The GST Nexus: Common Portal, GSP, Tax Professionals and APIs

Private companies have been given license as GSP and are building their own GST software. How does this impact professionals? If you are a finance consultant or if you are studying finance and taxes, then you must be wondering why you are reading about Application Program Interface (API), or for that matter what does it even mean in the first place. We believe that most of our audience are professionals such as Chartered Accountants, Cost Accountants, Company Secretaries and Tax Consultants who want to enrich their knowledge on Goods and Services Tax law. We, too, understand the wider interest of our audience and that is the reason for this particular post. The Goods and Service Tax envisages towards a paradigm shift in business taxation and related compliance in India. So far, we have survived with manual challans and cash deposits for tax payments, and what not. However, this will not be the case under the GST regime. Apart from filing business details, GST is also about system management and system understanding.

As a professional, you will not only be required to know about various return filing processes and other related procedural aspects, but also the technological advancements around it. GST is aiming to digitize the entire business processes, right from record-keeping to reporting. Under the new regime, small and medium enterprises will have no other option but to embrace technology. Even for large enterprises, it will be a must to include computer science professionals in dedicated in-house compliance teams; as working in silos will not even be a choice. So, with this background let’s look into the technological aspect and understand what an API is.

Goods and Services Suvidha Provider (GSP)

Goods and Services Tax Network (GSTN) is a special purpose vehicle (SPV) of the Government of India with the sole objective of setting up the IT infrastructure for Goods and Services Tax implementation in India. Once GST is rolled out, every business registered as a normal taxable person is required to furnish three returns on monthly basis. Information furnished in these returns needs to be highly accurate, as it will result in counter-party input tax credit claim and thus needs to be correct. The GSTN expects that approximately three billion invoices will be uploaded on its common portal and thus to share the huge load, it has come up with the Goods and Services Tax Suvidha Provider (GSP) scheme. Under this scheme, budding startups and large IT companies will be given an opportunity to build their own GST return filing software on a framework devised by the GSTN. This will foster innovative technologies and will give a wider option to the taxpayer to select which vendor to chose for return filing and other related compliance. Under this scheme, GSTN will expose the APIs of their common portal with GSPs and data can be pulled and submitted from and to the GSTN’s database.

How does Application Program Interface (API) work?

We all love to eat out at restaurants, and if the services are good we end up paying an extra tip to the waiter. The service in a restaurant is an amazing way to describe how and why we need APIs.  Once inside the restaurant and on the dining table, we give an order to the waiter, who in turn goes inside the kitchen, submits the order request, collects the order and brings the order to the dining table. An API works in a similar manner; it takes the data request from a client machine, takes it to the server, identifies the data from the server and brings it back to the client machine. Under the GST regime, finance professionals need to ensure that the data fetched from these APIs are correct and all the logic build to get this work done in the background is extensively tested for. While all GSPs have a mixed team of finance professionals and software engineers, individuals with an understanding of both can go places under the new regime.

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