GST can lead the second IT revolution 

MAY USHER IN E-INVOICING, AUTOMATE DECLARATION FORMS ISSUANCE & E-AUDITS 

THINGS ARE HAPPENING AT A HECTIC PACE on goods and services tax (GST) front. Last week, the finance minister put the whole GST initiative on a fast track by announcing the central GST rates before the empowered committee of state finance ministers. Suddenly, there is a feeling that if a quick consensus can be arrived at with states on the constitutional amendments and the union government moves briskly on setting up the enabling IT system, April 1,2011 deadline for GST is achievable.
With respect to IT infrastructure, the FM highlighted the need to move with great alacrity and speed. He also proposed constitution of an empowered group chaired by Nandan Nilekani to be authorised to take decisions about the size, features and functionalities of such IT system. Dr Nilekani also talked about a dedicated web portal for filing registration applications, returns and e-payments, to be set up by a SPV owned by both the central and state government.
Its obviously a good idea, as businesses would get an opportunity to file online return for integrated GST (IGST) and hopefully for CGST as well as state GST. Today, this facility is available for central taxes such as excise and service tax and for state VAT in some states. Apart from the obvious changes in IT systems, GST would also offer a whole new range of opportunities for government, businesses and also for the country as a whole.
The procedural uniformity across states, which is inherent to GST, will make it feasible for the first time to automate several functions that are currently handled manually. This, in turn, would translate into a faster and more efficient discharge of these functions.
E-invoicing is one such area that will become more feasible under GST. Given the varied central and state-specific invoicing requirements under the existing tax laws, e-invoicing is difficult (though not impossible) to implement. In fact, under most tax laws, even a digital signature is not permitted. However, if the government is able to ensure substantially uniform invoicing requirements across states under GST, the legislators might as well take a step ahead and permit e-invoicing.
The advantages of e-invoicing are multifold. Apart from saving/relief from the administrative hassles of physically printing so many invoices, manual signatures, postal charges and storage, consider the positive impact on environment. Also,e-invoicing would entail faster execution of transactions, better storage and retrieval of relevant information, and also a more robust audit trail from governments perspective. Successful international precedents are available before the government.
Another area then can be considered for automation is issuance and tracking of declaration forms for inter-state movement of goods, perhaps through the proposed common portal. This has been a major pain point for industry for a long time. Imagine, if the authorities at the check post were able to log into the IT network and enquire about the consignment, with reference of the GST number of the consignor and consignee.
Currently, provisions pertaining to dispute resolution and appellate proceedings under various laws vary substantially. However, typically, this entails filing multiple copies of replies/submission by businesses, mostly with double line spacing and without back-to-back print outs. The paperwork involved (by both parties) is immense and there is definitely scope of improvement. Also, as a large number of cases drag over several years, businesses face a challenge of maintaining the litigation trail. Imagine a scenario, where a company gets an electronic notice or demand order, files an e-appeal, and the appellate authority passes an e-order. Judges sitting in the court room with laptops in front would surely be a welcome sight.
Similarly, IT can be used for many other purposes, including e-audits and audit sampling, training of government officials and disseminating information to industry and trade. GST needs to be the enabler which would take IT beyond the organised sector to small businesses.
Many would argue that all this is easier said than done. Surely, it would entail massive efforts and resources from all stakeholders. It would need a change in the mindset and getting used to a paperless working environment, much different from what we have today. It would also require changes in various laws and regulations, many of them would be non tax related. In fact, one of the mandates of Technology Advisory Group for Unique Projects (TAGUP) is to address and make recommendations on modifications required in various regulations on account of various projects undertaken, including GST. Also, given the vast IT talent pool in our country, one would hope that these measures should be capable of being implemented in a cost-effective manner.
To start with, the focus is likely to be on automation of basic functions and compliances. However, over a period of next 2-3 years, one can definitely look at more innovative ways of using technology. In that sense, GST might just be an enabler for the second IT revolution.

Economic Times, New Delhi, 27-07-2010