With a little over a month remaining for the roll-out of the Goods and Services Tax (GST), concerns over preparedness of taxpayers — especially small and medium enterprises (MSMEs) — continue. Designated technology providers, known as GST service providers (GSPs), cite unfrozen rules and lack of general awareness as the primary reason.
GSPs have widely interacted with various kinds of businesses as they are the designated application developers through which a taxpayer can connect with the GST Network (GSTN) server. While GSTN, which has built the IT backbone for the new tax regime, would provide its own tool for filing tax return under the GST, GSPs will ensure that custom-made front-end applications are available for different needs of businesses.
A taxpayer can either directly file return through the GSTN or can use any of the 34 GSPs applications as they are authorised to connect with the server.
There is also a distinct divide in GST preparedness between MSMEs and big businesses as some GSPs that primarily cater to companies with annual turnover of Rs1,000 crore and above sound confident about their clients. For example, Vinod Tambi, COO of Excellon Software, which has clients with high-volume transactions with presence at multiple locations, said they were ready for the July 1 roll-out. The company is also a designated GSP but not focused on SMEs.
Although some experts agree that big businesses are in better shape than smaller ones, they argue that most such companies have multiple smaller suppliers, whose lack of readiness could adversely affect the whole supply chain, thus impacting big firms.
The GST regime is designed for free flow of input tax credits. So, if a supplier fails to file valid return due to lack of awareness or readiness, it could impact the cash flow of other entities in the chain.
“Big companies are definitely more prepared than MSMEs, but the latter doesn’t have clarity over several aspects. Many service providers aren’t clear about registering in different states if they have places of business spread over multiple states,” Archit Gupta, founder & CEO of Cleartax.com, said. He added that many companies that are exempt under GST aren’t sure whether to register with the GSTN or stay out of the system.