Several warnings from industry officials were ignored by the government in respect of complex taxation reform. GST Network, an Information Technology (IT) backbone required to handle all the activities of Goods and Services Tax (GST) Reform was not ready for the launch, said some of the officials. Some weeks ago, before the implementation of the new indirect tax reform, the government declared that they were ready with the new reform but the industry experts said that they were required more time to prepare for the changes. The Finance Ministry, Arun Jaitley on 20th June said that “It’s not a complicated process.”
Several warnings had been ignored by the government to test the complex taxation reform and even it was focusing on late changes, said tax and IT consultants who worked on the GST Network project.
According to the sources, Infosys which developed the GST Information Technology Network (GSTN), made some “basic errors”. Any of the responsibilities related to GST implementation or technical glitches in the network have not been accepted by the government officials, said tax officials. By adding that, the government is still working on changing GST rates, the deadlines of filing returns and many more, which makes challenging to unstable the new reform, as said by the officials.
According to the director of financial planning firm involved in formulating the GST Network, “At that time, the powers in New Delhi were mocking industry, saying ‘the government’s ready, but the industry’s not. Now people are laughingly asking, so who was really not ready?”.
According to the finance ministry, industry warnings had been ignored by the government officials and denied to comment on the specific problems on the implementation of GST. Additionally, the government had ignored that the industry officials were needed more time to test the system.
According to an official statement of Infosys, “several stakeholder concerns”. were raised about the Goods and Services Tax (GST) Regime and some of the best Information Technology (IT’s) engineers were working upon to fix all the glitches of new indirect tax reform.
The Goods and Services Tax (GST) Reform had been developed by the government which helps to eliminate several state and federal taxes. Moody’s Investors Service said that the new indirect reform would help to boost the economy of the country by eliminating the trade barriers of 29 states.
Since the implementation of Goods and Services Tax (GST) Reform, the system has been facing issues due to the complex four tax- rate structures under GST, which makes it challenging to stabilize.
The Industry tax consultants said that they had informed to government officials, about the GST Network which plays an important role in filing returns, was not working efficiently. Technical glitches were faced by the taxpayers in filing returns at the portal which led to incorrect tax assessments.
According to the technology officer who involved in the GST implementation, his company had to deal with a “revolving door” of government requests in the run-up to the launch. The economic downturn which is at a three-year low in the duration of April-June quarter has been blamed for the implementation of GST System. The growth of the Indian economy will be gained in the coming quarter.
According to the director of the financial planning firm, the government was “adamant” on the implementation of new indirect tax reform on 1st July. He further added that “Obviously, it led to chaos.” According to the tax officials, one of the tests adopted by the GSTN did not reveal realities, “GSTN in the month of April and May gave 100 companies an invoice to upload and see whether it was getting uploaded or not.”
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Tax officials said that “You can’t really test the system by taking one invoice as a sample. GSTN told companies it would do more testing with a larger number of transactions. That never happened.” According to Prakash Kumar, the head of GSTN, “a phased approach was adopted” at the time of implementation of GST and change is a constant in large IT projects.”
According to the finance ministry official, “the gravity of the situation” in developing the GST Network. “No doubt, the government didn’t realize the difficulties that would be faced.” By adding that, “But Infosys is also responsible.”