Introduction

GST returns require a tremendous amount of qualitative and quantitative information to be provided by the organization, which can be used to determine the authenticity of the entity, determine the profitability, as well as uncover fraudulent transactions that are conducted to inflate sales figures providing a misleading picture of the profitability and financial stability of the company.

Taking significant decisions, such as whether to conduct business with a particular company or whether to invest in the company, becomes impossible without this data. Karza Technologies consent driven GST and ITR solutions complement our diligence suite well, and ensure up-to date monitoring of a business’ financials, as well as providing the means to conduct financial diligence on smaller entities that may not be required to publicly disclose their returns.

Our KGST solution is ideal to expand the credit base that our clients lend to, improve credit accessibility to SME’s, and conduct a detailed analysis of the financial health of a business.

Features of KGST

Let us understand the multifarious features of KGST:

Discover different GSTs

PANs are used to identify various taxpayers in the country. PAN is a unique and distinct 10-digit alphanumeric number assigned to Indians, mostly those who pay tax. As a result of this unique identifier, all tax-related information about a person is recorded using a single PAN number that serves as the primary key for storing information. It is shared across the country, so no two people or tax-paying entities can have the same PAN.

On the other hand, GST, or Goods and Services Tax, is a destination-based indirect tax levied on the supply of goods and services. As per the GST law, a PAN can have multiple GST registrations (GSTINs) within a single state. The entity should register for GST in multiple states if it engages in interstate trading in multiple states through one PAN. 

By using API GST search basis PAN, you can retrieve multiple GST registrations under a single PAN card. 

Accurate Financials

GST data is primarily used to extract important numbers to gauge the profitability and financial stability of a company. The UI report's Essentials tab displays gross turnover, net turnover, total clients, total invoices, gross purchases, net purchases, gross margins, net margins, etc. Simple words, a detailed dissection of the company's finances. 

Additionally, with total clients and total invoices, it provides a view of the company's client diversification. A company that has merely 1 or 2 clients is in a highly precarious position since even if one client closes all its business with the company, it can threaten the company's very existence. 

Total invoices provide information on whether the company generates enough invoices to cover all its clients. If the invoices are extremely low, and such invoices stop flowing in the future, then the overshadowing threat of doom lingers over the company.

Complete summary 

The KGST product displays the entire gamut of pertinent information related to the entity. Using the Micro Service API, GSP GST Authentication, the user can access and discover the complete range of information, such as the legal name of the business, the trade name, the current status, whether it is active or inactive, the structure of the business, authorized signatories, registration date, etc. 

As a result of the Microservice API, GST Authentication, you can retrieve additional supplementary information, such as aggregated annual PAN turnover slab of the entity pertaining to a particular financial number, gross income for a particular financial year, the nature of the company's core business, and most importantly, the HSN code of the products and services that the company offers. 

HSN stands for Harmonised System of Nomenclature. Globally, this system has been implemented in order to categorize goods and services in a systematic manner. HSN codes are 8-digit standardized codes that categorize 5000+ products and are accepted globally. 

Consequently, GST numbers provide the most comprehensive scope of information on any entity, thanks to KGST.

Compliance Status Check

The GSP GST returns filing API provides the filing history of the particular GSTIN with the GST Network. By viewing the entire history of GST returns filed by an entity, you can check whether it adhered to all the formalities associated with return filing up to specific due dates and check if there were any delays in return filing. An analysis of the meticulousness and discipline followed by the organization in filing its returns provides an incisive view of its indebtedness, and of its efficiency as an organization.

Assessment of Concentric risk in Revenues

The top 10 customers found in the UI report indicate if there is too much revenue coming from a single customer or a group of customers. The concentration of revenue is expressed in absolute numbers and percentages. If a company extracts more than 50% of revenue from a single customer, and that customer goes insolvent, that can create a gaping hole, a gnawing gap in the company's revenues, and be a threat to its financial stability, resulting in the company's failure. 

Additionally, the report provides state-by-state sales that can highlight if there is too much concentration of revenue from a few states or from a single state. As an example, if a company receives approximately 50% of its revenue from Maharashtra, and Maharashtra experiences a massive decline in its GDP during the given year, this will threaten the company's existence or cause a significant dent in its revenues, thus adversely affecting its profitability. 

In addition, HSN wise sales in the report can provide insight into which kinds of products generate the most revenue, and whether revenue is spread over various product categories, thereby diversifying the risk and eliminating too much dependence on one particular product. As for the former scenario, the company can capitalize on the growth of its best-selling product to increase revenue and boost sales of declining products.

Assessment of Concentric Risk in Purchases

In the UI reports, the top 10 suppliers illustrate if raw materials are sourced too heavily from one supplier. A consumer's production facility may become bogged down if it over-relies on one supplier because that supplier turns insolvent, or fails to provide raw materials in a timely manner or in a certain quantity. 

State-wise purchases reveal if there is too much reliance on state-based suppliers for obtaining raw materials. In case the state experiences an unprecedented calamity that impacts the economy severely, this will impede the consumer’s production. 

As a result, the user can find several suppliers for a particular raw material, while at the same time ensuring that the suppliers are spread evenly across the landscape of India.

Better view of actual sales

There is often an inflating effect on the sales figures caused by internal sales within the organization. Technically, intra-organizational sales occur when one GSTIN provides goods and services to another GSTIN within the same PAN umbrella. It refers to the supply of goods and services from one location to another within the same enterprise. 

Absent this classification, a prospective consumer may be impressed by the substantial sales numbers and based on a faulty perception of the company's revenue and sales, may invest in the screened company or strike a trade deal with the screened company. It may be the case that sales are invariably boosted by internal transfers forming a major component of total sales. 

KGST also uses KScan, another state-of-the-art product, to uncover related parties. A company may create fictitious companies and conduct fraudulent transactions of selling astronomical amounts of goods and services to these companies to increase sales and present a false image of huge growth and profitability. 

Additionally, the company has sold large amounts of goods and services to another company in which one of the directors has a major stake or with subsidiaries of one of the directors, or with another company belonging to an immediate family member. An investor or prospective customer may be lured by such unauthorized, deliberate inflating of sales figures by giving them a lopsided view of the company's revenues and profitability.

The KGST also detects cyclic transactions in which goods are purchased from one company and later the same goods or raw materials are sold to that same company. As a result, the sales figures of both parties are augmented without resulting in any actual sales.

The classification of related-party sales, intra-organizational sales, and cyclic transactions allow for a better, more accurate assessment of actual sales to third parties.

Assessment of Future Financial Stability

As an example, a company may achieve a revenue of 100 crores in a certain financial year, and another business may assume it will achieve a revenue of a minimum of Rs 100 crores in the following year based on the strength and validity of the earlier figures. This unprecedented revenue may have been achieved because of a one-time sale of Rs 80 crores to a particular company that is unlikely to occur again in the future. 

When the sales are made to a long-term customer or a regular customer who purchases material or services on a regular basis, we can be sure they will order again from the company, thus providing financial stability for the company. Hence, recurring sales provide a more accurate picture of financial stability and continuity of the business than a one-time sales win that gives an incorrect picture of those factors. 

Detailed Data of Tax-Liability and ITC

KGST provides a comprehensive view of all tax obligations, taxes paid, taxes yet to be paid, and late fees incurred due to late payments. This report also shows which input tax credits are available, which input tax credits the user is eligible for, and which input tax credits have been claimed. Let's consider its use. Tax data makes your tax obligations more manageable because it simplifies the process of keeping track of them. 

Let's begin by understanding what input tax credit is. As GST is paid on the outflow of goods and services, an input tax credit is claimed for the GST paid on the purchase of goods and services for the furtherance of business. An input tax credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs. Say you’re a manufacturer - tax payable on output is Rs 1250 (FINAL PRODUCT), tax paid on input (PURCHASES) is Rs 800. You can claim an input tax credit of Rs 800 and merely pay Rs 450 in taxes. 

For this reason, it is important to know the input tax credit that is available, what one is eligible for, as well as the input tax credit availed in order to reduce the amount of tax paid on the output by using input tax credits of GST paid on raw material or purchase to produce the value-added product. Thus, KGST provides an incisive assessment of the input tax credit, understanding its impact on the company's profit after tax. 

Conclusion 

We could go on and on about the benefits and uses of KGST. However, it is impossible to fully summarise these innumerable benefits in merely one article. GST is the biggest tax reform in this country's history. It is therefore imperative to leverage the vast amount of data produced by GST with a product like KGST. This data would otherwise be inaccessible or inaccurate.

If you are filing GST returns, you must provide the company's financial statements or any qualitative information with immutable accuracy. In other words, the data retrieved from GST platforms by KGST is accurate and therefore provides actionable insights.