Snags raise doubts over GSTN tech bone

Even as the government swiftly set up a five-member ministerial panel on Wednesday to oversee the technology challenges being faced by Goods and Services Tax Network (GSTN), the company that manages and maintains the information technology (IT) backbone of the new unified indirect tax, experts said the issue could be more to do with preparedness than technological challenge.

A tax expert with a leading management consulting firm, told DNA Money that GSTN wasn’t given enough time to prepare for a smooth rollout of goods and services tax (GST).

“The final rules (for GST) were available only by the middle of June and so there is some merit in saying that GSTN did not have time to prepare,” he said.

In less than three months of the biggest tax reform being launched on July 1, the traders and businessmen are complaining of technical glitches being experienced on the GSTN site while filing returns.

Another IT expert, who is associated with GSTN, also felt that since the IT infrastructure firm was given less than a month after the finalisation of the GST rules, its applications may not have gone through a proper stress test.

“As on today, is it (IT system of GSTN) something they (GSTN) have built for 100% of what the system has been designed for or is it only to roll it (GST) out and then ramp it up,” he asked.

According to him, the architecture of the IT system was horizontal, which means it can easily be ramped up as and when required.

The technology expert, who did not want to be named, said the three billion invoices that GSTN claims it can handle has to do with storage or memory and not with its computing power.

He believes it must be lower computing power that must be causing the technical glitch.

“It looks more of a technical glitch because the way the system has been implemented, which means the application written has not been put through the stress test before it went into production. I’m sure, there is a problem and it is only a matter of streamlining the system,” he said.

Another tax consultant, whose clients have been at sea trying to upload and file returns on the GSTN site, said if the IT system for the GST was not fully ready, the government should not have rushed them into preparing for it.

“What is difficult to understand is everyone knew that the GSTN was not ready, the government knew and everybody knew, but knowing that it was not ready why did they (the government) persist and say that people had to file returns on time. Our clients have struggled to handle this,” he said.

The tax executive said his clients were not able to upload invoices as computer screen frequently went blank and while filing returns, the GSTN site would throw up error message even when no error was committed.

In the initial phase, he said, the authorities refused to entertain complaints. “By and large, we realised that there wasn’t much willingness from people to admit the mistake. It is one thing to make a mistake and it’s another to admit you have made a mistake. Whenever we tried to get in touch with people, no one from the government wanted to acknowledge to us that yes there is a problem. Everybody was happily in denial and that has aggravated the problem.”

The issue came up in the meeting of GST Council, a body of finance ministers looking into the nitty gritty of GST, held late last week, and the date for filing GSTR1, GSTR2 and GSTR3 for July has been pushed back by around a month.

Following complaints from various state finance ministers at this meeting, a ministerial panel, headed by Bihar deputy chief minister Sushil Kumar Modi, has also been constituted to resolve the problem.

Other members on the panel include Chhattisgarh Minister for Commercial Taxes Amar Agarwal, Karnataka agriculture minister Krishna Byregowda, Kerala finance minister Thomas Isaac and Telangana finance minister Etela Rajendar.

M S Mani, senior director at Deloitte India, said if the problem still persists, the government should look at further extending the deadline for filing GST returns for July.

“Unless the technology issues, relevant to GST, are addressed, people will continue to struggle filing their return and that will bring down the attractiveness of GST as a reform,” he said.

...& ANALYSIS

• GSTN wasn’t given enough time to prepare for a smooth GST rollout
   
• GSTN applications may not have gone through a proper stress test, given the time crunch