GST puts Infosys reputation on the test

Wednesday 12th July 2017 06:31 EDT
 
 

The brand new GST has put one of India's biggest IT companies, Infosys' reputation on the line. The company is expected to handle 3.2 billion separate invoices every month when the system is running at full capacity, a feat which analysts believe is the biggest and most technically complex data platform anyone has ever built in India.

Analyst at JM Financial, Pankaj Kapoor said, “This is huge, bigger than any other project I can think of. Not only is it having to handle this much data, but it is also having to integrate disparate systems on a national and state level.” Experts said that while the recent move to collect biometric data from almost every Indian was also huge, it was also as complex and potentially difficult as rolling out the new tax platform. Former Infosys chief executive who led the initial design of the GST network, Nandan Nilekani said it was conceived as a source of constant, up-to-date information on business activity, at a level that is “totally globally unprecedented.” He said, “You have every business in the country above a certain size, filing invoices and line items.”

The whole contract is worth Rs 13.8 billion over five years. More importantly, it gives Infosys a chance to move beyond its recent troubles, having been engulfed by a public fight between its founders and its board members over executive pay. The main bottleneck in the new GST system will be the handling of so many invoices. The documents must not only be processed but also matched with each other to allocate tax credits to companies whose suppliers have already paid tax on a particular item.

Archit Gupta of ClearTax said matching the invoices “will be very difficult”. “What if someone further down the chain puts in the wrong details, or someone, one of your suppliers, has not yet registered? You may have to pay taxes on their behalf.”

The technical challenge of creating such a system has been made even harder by the determination of the Modi government to implement the system just three months after it was passed by parliament.
Navin Kumar, chairman of the GST Network - the government organisation that is overseeing the project - says the implementation has been so fast that some parts of the system are untested by real users. Infosys would not comment on anything. In the first few days, Kumar says the system has enrolled 7.1m companies.“We have processed in 10 days what we expected to do in a year,” he says.


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