How has Digitization Improved the GST Payments Experience?


Before the age of the internet, paying taxes and filing returns was quite a demanding task involving a significant amount of time and effort. The fact that businesses had to pay taxes at multiple levels added to its complexity.

GST has subsumed and replaced various taxes to reduce this burden. The GST system has also been taken online to make GST payments online and registration of businesses under the GST system simpler. Nowadays, companies can generate tax returns under this GST online system.

Before we take a look at the benefits of making GST payments online, let us take a glimpse into how the online GST system works.

What is the Goods and Services Tax Network?

Building a digital network that would be accessed by such a large number of users to perform multiple functions and having different access levels was not at simple feat. The Goods and Services Tax Network (GSTN) is the IT network that forms the backbone of the entire online GST system. The GSTN drives everything ranging from GST payment online, registering under the CGST act, generating returns, etc. This network is maintained by the National Informatics Centre (NIC).

The online GST portal contains information about every transaction and gives taxpayers information about their tax returns. This portal is also accessible to tax authorities.

Why is the Online GST System Important?

Some of the primary functions of the GST Network have been listed below.

  • The Goods and Services Tax Network enables information sharing on a massive scale. The information on the portal is accessed by several entities like taxpayers, Central and State Governments, Reserve Bank of India and other relevant authorities making it essential for the system to be encrypted and secure.
  • The GST provides taxpayers with a safe and secure platform where they can compute and pay taxes as well as generate returns. The GST portal is a one-stop-shop where companies can register themselves, make GST payment online, and generate returns, all in one place.
  • With the whole GST taxing system being online, the transaction history and other vital documents are no longer vulnerable to threats. Also, the information is regularly backed up.

How has Digitization Improved the GST Payments Experience?

The Challenges Prior to the Introduction of GST

Before the introduction of the GST, there were multiple taxes collected at various levels. This led to an increase in the volume of paperwork required to be done to file taxes and generate returns. This increased the tax compliance of small and medium scale businesses, which wiped out a significant portion of their revenue. Further, the whole procedure was prone to human error.

The indirect taxing system that was in place before the introduction of the GST failed to regulate the unorganized sector of the Indian market. The lack of regulation made both tax paying and tax collecting from this sector very difficult.

The Benefits of the Online GST Payment System

  • Unlike the traditional process of registration, registering under the online GST system does not require the business to visit tax authorities to submit documents. Thanks to the online GST system, a business can get registered under the CGST act within a day just by submitting the online copies of the required documents.
  • The businesses can update information regarding the sales, purchases, details of taxes paid, concessions availed via digital modes. No paperwork is involved in the process.
  • The businesses can access the portal to file taxes and transfer tax amounts directly to the government. Tax amounts can be credited instantly via internet banking, small businesses can also opt to pay with system-generated challans.
  • The Input Tax Credit (ITC) is another benefit of the online GST system. The earlier ITC was taken by presenting fake invoices or submitting a single invoice multiple times. The new system will automatically match, reverse and reclaim without any contact with the businesses.

Now that you are aware of the benefits, you can make your GST payments online or get registered under the GST scheme.

How to Register for the Composition Scheme under CGST?

One of the essential benefits of the CGST Act for small businesses is the composition scheme.

The Composition scheme allows small businesses that do not have the resources to register as regular taxpayers to register under this particular scheme. Companies registered under this scheme need not file their taxes monthly. They have to file their taxes quarterly. This dramatically reduces their tax compliances as they may not have the resources or the workforce to fulfill tax compliances under the regular GST system.

The process of registering a business under the composition scheme is quite simple. You will need to select the option ‘Register as Composite business owner’ under section 10 of FORM-B. However, as per the CGST Act, 2017, a person willing to withdraw himself from the composition scheme has to file an intimation letter for withdrawal from the program in the form of GST CMP-04.

Though the GST system is relatively new and has faced many hurdles, it certainly has the potential to simplify the indirect tax system of the country.