GST: Technology driven changes: Going offline to online in ecommerce era

Before implementing the goods and services tax (GST) In July 2017, India had a fragmented indirect tax system. Each state had independent VAT legislation to tax supplies of goods, while the production of goods and the provision of services were taxed centrally by the central government. The overall management of indirect taxes in India was based on a system of state-wise automation of filing, combined with issues of accuracy, completeness and state-wise variance. technology was used to varying degrees, and the end result was that tax compliance and assessment practices were inconsistent.

With the introduction of GST, the country has adopted a pan-Indian technology platform with more sophistication to simplify GST reporting and related compliance. It was an ambitious but successful combination of streamlining and simplifying the tax system and the business processes associated with complying with the new tax system. The GST portal handles “Registration – Compliance – Assessment – Litigation” with easy-to-understand manuals, FAQs and even timely guidelines for taking changes into account. Even the robust “central” e-waybill system introduced in 2018 has made it easier to issue archaic control items, reducing the lead time of the supply chain and the associated costs for companies, and also supporting tax administration.

Since the largest part of the compliance chain was shifted to an online interface, the technological intervention not only enabled the companies to run smoothly, but above all, the tax authorities can now improve compliance and tighten controls and balance sheets with significantly reduced manual intervention.

India introduced electronic invoicing in October 2020, providing a system that enables real-time data reporting from taxpayers to the government and also allows the recipient of deliveries (the taxpayer) to verify the accuracy of the report. What started with big taxpayers is now moving to Rs 50 billion companies, making them part of the revelation technology has brought to GST. The government’s progressive approach in adopting concepts such as e-invoicing and the establishment of a GSTN that provides advanced analytics tools to leverage taxpayer data to improve compliance, detect tax evasion and assist with Policy making, has produced positive results for businesses and tax authorities by increasing transparency and controlling tax evasion.

GST has been instrumental in removing the physical barriers to business, making India one single great marketplace, and bringing the markets closer to consumers in the new countries.


Another dimension of this technology-driven phenomenon is the increase in online commerce and delivery models. Online shopping and supply chains are now not only the preferred medium, but sometimes also the only trading medium. Tech support for commerce and government is more important than ever, and the government is leaving no stone unturned in helping businesses as much as possible. TCS for e-commerce has not only resulted in a robust reporting mechanism for e-commerce marketplaces and sellers, but has also ensured authorities receive first-hand data to match with seller reporting data.

As India’s growth story is being written, the move from offline to online plays a significant role as this advancement must include the involvement and contribution of MSMEs. With around 65 million units (around 90% of all companies) MSMEThe country’s contribution to GDP is substantial – around 30% of GDP and more than 40% of exports. Excluded from this are the millions of small units (estimated to be over 15 million) such as do-it-yourselfers, small boutiques, kirana stores, etc. of the e-commerce juggernaut engine in order to increase their reach and their usefulness.

The government should act as a pioneer for this SMEs to get online by using the GST regulations, and bringing about parity for offline and online sellers – a current pain point and removing this significant hurdle for SMB sellers under either a composition plan (under 1.5 billion rupees) or an exemption plan.

Measures in this direction will not only increase economic activity and thus offer SMEs a platform for growth, but with the technology and reporting mechanism now available to the tax authorities and the reporting of such transitions by e-commerce operators, it will also bring more transparency and Promote stronger and safer tax compliance.

(The author is a partner, Deloitte India)

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