The Lessons COVID-19 Has Taught Us About The Importance Of Digitization In All Sectors Of The Economy
The Coronavirus has disrupted our lives in every aspect, and even when we come out on the other side, our lifestyles would have changed permanently. One of the significant changes we see in practically every industry and sector is the shift towards digitisation.
This article talks about how the lessons learnt from the COVID pandemic about the importance of digitisation can be used in the context of the goods and services tax (GST).
GST: An Introduction
The GST is a tax levied on goods and services sold for domestic consumption. India brought the GST scheme in 2017, which is arguably the biggest tax reform the country has seen in a long time. Goods and services are divided into five different tax slabs for collection of tax: 0%, 5%, 12%, 18% and 28%.
The primary purpose of GST in India was to reduce double taxation and bring down inflation because in the old system, the tax was paid at every stage in the value chain and the customer was essentially paying “tax on tax”.
GST also gave several concessions to small business people and taxpayers, like the gst composition scheme. This allows taxpayers with less than a certain threshold aggregate annual turnover to be exempt from GST and pay nominal taxes instead.
Going Digital in Different Industries
Payment Services
For the last couple of years, there has been a lot of cheer for shifting towards a digital and cashless economy, thanks to the advent of e-wallets, online banking and other services.
The COVID-19 pandemic has also made people averse to touching surfaces and objects that strangers come in contact with, including money and ATMs. This means that the digital payment systems will be even more prevalent in the period after the pandemic.
All the processes related to GST: registration, payment, and filing returns, have to be done online through the GST portal. Small businesses are used to dealing in cash transactions every day, so online gst payments will motivate them to go online. GST payments have two modes: the electronic credit ledger and the electronic cash ledger.
Banking
As mentioned earlier, human interaction at banks have gone down significantly and will mostly stay that way even after the COVID-19 pandemic. Banks want customers to shift to online banking, but many Indians are facing issues.
Poorly-designed user interfaces in apps, language barriers (most online services are only in English), and server crashes are a few examples of instances where people lose faith or give up on online services.
However, with the likelihood of the continuation of these services even after coronavirus, the IT departments of banks should be motivated to improve the software services offered.
Logistics
The logistics industry is crucial for the functioning of the nation. It is this business that’s responsible for delivering goods from one part to the country to another safely and on time.
While most people are forced to stay indoors, the trucks and vans delivering essential products and food items are the lifelines of the country. Under the GST Act, restrictions on inter-state movement of goods are eliminated, so goods can move between states without the hassle of paying different taxes in each state.
The e-billing system under GST was launched in April 2018, through which transporters, manufacturers, traders, and people in business can generate online bills for goods delivered from one place to another through a common portal.
Maintenance of records is now easier for the suppliers and the transporters (who spend lesser time at checkpoints thanks to this) as well as authorities when it comes to the filing of tax returns.
Retail
The retail business was already facing a threat from online giants like Amazon before the pandemic, and the lockdown has made their state worse. All brick-and-mortar shops are closed, and due to the social distancing norms that will be enforced in future, the business will never be the same for retail stores. So, people in business are motivated to focus more on online sales and delivery.
Now, if you are an e-commerce businessman, irrespective of your turnover, you must register on the GST portal and cannot avail any exemptions. Once you register, you have to fill a set of details about your business and bank account, following which you will get a unique GSTIN (GST Identification Number – a 15-digit code commonly seen in bills and receipts).
The advantage of this for you is that your taxation process is made much faster online. At the same time, the authorities have the benefit of keeping track of the activities of all such businesses and ensuring that the system is transparent.
Automotive Sector
The automotive sector has taken a hit during this pandemic. Still, industry experts are using this time to plan how to amp up digitisation and incorporate AI and IoT (Internet of Things) in vehicles like smart cars.
Worldwide, there is also increasing concern about fighting pollution levels, which is why green or environment-friendly cars are also being produced more than ever before.
To promote the same in India, the GST council has brought down the tax slab for electric vehicles (EV) manufacturing and charging to 5%. The automation industry is also likely to see an increase in the number of robots used in factories to replace humans, especially with strict social distancing that is likely to be enforced.
Miscellaneous Sectors
Even though only a handful of sectors were elaborated in this article, in reality, the COVID pandemic has been a wake-up call for most industries. The Aarogya Setu app, for example, has demonstrated the power of GPS tracking and tracing everyone digitally to control the spread of the virus.
The cinema and entertainment sector is also planning to shift their business operations to OTT platforms like Netflix than multiplexes and theatres.
Have You Gone Digital?
Given the uncertainty of today’s times, you, as a businessperson, must be equipped to go digital from now and continue using digital services even after the situation stabilises.
While it is difficult to make the transition from offline to online, every industry is experiencing something similar. Luckily, there are many software services specifically designed to help small business people take their business online.
