The Goods and Services Tax will come into effect July 1 onward and is expected to be one of the most significant and revolutionary economic tax reforms undertaken by the Indian government. Industry experts have predicted a $1 billion opportunity for IT vendors over the next two years. If we look at the Role of Analytics in GST Implementation, we see that the latter’s roll-out is expected to become a ‘data analytics powerhouse’.
Working of GST
As stock transfer is also accounted as supply under GST, enterprises may have to relook at their business model and decide whether to continue existing branches or set up new location across local state borders. According to Goods and Services Tax Network (GSTN), a not-for-profit organization operated by the government and private players jointly, GST will give enormous amount of data to the tax department to work with that will eventually rule out discrepancies and help tax sleuths to go after tax evaders. Based on the data filed by millions of taxpayers that will migrate to the system, analytics will help in identifying leakages and ensure more focused economic-policymaking. GST requires uploading of all outward supplies, all the inward supplies every month and matching the credits to identify mismatches and communicate with relevant vendors. Data Analytics and CAATs could be useful for analysing this data, MIS and identifying and reconciling the mismatching so that remedial measures can be taken. Different analytical tools and softwares which have inbuilt features may be used for invoice matching, analysis of purchases and sales with the standard templates for GST compliance so that these services can be provided via automation. If working with a third party is the norm, then it is desirable rather essential that the entire ecosystem be measured using data and decisions be taken accordingly.
Role of analytics
Data Analytics in GST basically means two applications:
(a) Data mapping of the GST on revenue and expenses. It is a way of tracking the GST numbers through the ‘black box’ of the accounting system and essentially documenting every revenue and expense stream end-to-end.
(b) Performing real-time data trending and analytics prior to BAS submission. The data analytic tools which accompany many of the BAS (Business Activity Statement) automation solutions are powerful and not only replicate what the BAS engine does, but also help taxpayers find input tax credits.
Thus, we see that GST is a game-changer for ensuring compliance of commercial transactions; technology being a key enabler and the ammunition to transform to the new GST regime. Hence, it is critical for enterprises to understand the impact on compliance and changes required in their existing information systems. A smooth transition to GST would occur by providing advisory and assurance services not only pertaining to interpretation of GST but also facilitate implementation and changes to the new information systems as required.
