GST compliance: Why cloud solutions are set to be clear favourite with enterprises

Source: Financial Express

Cloud solutions can be used as pay-per-use applications besides being accessible on mobile devices even as on-premise solutions have struggled to adjust to changes in return filing formats

As businesses with on-premise software solutions struggle to update their applications after the roll-out of Goods and Services Tax (GST), authorised technology providers for the new tax regime say that more enterprises would switch to cloud computing in coming days due to its cost effectiveness and flexibility to work on mobile devices.The on-premise solutions refer to solutions and data residing on a user’s computer while cloud solutions are hosted by a separate entity, and solutions are accessed via internet. The GST Suvidha Providers (GSPs), which are software developers selected by GST Network to act as a bridge between the taxpayers and GSTN servers, have seen growing demand for cloud-based solutions.

The enterprises are also lured by the fact that cloud solutions can be used as pay-per-use applications which translates into cost-saving for businesses that require to use solutions only sparingly while on-premise solutions require a significant upfront investment. “Pay-per-use is gaining traction among customers, which is further helped by improving connectivity,” Sanjay Phadke, head-GST at Vayana Network said. He added that with storage cost gradually coming down, businesses would consider cloud solutions more favourably.

Additionally, enterprises with on-premise solutions have had a tougher time in adjusting to changes in return-filing formats affected by the GST Council as late as April. This required manual intervention from technicians to upgrade the system. However, the same exercise proved to be much easier for cloud-based applications.While Vayana Network, which serves businesses with annual revenue of Rs 30-400 crore, provides only cloud-based solutions, currently businesses are nearly vertically split between the two choices on offer. This is being exploited by companies such as Spice Digital, also a GSP, which is serving nearly 2,500 customers to get them GST-ready.

“We have both on-premise as well as cloud solutions to offer our clients. Additionally, our solutions have embedded artificial intelligence which helps the software to learn from user behaviour and adapt to evolving requirements,” said Saket Agarwal, global CEO, Spice Digital. Although GSPs admit that the first three weeks in the GST system have passed without any major hiccup contrary to the expectations on the eve of July 1, they warn that the major test would come at the time of filing returns in September. However, GSTN, the IT backbone for GST, allowed GSPs to start uploading sale and purchase invoices from July 24—a crucial exercise to test GSPs’ preparedness in terms of the ability of their systems.

Before GSTN opened the facility to upload invoices, its chairman Navin Kumar had said that the facility was for B2B companies where transactions are to be reported at the invoice level. Big businesses who deal with a large number of invoices in a month, totalling lakhs of such bills, will be required to do it. These businesses can start uploading invoices from now instead of waiting till the time of filing return, he said. While many experts have termed such detailed compliance as onerous and cumbersome, , the flip part of the exercise is that it will make evasion of taxes extremely difficult and bring about a self-policing mechanism to report sales and pay taxes. GSTN expects that businesses will file over 3 crore invoices every month, and has said that its system was robust enough to handle the load.

Similarly, this also brings a massive challenge to the 34 GSPs as they need capable systems to handle the task. The first four days of the exercise that began from June 24 has brought much relief to not only the GSPs but also their clients as the procedure has largely been smooth, which helps businesses avoid the rush at the last moment.

“Day one experience was hassle-free as people were successfully able to upload their invoices to our system. We now have regular invoice uploads to our cloud app manually and via ERP connectors. These invoices can be sent to GSTN as soon as we receive production API from GSTN,” said Saket Agarwal, Global CEO, Spice Digital.

Since GSTN is still to release the production version of application programming interface (API), only certain types of information uploaded by GSPs will be accepted by the GSTN server. GSTN says that the API would be ready well before September for filing returns. “Apart from uploading invoice data, Vayana Network is also helping customers with item-level invoice matching and reconciliation between buyers and suppliers so that it becomes easier for them to claim input tax credit,” Phadke said. Another GSP said that its systems were ready to the extent GSTN was, and it had successfully managed to upload invoices on behalf of customers. “Some of the elements that we are currently uploading to our systems will not be uploaded to GSTN servers as all the functions aren’t ready at its end,” he added.

The flow of huge amounts of data has also brought focus on the concern for security of sensitive data. The aspect related to security of sensitive data being routed through the GSPs will also play a role in successful implementation of GST, especially for those using cloud-based services. “Our solution is ISO 27001 certified, the same as GSTN, which ensures the highest degree of security to our customers,” Agarwal said.