With the ambitious Goods and Services Tax set to be rolled out from July 1, its IT backbone, GSTN, is preparing for all kinds of contingencies. It recently conducted a pilot with over 3,000 taxpayers and with the feedback is trying to make the system user friendly, GSTN Chairman Navin Kumar told The Indian Express in an interview. Excerpts:
The IT preparedness review meeting was held last week. GSTN is scheduled to make a presentation in the next GST Council meeting. What is left?
First, let me say what has been done. GSTN project consists of a front-end and a back-end. Front-end has the GST portal on which three services will run: Registration of new taxpayers, filing of returns by taxpayers and payment of returns by tax. Back-end has IT systems of all the tax departments of the states and the Centre.
When we started, the Centre asked us to make an assessment of the revenues of the states and how their systems work. We found that all states have an IT system for their commercial taxes, but they were in various stages of development. Some were quite sophisticated but some were rudimentary. And, a majority of them were somewhere in between. We told the Centre that in our assessment, not more than 7-8 states will be able to upgrade or bring in a new system for GST in time. So, the Centre convened a meeting in 2014, in which commercial tax officers of all states participated.
There we shared our assessment and said that we would do the front-end and the back-end, if the states opt for it. At that time, 12 states opted for it. We selected Infosys as our partner in November 2015. Between November 2015 and now, 12 more states have joined for their back-end. Now we are doing for 20 states and 7 Union territories, total of 27 states/UTs.
The front-end will consist of IT hardware, software and we will have to provide connectivity and bandwidth. Hardware is ready. Connectivity and bandwidth have been arranged. We have four data centres, which are connected to the data centres of the states as well as CBEC. That work of connectivity with all states has been done. With the CBEC, it’s going on and it will happen by the end of this month. That leaves with us the software part.
When we selected Infosys, the Constitutional Amendment Bill had not been passed. We were told by the Empowered Committee of State Finance Ministers that Infosys should be asked to start with the software development but keep the hardware part on hold as it can be made after the Bill’s passage. So, software started in November 2015 and we are in a happy position that software is more or less done now.
Between May 2 and May 16, we conducted a beta test where we invited over 3,000 taxpayers to work on our software and tried to file returns and make tax payments, just as they would do once the GST gets rolled out. In the process, we took their feedback and we are now working on the feedback. We are trying to make it user friendly and simple. When you have a large system, there are problems. All those problems which came up during beta testing, either have been resolved or we are in the process of resolving them.
Could you give some examples of the issues that came up?
For example, the interface, was found to be a bit complicated by some taxpayers. So we said we will make it easier to interact. We have simplified it now. We have given an offline tool, which they can download and they can use that for filing their returns, uploading their invoices. One problem that we encountered was that people with old computers were not compatible with the current (GSTN) software. We had to revise it, so that even older computers can use it.
Some people were not able to log in, some had problems with using their digital signature certificates. Some problems were user specific, so they had to be educated. We also have a help desk. Wherever there was a problem, either in software or the system, we resolved it. Now, we are more confident that the software will be more user friendly. Beyond this, the refinements are still going on. Then, we have to register GST practitioners – the consultants, advocates, chartered accountants, who would be advising and helping the taxpayers file their returns. We are going to start their registration after the enrolment window closes.
In the meantime, our IT infrastructure, which is ready, is being tested. Now, we are putting our software on the system and load tests, performance tests are on. They will continue till about the middle of June. Another thing is Standardisation Testing and Quality Certification(STQC), which comes under the Ministry of Electronics and IT. They are supposed to audit all large government IT projects. We have been interacting with them. The software part, the performance test, vulnerability assessment and penetration testing, which is the security part, that will be done now.
Especially in light of the ransomware attack …
Yes. They will check if our arrangements are adequate or not. This will also happen in June. Once all these things are done, we will be ready for roll out.
How many GST practitioners would be registered?
Around 4-5 lakh across the country. Once the portal starts, then the taxpayers will be able to see which tax practitioners are available in their area. If they want to consult anybody they can go there. Similarly, tax practitioners will see taxpayers in their area.
What about GST Suvidha Providers?
GST Suvidha Providers are IT companies or accounting software companies. Some of them are providing services to taxpayers for things like accounting package, inventory management, invoicing and other services of VAT and service tax. What we thought was that we are providing our portal where people will come and file their returns, make tax payments, but for large or medium sized companies, the number of invoices may be very large. The new GST law differs from the existing VAT or service tax law in the sense that here the returns have to carry the invoice data, which was not there earlier. That is going to be a crucial part of the whole compliance process.
For small taxpayers, maybe they have to enter 100 or 200 invoices, but if you have invoices running into thousands, that may not be possible on the portal. So we thought of involving firms already providing such services. While our portal is supposed to cater to 80 lakh taxpayers, they can have a portal that caters to maybe 5,000 or 10,000 taxpayers. Supposing that we have 30,40 or hundreds such GSPs (GST Suvidha Providers), then our load will be distributed.
It was said that GSTN can handle 300 crore invoices a month. Will the actual size be tested only post the roll out?
Until now, some states have been taking invoice level data but mostly they were taking it as annexures, and data was not being used or uploaded. Some states like Gujarat, Maharashtra had started it so we took data from them and on that basis we have estimated the total anticipated invoices. But, we will get to know only when GST starts. So far as testing is concerned, we are testing for 700 crore invoices. 320 crore invoices is the estimation and we are testing at double the number. I do not think that it will exceed the number, but we will know the actual position when people start filing.
Are you expecting any disruption in the initial phase?
We have already done the enrolment, so our portal has been launched, it has been used. 60 lakh people have come to the portal, so we have seen how it works. The difference is that in enrolment there was no deadline, in a way. In the first phase, we announced it for two months till December and then we kept extending. The maximum load we saw was about 2 lakh taxpayers on a single day. Here, there will be a deadline for the returns. We have to see how they come and what load is there. We have studied for VAT and we found that almost 50 per cent of the taxpayers file their returns on the last day. We kept that in mind while making assessment of the compute capacity that we must have.
So you are preparing for the possibility that on the last day, the load will shoot up …
Yes. But, here what the taxpayers have to do is to first give the invoice data. In our system, we have kept provision for uploading that data on a daily basis. They can do it at the time of issuing invoices. When they are selling something in the shop, they can upload invoice immediately. But, that may not happen immediately. We will now start a media campaign that don’t wait till the 10th of every month. At least, they can upload the invoice data at the end of every day or at the end of every week, then they will not face any last moment problems.
It would be easier for big firms, but small taxpayers might faces issues like connectivity …
Should not be. Even in worst areas, you are able to connect to the internet for some time, 10-15 minutes at least. That’s why we have given this offline route where you can fill in your data, so that whenever there is connectivity, you can send the data to the portal. That is what we will be telling the taxpayers. In our training of tax officers, we have told them that when they interact with taxpayers, they should advise them not to wait for the last moment. Because this is the most intensive part of the return filing process. Uploading of invoices will test our system because most of the data is coming there. The GST returns will be made by the system based on this data. This is the most difficult part. If people take to uploading the data periodically, then it won’t be a problem. But we have designed a system assuming that will not happen and 50 per cent of them will come on the last two days.
It’s been seen in existing tax system that if the IT system fails, transporters are left stranded. If the server fails, how will GSTN system cope?
Currently, each state has its own system. Some states have transit permit, some do it manually, while some generate on computer systems. So, wherever it is on IT system, they have to generate from the IT system. If that is down, then it’s a problem. But the system that we have built, the arrangement is that if something fails, there is something else to take over immediately. That is called business continuity planning (BCP) and is part of our IT system. With Infosys, we have arranged a maximum amount of time allowed for such failures, the time during which it should be corrected. That is why we have four data centres.
One in Delhi, one in Bengaluru, another near Delhi and another near Bengaluru. The reason is that if there is some problem in one data centre, the other one immediately takes over. So, users will not even feel the difference. Suppose there’s an earthquake, when everything is down, then it may take longer. But normally the taxpayer will not even feel that there is a switch. And for that, we are also providing connectivity and bandwidth. From our data centre to a state data centre or CBEC data centre, we always have two lines and these are being provided by different service providers, so that if one is down, the other can still work.
GSTN services to Centre and states/UTs have been exempted. Why?
This question will be better answered by the people in the government. My assessment is that this is a service that we are providing to the taxpayers and the government. These are services actually offered by the government and the government has outsourced the work to us. The idea is why do you put a tax on that. In any case, as per the revenue model of GSTN, we will be raising user charge bills and users are taxpayers. We are supposed to charge them, but the government said they will pay on their behalf. That burden will be shared by the Centre and states in proportion of their registered taxpayers. So, if we include an element of tax, then the money will be coming from the government only. So better to keep that out.