How technology could impact GST space in 2023?

The evolution of the GST system has been shaped by several changes and advancements in technology, but the extent to which technology has contributed to compliance improvement is uncertain. In 2023, the impact of technology on GST trends will be more evident, particularly in the ITC Claim process, which is set to become even more stringent. To avoid revenue loss and fraud, the government will continue to impose stricter rules and disclosure requirements, which will necessitate businesses to adopt more tech-savvy practices, such as automation, to ensure accuracy and consistency in their compliance. Vendor management systems will also need to be improved to ensure compliance from all parties involved.

Following two years of the pandemic, CFOs and indirect taxation teams are expected to focus on maximizing their ROI from ITC Reconciliation, which will require them to streamline data collection and processing. They will need to track vendor onboarding, purchase transactions, payment releases, and credit facilities more efficiently to unlock ITC claimable amounts that would otherwise go to waste.

In 2023, there will be an increased emphasis on e-invoicing as a means of promoting standardized and authentic data for business transactions. This will enable businesses to access granular and real-time information about their transactions, which can be used for sachetized financing options at the invoice level. As the e-invoicing mandate expands, businesses will begin to reap the benefits of enhanced capacity and innovation, with advantages accruing to suppliers, recipients, and financiers.

CFOs will also need to focus on tackling Show Cause Notices and GST Litigations, as the government conducts audits and scrutiny of ITC claimed in previous years. To avoid potential issues in the future, businesses will need to prioritize proper mechanisms for monitoring and archiving their GST returns.

In 2023, the GST Council is expected to facilitate trade and simplify compliance by introducing measures such as the simplification of GSTR 3B return. Businesses will need to track and maintain ITC positions at the source, i.e., invoices, where technology can be used to provide granular tracking. Other trends, such as the increased focus on e-invoicing, will also shape GST compliance in the coming years.