Exclusive Interaction-Niraj Hutheesing, Founder-Director, Cygnet InfoTech

Niraj Hutheesing, Founder & Director, Cygnet Infotech talks to us about the benefits of tax tech and E-invoicing in this interaction.

What are the benefits of subscribing to Tax tech & E-invoicing?

With the changing global scenarios for both the taxpayers and the tax authorities, businesses are seeking more innovation in their tax management especially as the official authorities are going digital. It thus becomes crucial for businesses to start adapting latest technologies and invest in their tax functions in this evolving tax tech ecosystem.

E-invoicing is a fundamental function of accounting i.e. raising digital invoices, in real time. Account reconciliations as well as the working capital flow becomes seamless because businesses are getting timely invoices and the data can be archived more efficiently. With digitized invoices, the storage and retrieval of such invoices becomes easier and enables in saving time and resources. Additionally, the appropriate technology enables auto-validation of E-invoice data, thereby eliminating human errors. E-invoicing works for the benefit of the sellers as well as buyers as it helps them reconcile their purchase order with the E-invoice data due to automation.

What is your Tax technology outlook for 2021? 

The Tax Tech journey has evolved since 2017, as new tax technology solutions have now paved the way for companies to build an Intelligent tax system, automating an entire ecosystem using a digital twin and enhanced audit tools are helping taxpayers in make better Credit decisions. They are slowly moving from a manual or semi-automated system to completely automated GST compliant software which will reduce time and cost for many tax experts. As the country is getting closer to becoming truly digital, we are focused to bring automation via technologies like AI, ML, hyper-automation within the financial wheel of the enterprises in the next few years. In 2021 and beyond, one of the most prominent technologies that will transform the tax technology landscape is Business Process Automation through hyper-automation. Another technology innovation is the creation of a Digital Twin of the Organization (DTO) which makes it possible to visualize the wear and tear in various processes. As per the latest report, India improved its score by 6 ranks as a consequence of the introduction of GST which led to seamless credit flow and online compliances. This also ensures limiting penalties during an audit.

On GST and its critical assessment

With an aim to seek larger tax compliance and to promote non-intrusive tax regime, the use of data analytics and automated tools have created a larger significance in ensuring compliances in self-assessment based tax regime. The Government has also introduced stringent provisions in recent amendments to curb the menace of fake invoices and tax evasion by prescribing restrictions of availing of tax credits, payment of tax in cash in certain cases as well as suspension of registrations where significant differences or anomalies indicating contravention of the provisions of the Act or the rules made thereunder are observed.

Given this, the reconciliation of input tax credits as per GSTR-2A / 2B and purchase register, outward supplies reported in GSTR-1 with GSTR-3B as well as e-invoice (wherever applicable) and E-way bills would be critical for the business to remain compliant and ensure continuity of business operations without interference from tax authorities.

Is E-invoicing relevant for SMBs and small resellers with a small turnover?

E-invoicing is very relevant for SMB and resellers since they would also form a part of the E-invoice ecosystem as it is being envisioned by the GSTN. The inclusion of the business in the entire supply chain will allow seamless flow of credits and in turn, reap the benefits of consumption-based tax system – the way GST has been planned. This will also ease the compliance efforts with auto-generation of returns based on E-invoices generated. With the Supplier Non-compliance the buyer might have to face the consequences of blocked GST Credits , which can't be availed till the time a valid E-Invoice is generated.