How to Evaluate GST Software for a Trading Business

What GST software should actually do

Good GST software does three jobs. It records tax correctly at the time a document is raised, it turns those records into the data your returns need, and it helps you find mistakes before they reach a return. Software that only prints GST on an invoice does the first job partly and the other two not at all. For a trading business with many invoices and bills each month, the second and third jobs are where the time is saved.

GST reports an Indian trading ERP should provide

The reports you need depend on your registration and your business, but a trading ERP should cover the core set below.

• Outward supplies for GSTR-1, grouped by type: registered buyers, unregistered buyers, credit and debit notes, and an HSN summary
• A way to review purchases against GSTR-2B and see what matches and what does not
• A GSTR-3B summary of liability and input tax credit, checked against your books
• Reverse-charge purchases, where they apply
• Composition-scheme working, if you are a composition taxpayer
• ITC-04 data, if you send goods to job workers
• A register of output and input tax, and a list of problems in the data

Questions to ask before buying a GST ERP

Ask questions that make the vendor show, not tell.

• Where does the tax on each line come from, and how does the system choose between CGST and SGST or IGST?
• What checks are made on GSTINs, HSN codes and rates when masters are entered?
• How are problems in the data flagged, and where do I see them?
• Can I reconcile purchases against GSTR-2B, and how does the data get in?
• Can a finalised period be locked, and who can unlock it?
• Can my CA see the position without editing my data?
• Who files the returns, and what exactly does the system prepare for them?

A checklist by area

It helps to score any system area by area rather than overall.

• Capture: HSN codes on products, GSTIN and state on parties, and validation when they are entered
• Classification: CGST and SGST versus IGST decided from the states, with the split adding up exactly
• Reports: GSTR-1 data, GSTR-3B summary and purchase reconciliation drawn from the same records
• Controls: exceptions listed, periods lockable, changes logged
• Access: a role for your CA with the right level of access
• Scope: a plain statement of what is prepared and what is filed elsewhere

What TradeFlow provides

In TradeFlow, GST records are created from sales invoices, credit notes, purchase bills and job-work charges, and the following working data is prepared from them.

• GSTR-1: registered, large and small unregistered sales, credit and debit notes, an HSN summary and a month-by-month breakdown, exported as Excel or as a TradeFlow JSON file that is not a file for upload to the government’s GST site
• GSTR-2B: month-wise purchase reconciliation, with lines entered manually or loaded from the GSTR-2B JSON file, each shown as matched, missing in books, missing in GSTR-2B or an amount mismatch
• GSTR-3B: monthly liability and input tax credit from your books, compared with GSTR-1 and GSTR-2B, with a place to record the figures actually filed
• CMP-08 comparison for composition taxpayers, and ITC-04 working data for job work
• Reverse charge on purchase bills, and a register of output and input tax with Excel export
• GST periods that can be locked, an exceptions list, and a CA Compliance Dashboard for your CA

How TradeFlow checks the data

TradeFlow validates a GSTIN by its format, state code and checksum, but does not confirm it against the government’s records. It flags a missing HSN code where one is needed, a GSTIN whose state disagrees with the party record, a place of supply it cannot determine, and a rate outside the configured rates. It does not validate the format of HSN codes or look up a rate from an HSN code, so keep the HSN master and product rates accurate.

Preparation, not filing

Ask every vendor what their software files. TradeFlow prepares the return data; the returns themselves are filed outside TradeFlow, by you or your CA. TradeFlow does not connect to government systems. After you file, you can record the filing status on the GSTR-1, GSTR-3B, CMP-08 or ITC-04 working, which locks it. CMP-08 also has a dedicated acknowledgement-number field; GSTR-1, GSTR-3B and ITC-04 instead have a free-text filing note. Nothing is submitted from TradeFlow.

Red flags

Some answers should make you cautious.

• A vendor that cannot say who files the returns
• GST that appears only on the printed invoice, with no separate record behind it
• No list of problems in the data, so errors surface only at filing
• No way to lock a period once it has been filed
• Reports that cannot be traced back to invoices and bills

Run a month of your own data

The most reliable evaluation is a trial on real transactions. Enter or import a representative month: sales to a customer in your state, sales to one in another state, a sale to an unregistered buyer, a credit note, purchases with and without a purchase order, and a reverse-charge purchase. Then check that the GSTR-1 data agrees with your invoices, that the purchase reconciliation shows what you expect, and that the exceptions list catches the deliberately wrong entries you included.

Where TradeFlow fits

TradeFlow is an ERP for Indian traders, wholesalers, distributors and dealers, with GST applied from invoices and bills and the working data above prepared from your records. To see it on your own transactions, book a demo and bring a sample month.

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