Impact of IT on GST

2017 © NextGen Knowledge Solutions Private Ltd. 1
Seminar on Impact Analysis of GST on Various Sectors
NIRC of ICAI, New Delhi, December 16, 2017
- Impact of IT on GST -
Presented by:
Vinod Kashyap
NextGen Knowledge Solutions Private Ltd.
Seminar on Impact Analysis of GST on Various Sectors
NIRC of ICAI, New Delhi, December 16, 2017
- Impact of IT on GST -
Presented by:
Vinod Kashyap
NextGen Knowledge Solutions Private Ltd.

Agenda
Preamble
Impact on Tax Administration System
Impact on Tax Payers
Artificial Intelligence & Robotic Process Automation
Digital Disruption
Q & A

Have only electronic interface with taxpayers
…Total Anonymity Will Shut Out Vested Interests

GST data may be used to track income-tax evaders

Impact on Tax
Administration
System

GST System Architecture
Source : GSTN
Compliance
Software
GST
Server
GSP Portal
(Providing CSV, Excel
based Invoice upload,
GSTR-2A download /
GSTR – 1 Summary)
GSP / GST
Server
Tax Payer
Application
(Local ERP,
Standalone,
Custom
Application, Excel
Based Systems etc.)
Upload Sales Register in CSV / Excel
Download, auto-populated data in GSTR – 2A
MPLS

2017 © NextGen Knowledge Solutions Private Ltd.
E-Registration
Tax Payers & Tax
Practitioners are required
to register electronically.
E-Filing
Tax Payers are required to
submit their tax returns
electronically.
E-Accounting
Tax Payers are required to
submit accounting data to
support their tax returns.
E-Matching
Additional source data is
matched with the data
available with tax
authorities across all tax
payers.
E-Audit
Data submitted by the tax
payers is analyzed by the
tax authorities to prevent
tax frauds or unintentional
errors.
E-Assessment
Tax Authorities make the
assessment of tax payers
based on the data
submitted.
Integration of digital technologies into the processes involved in tax administration starting from registration to assessment.
Digital Tax Administration System
Source : E & Y
7

Intelligence Based Deterrence
Fraudulent Bills
In-built
Controls
Improper Input Tax
Credit
Unrecorded Sales False Payment Proof Under Invoicing Non Existent Dealers.

Electronic sales suppression undertaken
through electronic tools that can alter the
evidence of transaction whether paid in cash
or cards, without leaving a trace of
transaction.
UNDER REPORTING OF INCOME
The cash economy and shared economy,
while not forms of tax evasion and fraud per
se, have features that can facilitate tax
fraud.
LACK OF VISIBILITY OF BUSINESS ACTIVITY
False invoicing seeks to over-report
deductions and to falsify invoices to mask
non-deductible personal expenses as
legitimate business expenditure.
OVER REPORTING OF DEDUCTIONS
Challenges : Tax Frauds & Tax Evasion
9
Source : OECD 2017

TIMING
Improvement in timely collection of data
TRANSPARENCY
Will bring transparency in tax
administration
CONTROL OVER REVENUE LEAKAGE
Software based controls will put a check
on revenue leakage
FASTER PROCESSING OF RETURNS
Automation of processes will help faster
processing of returns
DATA MATCHING
Data collected from tax payers can be
matched with data collected across tax
payers
USE OF ADVANCE DATA ANALYTICS
Advanced data analytics can be used
INSIGHTS FROM BIG DATA
Data Analysis can be done
INTELLIGENCE BASED DETERRANCE
Software based controls will work as
deterrence to tax frauds & tax evasion
Benefits : Tax Authorities
AUTOMATION
All the processes in tax administration
will be automated
10

Impact on
Tax Payers

Monthly Return Filing Process
GST
Server
Tax Payer’s
Application
ASP
GSP
Portal
GSP
Server
Step - 1
Upload GSTR-1
Details of outward supply of
goods or services
Invoice level data can be
uploaded on a daily basis or
weekly basis
Step - 2
Download GSTR-2A
Details of inward supplies of
goods or services is made
available to the tax payer on
the basis of GSTR-1 filed by
Suppliers
Step - 3
Reconcile inward supplies
Tax payer can :-
Accept or reject invoices
Modify the invoices
Add missing invoices
Step - 4
Upload GSTR-2
Tax payer needs to submit
Form GSTR-2 after
reconciling inward
supplies.
Step - 5
Download GSTR-1A
Details of outward supply
of goods or services with
addition or modification
made by recipient is made
available to tax payer.

Monthly Return Filing Process
GST
Server
Tax Payer’s
Application
ASP
GSP
Portal
GSP
Server
Step - 6
Reconcile outward
supplies
Tax Payer can:-
Accept or reject invoices
Modify the invoices for
computation of tax liability,
accepted or modified
invoices will be considered.
Step - 7
Upload GSTR-1A
Tax Payer needs to submit
the return at GSTN Portal
after reconciliation.
Step - 8
Reconcile Electronic
Cash / Credit
Tax payer needs to
reconcile electronic credit
ledger & check his tax
liability.
Step - 9
Upload GSTR-3
After completion of
reconciliation of data of inward
supplies and outward supplies
monthly return is ready for
upload Tax payer needs to pay
taxes before uploading return.

Benefits : Tax Payers
Insights from
Data
01
Bringing
Efficiency &
Accuracy
02
Governance &
Compliance
03
Tax Payers can use it to answer some of the questions expected from
tax authorities.
Robotic Process Automation (RPA) finds scalable use in taxation. Tax
Payers can implement RPA and realize its benefits.
Automation of tax compliance will result in reduction in missing
compliance deadlines.
The digitalization of tax system can generate big data which can be
used by the tax payer in many ways that can improve his tax
compliance obligations.
Digitalization of Tax System
Insights from Data
Bringing Efficiency & Accuracy
Governance & Compliance

Artificial
Intelligence (AI)
&
Robotic Process
Automation (RPA)

“Artificial Intelligence (AI, also Machine
Intelligence, MI) is Intelligence displayed by
machines, in contrast with the Natural
Intelligence (NI) shown by the human
beings.”
- Wikipedia
“AI is about making Computers that can
help us that can do the things that humans
can do but our current computers can’t.”
- Yoshua Bengio

Artificial Intelligence (AI) is here…
Spotify
is a digital music service
that gives you access to
millions of songs.
is a web mapping service
developed by Google. It
offers satellite imagery,
street maps, real time
traffic conditions, route
planning.
is an intelligent personal
assistant developed by
Amazon. It provides
personal services like
setting-up alarm to get
up early.
run with the help of
camera, radar sensors,
computer
Google Maps Alexa Self Driving Cars

Predictive
Analysis
Clustering &
Classifying
Artificial Intelligence (AI) will reduce risk, increase
value and help drive a cost effective approach to tax
administration.
Artificial Intelligence in Tax System
Predictive Analysis
Basic : Regression, rolling average, exponential average
Advanced : Trend analysis
Clustering & Classifying
AI & machine learning functionality can identify cluster of
data points faster with higher accuracy, on vaster
quantity of data and with a higher number of variables.
Expert Support System
In certain AI systems decision rules are encoded and later
queried for accurate response.
Expert Support
System
Artificial Intelligence (AI) in Tax
Source : PWC
18

What is Robotic Process Automation (RPA)?
RPA is a feature of intelligent process automation (IPA) that describes logic driven robots executing pre-programmed rules mostly on structured data. RPA takes
productivity optimization to the next level by redefining work and reassigning employees to execute higher value activities. Process bots are capable of independently
performing simple human-like functions such as interpreting, deciding, acting and learning.
Robots…
Robotic Process Automation (RPA)
are computer
coded Software
Enable the automation
Of repetitive
Rule-based processes
Mimic interaction
of users
Work across functions
& applications
Process Robots Capabilities…
Automated data entry
Multi-system integration
Repetitive tasks
Process Reconciliation
Data validation / quality
Process simple business rules
Source : PWC

02
03
04
01
ROBOTIC
PROCESS
AUTOMATION
Migration of Registrations,
New Registration,
Change of schemes .
Digital Tax Receipts for Filing of
Returns, Automated levy of late
fee or Penalty for non-
compliance
Data validation, Data matching
across tax payers, Data
Mismatch Reports.
.
Robotic Process Automation (RPA) in Tax
“Robots can free humans from Dull, Dirty, Dangerous, and Dear Jobs.”
20
Assessment to tax based on the
returns filed.

Digital
Disruption

Largest accommodation provider owns no real estate ………………………………………………………………………( Air BNB )
World’s largest taxi company owns no taxi …………………………………………………………………………………………( Uber )
World’s largest movie house owns no cinemas…………………………………………………………………………………..( Netflix )
Fastest growing banks have no actual money …………………………………………………………………………….( Society One )
Most popular media owner creates no content …………………………………………………………………………….( Face Book )
World’s most valuable retailer has no inventory ……………………………………………………………………………….( Alibaba )
Largest phone companies own no telco infrastructure ……………………………………..( Skype, WeChat & WhatsApp )
Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.
Source : IBM
Largest software vendors don’t write the apps ………………………………………………………………………(Apple & Google)
Digital Disruption
The Digital Disruption has already happened…
22

“Go Digital or Go Home”…something that might well be a reality for tax professionals soon
GST: How tax professionals can tap the digital goldmine

DIGITAL DISRUPTION
How it will change the role of tax
professionals?
2
The changes create real time data, which companies
need to extract, analyze and validate.
REAL TIME ANALYSIS OF DATA
1
ROBOTICS, AI & AUTOMATION
Tax professionals will need to develop new skills that
require an understanding of how to apply new
technologies. Next generation of tax professionals will
come from science, technology, engineering and
mathematics background.
4
Tax functions will need to adept to emerging “gig
workforce” trend. Tax functions will need to optimize
the process of recruitment.
ADAPTABILITY
3
C-SUIT INFLUENCER
Tax Directors are increasingly becoming key players at
the front end of business strategy.
Key Competencies of Tax Professionals in Future
Source : E & Y
24

“No matter how complex things are,
basically everything is simple.”
Questions
25

Vinod Kashyap
vinod.Kashyap@nextgenknowledge.com

Impact of IT on GST

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