The Indian government has postponed until September the need to file returns under the goods and services tax (GST) and allowed tax payments to be based on a simple return (Form GSTR-3B) containing the summary of outward and inward supplies, which is to be submitted before 20th of the succeeding month. However, according to informed sources, the delay in GST rollout may be due to a serious difference between the GST Network (GSTN) and Infosys Ltd over the preparedness of the technology backbone to handle GST filings.
While GSTN is responsible for providing the technology backbone to introduce GST and connect the databases of states and the centre, Infosys, the vendor appointed by GSTN, is building and maintaining technology network for the tax system. GSTN has informed the GST Council that they cannot comply with the deadlines for filing of the returns. Even an industry body, in a letter, has pointed out how the servers were constantly under maintenance during the GST migration period.
The agenda note (seen by Moneylife) of the GST Council's 17th meeting mentions the concerns raised by industry bodies and some of its members over the stability and robustness of the GST systems. "As the first round of beta testing of the GST system has been carried out by GSTN, the trade and industry are seeking that the system should be open for some time for them to try out and test it to get themselves familiarised and to get the assurance about its stability and robustness....So looking at the paucity of the time, it appears that filing of the returns for a particular period from 1 July 2017 may have to be extended so that the taxpayers get more time for getting familiarised with the system. It is to be noted that only the period for filing of the return for a particular period beyond the due date for filing of returns for one month of July 2017 to August 2017 may be extended and not the requirement for filing the returns for that period," the note states.
In September 2015, Infosys won a contract worth Rs1,380 crore for building the technology network for implementing GST and maintaining it for five years. GSTN had bought hardware last year and Infosys was expected to install necessary software for the GST. The systems were made available for participants for 15 days to get familiar with the GST.
Earlier this month, GSTN Chairman Navin Kumar had said that the IT system for the e-way bill was being worked out and may be deferred by a few months. There are also indications that Infosys may have told the government that it is not yet ready with its systems.
Bharatiya Janata Party (BJP) leader Dr Subramanian Swamy indicated as much in his tweets. "Has Infosys announced that GSTN will not be ready before 1st July. Who is accountable for this if true?" he asked.
In his second tweet, Dr Swamy demanded that the Government nationalise GSTN and sack the GSTN Chairman for this “monumental fiasco” of being unable to activate it (GST) by 1st July.
Citing the statements from the GSTN CEO, industry body ASSOCHAM had said that GSTN will not be operational on 1 July 2017. Assocham, in a letter to GST Council Chairman and Finance Minister Arun Jaitley, said, "It has been clearly stated by the CEO that the return module (which will facilitate filing of different returns before different prescribed dates) will be ready only by end-July, which will be before August, the month of filing returns."
"...during the current phase of GST migration for existing assessees, the server was constantly under maintenance. This raises huge question as to whether the IT infrastructure has been appropriately tested. It also raises questions as to whether this system can survive in the GST era when it had undergone maintenance during the second phase of migration when the traffic was restricted only to migration," Assocham Secretary General DS Rawat had said in the letter.
Under earlier plans, the government wanted to roll out GST from 1 April 2016, which was deferred. Finally, it is likely to roll out from 1st July. However, looking at the issues raised by stakeholders and service providers, GST appears to be a rollercoaster ride.