significant number having already migrated to the new portal. As of August 25 , over 4.8 million taxpayers had already saved their sales data on the portal. Supported by the backbone of the GST Network (GSTN) , GST is paving the way for a digital office to replace paperwork. The end-to-end platform is designed for all stakeholders to undertake versatile activities from vendor registration to tax reconciliation. It will challenge the grey market by pulling businesses on the fringe of the economy into the formal tax bracket and cut red tape by minimising opportunities for palm greasing with a formalised interface.

 

Beyond the on-ground impact of GST, the initiative can even be acknowledged as a leap of faith in digital governance. It is a first-of-its-kind policy in India, which in its very inception envisions digital governance, rather than overlaying it as an afterthought. It envisages tracing every business transaction across India without breaking the chain of benefits to traders. However, for GST to be truly effective, businesses need to extend their vote of confidence to the technologies that support the GST infrastructure.
 
Take the example of personal computers, which are transforming India's cottage industries into small businesses. Modernising the dying craft of Chanderi saree making, women textile designers at Chanderi in Ashoknagar district of Madhya Pradesh have utilised design software and internet connectivity on PCs to conquer the online marketplace and reach new customers irrespective of geography.

 
Technologies that can, by virtue of their form factor, handhold first-time business users to take their first successful steps into the digital economy by enabling productivity, mobility, and security  are extremely relevant at this stage. Businesses can stay ahead of the curve by deploying devices that allow content creation to analyse big data into meaningful insights that power sound decisions. For governments, it comes down to the precision and speed with which technology can utilise big data to contribute to administrative and monitoring processes, GST being the latest.
 
Successfully adopted in over 140 countries, GST has been vetted to work well with the public and the government.  But, is India prepared for a successful GST implementation? The answer is a calculated yes, as it is an ever-evolving process and a steep learning curve is bound to exist. While most state and central officers have been trained in GST law and software, its growth will be lopsided if GST training for taxpayers, employees, vendors and product heads in bill processing, vendor management and software integration is lacking. There is immense ground to be covered, and the spirit of cooperative federalism is pivotal to the success of GST.

 
The stage is set for a public policy transformation. With digital transformation bringing more businesses into the ecosystem and the new tax regime giving a huge push to the government's Digital India campaign, it will not be long before technology drives the Indian economy to new heights. The author is managing director, sales and marketing, Intel India