`Forgot password’ commonest query in GST’s first fortnight; offline utility to be launched on July 24, says GSTN Chairman Navin Kumar

A fortnight into GST’s rollout from July 1, Goods and Services Tax Network (GSTN), the IT backbone and portal has begun rolling real-time taxpayer registration and migration.

While the first set of returns will be filed only in September, the portal is equipped to deal with filing returns, handle invoices of more than 5 billion a month, execute inter-state tax settlements, and connect states for two-way data flow on real time basis.

GSTN Chairman, Navin Kumar told Moneycontrol in an exclusive interview that “forgot password” has been the commonest query that traders have been raising. There are also challenges that on digital signature certificates (DSCs), which have mainly arisen because companies mostly skip the “follow instruction” step while applying for a DSC through the portal.

Edited excerpts:

Can you give us an update on the registrations?

There are two parts—migration and registration. Migration—anybody who was registered under any of the existing tax systems and wants to move to GST—was 66 lakhs until June 15 and has gone up to 70.1 lakhs as of July 16. When we opened the process again on June 25, (initially) we would get 25,000-35,000 people coming for migrations every day. But that number has slowly come down to about 10,000-12000 per day now. We are keeping this open for. This will remain open for three months—up to September 22.

On registration, we made an assessment (at the design stage) about the likely number of additional taxpayers that would come into the system. Based on studies of VAT (value added tax), service tax we found the annual addition was roughly 5 percent. So, on a base of 80 lakhs, a 5 percent addition would be 4 lakh per annum. But, in the last 20 days we have had 7.2 lakh additional applications. Of these, 5.01 lakh have already been approved. More people are registering. It is an indication that people, businesses, like GST.

What if someone has not registered or is eligible for shifting to GSTN in the next few months or after a year?

The registration window will remain open always. This one-month time limit that has been given for those people who were not registered under any taxes, but the liability has increased (turnover of more than Rs 20 lakhs) before or on July 1. The law says that the day turnover crosses Rs 20 lakhs, you must register yourself within one month. If your liability arose before July 1, when GST was not there, you still have one month’s time. But if your liability arises on July 15, then you have one month time after that. Therefore, we have to keep the window open always. It will always remain open, so that whenever a new or an existing business’ turnover goes beyond 20 lakhs, they can register themselves.

How will government identify if somebody was evading taxes by not registering on GSTN despite having an annual turnover of over Rs 20 lakhs?

The onus is on the taxpayer. When he crosses Rs 20 lakhs (turnover), he has to register. The tax department keeps conducting surveys in the market, on people who are doing business. It is basically on the basis of intelligence. But, suppose my liability arose on July 15 and I register on September 25. When the audit takes place, the tax officer will want to look at the turnover data. If you are not registered on time, then you will have to face certain consequences, such as you will have to pay tax for that period, or penalty. In addition, you will not get input tax credit for that period. It is there in the law. GSTN has nothing to do with it.

A two-month extension has been given till September for companies to file their first set of returns. What is your key focus area for GSTN in the meanwhile?

After July 1, we have allowed existing taxpayers to opt for the `composition scheme’. One can opt for the scheme with an annual turnover of up to Rs 75 lakhs. That service we started on July 5.

We are going to get an offline utility for taxpayers who have business-to-business (B2B) transactions. Such traders have to provide invoice level data in their returns.  One can punch all the invoice data—the name of the seller, GSTN of the seller, the commodity, the tax amount, tax invoice at our portal. It will suit people who have few invoices in a month, say only 200 invoices. For those with greater volume of invoices such as 5000, it will not be practically possible to type in all the details. We are providing this offline utility for them. It is a java-based utility and has an excel sheet linked to it. The utility will be releasing on July 24.

We have started giving this offline facility for uploading data to a closed user group of tax officers and tax payers.  They can now use that tool and try to input invoice data and upload it on the portal.

We have identified 34 companies as GST Suvidha Providers and they will be providing these services to these big businesses. We want to see how the GSPs have prepared themselves, how they are connecting to our system, how their clients are coming to our portal. This one week is kind of a pilot that we are doing and on July 24, the offline utility and the facility of invoice uploading will be available to taxpayers.

We want to tell the tax payers, particularly those who have large number of invoices in a month that they should not wait until the last day for uploading the invoices. They should use this facility that we will start from Jul 24 to put the invoice data on GSTR1.

Will you be empaneling more GSPs in the future?

Yes. We have invited applications and have shortlisted more than 80 GSPs. They are now supposed to come and tell us what they propose to do, and then we will make the final selections.

What are the key challenges that you foresee once traders actually start filing returns?

Our main challenge is persuading taxpayers to upload invoice data in advance. If everybody comes at the last moment it could be a problem for the system. It will not only be a problem for us, it will be a problem for the taxpayer also. We are telling the GSPs that they have to persuade their clients to upload their invoice data in advance.

We have designed our system assuming that 50 percent of the people will come on the last day and 30 percent of them on the day prior to that. But, if everybody comes on the last day, then the system may not be as fast as we would like it to be.

What are some of the most common queries from tax payers?

They are facing issues regarding the use of DSC—digital signature certificate (DSC). When you come for registration you have to sign it digitally. There are two options available—one is DSC, other is electronic verification code (EVC).

For companies, use of DSC is mandatory. Everybody else can use EVC, which is simpler. You press a button, you an OTP (one time password) on your mobile, you enter that and you are done.

The DSC is a bit tricky because you have to follow a certain process. We get a large number of queries from users on DSC. We have analysed that the problem is that people don’t read instructions. There is a user guide (which people don't read).

The other issue, very surprisingly, is problems while logging on to the system. And what are the problems? I have forgotten my password.

My tax advocate has taken away my password is also another common complaint.

The capacity of the system has been said to be 3 billion transactions a month. So, when you talk about scaling up, how much can it scale up?

We estimated 3 billion invoices on the basis of the invoices being submitted in VAT. Our study revealed that the average number of invoices generated by businesses was 127 per month. But the range was very wide. The maximum number was 28 lakh invoices a month, and minimum was 10 a month. We have designed our system for three times that capacity. So, 400 invoices per dealer per month, multiplied by 80 lakh, gives you that figure of 320 crore. And our system can handle double of that. So, lot of spare capacity is there. The system is designed to be scaled horizontally. If there is any problem, we can add more storage or more servers, but we have huge capacity to scale up.

Is part of this on the cloud also?

No, it’s all dedicated hardware. You can say it’s a dedicated cloud, and it’s all in India and it’s ours.

What is the status of the e-way bill?

NIC (National Informatics Centre) is working on it. Initially, we were asked to work on it, but since we were saddled with this work, to again float a tender and work on that, the government thought it would be better if the NIC does it because they already have a system in Karnataka.

What about those States where electricity and Internet are major challenges?

You need internet connectivity for filing your returns, and in this case, for uploading your invoice data and pressing that button "make GSTR1". Through this offline utility, with the worst kind of connection, that is 256 Kbps speed, it takes one minute. Making that GSTR will not take more than five minutes. Connectivity for ten minutes to half an hour is good enough. Even the remotest place in the country, you have power supply for 2-3 hours a day.

But having said that, we had also pointed out to government that they should look at the North East, where because of location, there is no connectivity provided. The revenue department has been regularly talking to telecom department and the state governments to see that lines are laid or wireless connectivity is provided.

Will there be a time when people will be able to file their returns on the phone?

We have given a mobile app also. This offline tool you can use on mobile also, and our website is also available on the mobile, but the problem with mobile is, if you have large volume of data, then it becomes difficult. But you may use it on a tab, and I find some GSPs are also working on providing connectivity, tab-based applications connecting to our system through SIM card, to obviate the need for electricity. Just like smartphone, you can you can use tab to connect to Internet. Those kind of solutions are also coming up.

What about cyber security?

Security is very important for any IT system. We have also been looking at it right from the request for proposal (RFP) stage. The RFP had a specific section on security requirements. Our system is going to be ISO 27001 certified.

We have set up a security operations centre or SoC which runs 24X7X365 days. It is located in Chennai. Infosys has their global security operations centre at Chennai. This is housed over there. There are third party functional and security audits. Third party audits will continue at different intervals. We are also going to set up a security management and analytics centre (SMAC), which will be operated by a separate agency, not Infosys. They will be looking at all the data that is generated by the SoC, and analysing that and also looking at what improved solutions are available.