Notwithstanding the teething troubles that could potentially challenge the underlying information technology infrastructure of the Goods and Services Tax (GST) system, its IT backbone GST Network (GSTN) is geared up to handle three times the estimated computing capacity and has measures in place to manage storage capacity for the next three years, having factored in an annual growth of around 5 per cent in taxpayers’ number.
“80 lakh taxpayers are already there, and we’re expecting annual growth of 5 per cent. But some 5-10 lakh new taxpayers will be there because some sectors that were not being taxed in the present regime, will be under tax in GST, like textiles, sugar, diamonds. So there will be new registrations for them. In terms of capacity, there are two things that we take into account. First is how much data storage we have, and how much compute capacity we have. Compute capacity is relevant for handling the load. We have enough storage for the next three years,” GSTN chairman Navin Kumar told The Indian Express. GSTN has set up two data centres in Delhi and Bengaluru, and plans to have two more in these cities to handle the data flow.
Kumar further explained that a study done by GSTN estimated 320 crore invoices that could arise at the time taxpayers file their returns, but the system would be able to handle three times the estimated invoices. “Our software is substantially ready. Our GSTR1 (functionality) will be ready from July 15, GSTR2 will be ready by end of July, and GSTR3 will come 10 days later. Since the returns are now to be filed by September, it will give people enough time to familiarise themselves with the software,” he added.
However, evidence of the strain on the back-end systems was visible on June 15, which was the last day of the 15-day enrolment window during which existing taxpayers could migrate themselves to GST, one of the hardware components failed, on account of the final day witnessing more rush than earlier days. “If the contingency systems were not there when that problem happened, the systems would’ve just failed. Whenever you build an IT system, there are redundancies and backups, so that if one component doesn’t work there is something that will take its place. We have sized our system based on the load it will have to take,” Kumar said.
The process of migration of 84 lakh VAT, excise and service tax assessees to the GSTN had started in November, with a phased enrolment plan for each state. The government had earlier set March 31 as the migration deadline, which was later extended to April 30, following which the government shut down the enrolment process for technical reasons. The enrolment was reopened for 15 days on June 1. GSTN opened a window from Sunday for registrations by new taxpayers.
The GST is completely based on a paperless system, and all the taxpayers are expected to complete their compliance procedures such as raising invoices, claiming credit for tax paid on inputs, etc using technology. The GSTN awarded the contract to Infosys in 2015 to build and manage the network for five years. In its pilot phase, GSTN ran tests with 700 crore invoices on its portal, against an estimate of 320 crore invoices it expects every month once the system goes live. However, experts have suggested that one could only gauge the well-being of the systems, only post July 1, from when GST will be rolled out.
“When you are building large systems, there are issues that could arise, but we are past that now. These problems are not predictable, but one will have to see how they perform once it goes live. However, with the relaxation given, the industry has got much needed time to do the compliance,” said Pratik Jain, partner – indirect tax, PwC.
To ensure all boxes are checked, the GSTN has been conducting tests of its software functionalities right from the time the software was being written by Infosys. “When the software is written, Infosys also has various teams doing various parts of the software. They call it units. Once each unit writes the software, they conduct what is known as unit testing. Then they give it to the main team, which plugs these parts into the entire composite system, and then they test the integration of the module into the whole system. This is called the system integration testing. After that, before giving it to us, they do an overall comprehensive test called release testing. They do three tests, and give the software to us, and we do the user acceptance testing,” Kumar said.
He added that in user acceptance testing, GSTN’s officials and a hired agency conduct the tests. He said that GSTN engaged with an agency called QualityKiosk in October 2016, in a contract that was originally up to March, but was extended till July. “Now that dates have been extended, and there are extra works to be done. Business analytics will be done for which parallely a new software is being developed. So all that needs to be tested, for which we’ve brought out a new tender for testing beyond July,” Kumar said.
Apart from the pilots and tests by GSTN, it has also let third-party testers examine its systems. The IT ministry’s Standardisation Testing and Quality Certification has also evaluated the software, along with tests, vulnerability assessment, and penetration testing. Kumar said that STQC raised certain observations post its tests of GSTN’s software, but they were routine in nature and are being addressed by the firm.