Come July 1, almost 8.5 million registered taxpayers will move to the Goods and Service Tax Network (GSTN). GSTN is the technology backbone of the new indirect tax regime and the bridge between taxpayers and GSTN are GST Suvidha Providers and Application Service Providers, better known as GSPs and ASPs.
On BloombergQuint’s special series GST Countdown, Tejas Goenka, executive director of accounting software maker Tally Solutions speaks about the role and preparedness of GSPs and ASPs.
Here are edited excerpts from that conversation.
The GSTN server also has a G2B model. So why should I as a taxpayer come to a GSP or an ASP as opposed to directly going to the G2B portal?
The GSTN portal does exist. Most taxpayers are used to using GSTN portals or even the central or state government portals to file their VAT and service tax returns. The nature of the return in GST changes a bit. In GST, the basic concept which is introduced by the government is this concept of invoice matching. When a customer does some transaction the expectation of the government is that to establish the tax liability on either party, one of those parties has to upload this transaction – including the details of what items have been sold, what rates they have been charged – into the portal. For any small trader or manufacturer, transactions can go from 10s to 100s to 1000s every month. The process of being able to upload every single transaction is a little impractical. So what GSTN has done is they have created this API framework which allows you to integrate your accounting or ERP software on which you are doing this invoicing in any case. Using the API which the GSTN provides will help you upload these APIs on a more regular basis. Instead of creating one entry in your accounting system, going out of it, logging into the portal, re-entering the same data, you can do it in one step. The idea of invoice matching is what makes the GSP, ASP model a very sensible one. It will be easier than going on the GSTN website and doing it all yourself.
Take me through what kind of services you provide as a GSP and an ASP, and as a taxpayer do I need to sign up for both?
If you look at the model we have today, we provide accounting ERP software for several lines of businesses in the country and that is your application. Inherently, we are today an applications service provider which provides accounting or ERP solutions for small and medium businesses. The GSP is an unseen kind of layer. The reason the GSP exists is to help the ASP build a secure connection into the GSTN network.
To give you an analogy, when you use Uber or Ola, you open the app and see a map. The map is not made by Uber or Ola. It is a simple API which they have embedded into the application which uses maybe Google Map. So the service of the app is provided on the application. The application in this case will be Uber or Ola, the service provider would be Google. The ASP, GSP model works similarly. The front end is still going to be your accounting or ERP software and they are going to use the GSP services. They will use any of the 34 that have already qualified or maybe some of the others which have applied now. So every application provider has a choice to integrate with their choice of GSP and the commercial transaction is actually going to be between a GSP and ASP rather than a GSP and the end customer.
What will be I be able to do on a GSP platform versus an ASP platform?
If you have an ASP which is not connected to a GSP, you will be doing whatever the ASP does today. For example, our older versions of Tally won’t be connected to our GSP. So you make your transactions, you look at your reports, it’s all a disconnected environment, for your business. The moment you look at the connected application which is what we are building with our GSP, you will be able to upload your invoices from the accounting software – so it directly allows you to login and connect to GSTN .
Another thing that you will be allowed to do is generate your return and file and sign through the application itself. Any requirement of a bridge between the application and GSTN is now facilitated by the GSP. So this is the difference - if you are doing a GSP-enabled ASP, you have the ability to connect to GSTN, and if you are not using a GSP-enabled ASP, then it’s a standalone disconnected system that you have been using for the last many years.
As a taxpayer, if I want to pick a particular GSP and ASP, what should I look for based on my business model, what kind of product should I pick?
The GSP option is not something the consumer should worry about. The way to look at it is, I am using my accounting or ERP software, or may be a separate compliance tool. I would like these two tools to integrate with whatever GSP and I am okay with that. Now when I am picking these tools, I pick softwares that matter to my business. I look at features, functionality, ease of use, reliability, speed. I don’t believe a businessman will choose a GSP, unless the GSP offers an application of its own.
You also mentioned the transaction will be between a businessman and an ASP or a GSP. I’m entrusting you, as a taxpayer, with a lot of commercially sensitive information. How will these GSPs and ASPs take care of the security and privacy of my data?
If you look at the system today, you are trusting your accounting software to maintain your transaction security. The ASP-consumer relationship will remain the same. The trouble comes in when the GSP comes in. GSTN has taken their steps, they do their audits to be able to look at any data leak, and make your GSP infrastructure extremely secure. The government is forcing you to be as secure as you can. It’s also on two sides. One is the trust the businessman should have with GSP, the second is the fact that GSP is connected to the indirect tax system of the country. So you don’t want anything messed up. The business must be able to trust you and so should GSTN.
Talk to me a little about GSP and ASP preparedness, and is there any kind of beta testing that you have done?
Once we qualified as a GSP in November, we have been prepping our infrastructure to be able to handle a certain capacity that we are expecting and we have been in regular touch with GSTN. Every two days, every week we have some kind of modifications in the APIs for greater stability. They (GSTN) have been beta testing with us. I do think there is a little bit of pressure on their side, the Council has not been able to freeze all the rules. Only when the rules are frozen, the IT infrastructure can be made to adhere to those rules. They are cutting it very tight if they are thinking about July. That’s my honest view of GSP readiness.
On the ASP side, it is very similar. If you want to connect to an ASP to make your life easier as a businessman, I think rules must be frozen, GSTN has to be ready, GSP has to be ready, and then you can be ready. So it’s almost a linear cycle, there is no parallelisation that you can do here. On the readiness side, infrastructure may be ready, but the real solution that a businessman can use, I think we are a little while away from that.
From the next GST meeting on June 3 to July 1, how much time will you need to prepare these solutions?
So if the rules get cleared, I don’t know how long GSTN will take. Once GSTN is ready, we will have to build our infrastructure to ensure we are ready. We still have got several questions on how the ASPs will consume the APIs that GSTN is providing. I will give you an example. We have got an accounting department with eight people. Now, I have been saying that one of the conveniences that GSTN offers, is being able to upload the invoice from your accounting system itself. My question is, can all eight people login in from the same GSTIN , or do they need different logins? How will that work? We don’t have too much clarity on operational stuff like this that will help us build the right system and experience for our customers. So if the rules are frozen, I still think GSTN will take some time to get their APIs ready. Not just that, to be able to test it at the scale India needs, and only then we will be able to see what ASPs can do.