Design of Blockchain DApps to Simplify GST and Letter of Credit Processes in Deregulated Financial Services

Abstract

Most banking sectors and government entities depend on a centralised mechanism to perform various operations. This mechanism is often slow, inefficient, and unreliable. The Government levies Goods and Service Tax (GST) on the supply of goods and services. GST is a complex multistage indirect tax law applied from manufacturing to the end-user. The current GST implementation has a few loopholes where a seller can easily evade tax payments. Similarly, a Letter of Credit (LC) is a trade process mediated by banking partners. This process is often manual for sharing and validating documents between traders with or within countries for commerce. This paper explores the possibility of implementing GST and LC processes using blockchain technology and aims to address some of the issues faced in the current system. This paper proposes a decentralised application (DApp) to ease the operation logic of GST or e-way bills using smart contracts. The paper also explores a decentralised finance (DeFi) system using blockchain technology to simplify the LC process. This paper also discusses the implementation of the proposed smart contracts on a private blockchain network.