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SBI explains how turnover-based MSME definition will help GST mechanism, transparency and more

SBI explains how turnover-based MSME definition will help GST mechanism, transparency and more

Finance Minister Nirmala Sitharaman yesterday announced the change in the definition of the Micro Small and Medium Enterprise (MSME). For an MSME to be defined as a Small unit, FM Sitharaman raised its investment limit from Rs 5 crore to Rs 10 crore with a turnover of less than 50 crore. The State Bank of India (SBI) has hailed this decision to define the MSMEs from their annual turnover. SBI is of the opinion that under the new tax regime, turnover declared by GST registered MSME units can be easily verified through GSTN (Goods and Service Tax Network).

On how GST will become transparent in turnover-based MSME definition; Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India (SBI) said, “The proposed definitional change for MSME is considered progressive and suitable because of the introduction of Goods and Services Tax (GST). Under the new tax regime, turnover details of enterprises are being captured by Goods and Services Tax Network (GSTN) and turnover declared by GST registered MSME units can be easily verified through GSTN. Hence, the turnover based definition would be transparent, progressive and easier to implement.”

Dr. Ghosh went on to add that as the lender will get 100 per cent credit guarantee on principal and interest which will save the capital of around Rs 25,000 – Rs 30,000 crore for banks (zero risk weights) and increase in credit disbursal which will translate into a direct credit growth of 20 per cent to the eligible accounts. As on March’20 around Rs 14 lakh crore is outstanding to the MSME sector, which translates into Rs 2.80 lakh crore immediate credit boost

Source: Zee-Business

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From 5.72 crore in Feb, e-way bills issued falls to 86 lakh in April

From 5.72 crore in Feb, e-way bills issued falls to 86 lakh in April

Even after the government repeated multiple times that all goods trucks are exempt from movement restrictions, their movement in April fell drastically to 15 per cent of what it was in February. The number in March fell by nearly 30 per cent compared to that in February.

Data of e-way bills issued — which is mandatory for transporting goods worth over Rs 50,000 — shows that even after the Centre allowed movement of all trucks and goods carriers on March 29, goods movement on the road has barely been able to bounce back since the nationwide lockdown was imposed on March 25.

GST Network data shows that against 5.72 crore e-way bills issued in February, only 86.09 lakh such bills were issued in April. These numbers include both inter as well as intra-state e-way bills. In March, when truck movement had nearly come to a halt, the total e-way bills issued were nearly 4.07 crore. In the first five days of May, 10.46 lakh bills have been issued. This means that from an average of 19.7 lakh e-way bills issued daily in February, the number slipped to 13.1 lakh daily e-way bills in March, then drastically to 2.87 lakh in April and 2.09 lakh for May so far.

However, it is important to note that the Centre had, in March, extended the validity of all e-way bills issued before March 24, due to the disruption caused by the lockdown. Usually, each e-way bill is valid for a day for a 100-km stretch of the truck’s journey.

The government, in a notification issued on May 5, extended all the e-way bills issued before March 24 till May 31. It had also extended the deadline to file Goods and Services Tax (GST) returns for entities with turnover of over Rs 5 crore by 15 days from the due date without payment of any late fee, interest and penalty. GST returns for transactions in March were to be filed by April 20, which was extended till May 5.

Even as almost all goods movement froze after the lockdown was announced, the government first clarified that movement of essential goods is allowed. Through another order on March 29, it allowed movement of all essential as well as non-essential goods.

In a letter to the chief secretaries of states, Union Home Secretary Ajay Kumar Bhalla clarified that “transportation of all goods, without distinction of essential and non-essential, have been allowed”, giving permission for trucks and goods carrier to move within the states and across states as well.

However, the GST Network data shows that not only has intra-state movement of trucks and goods carriers been severely hit, their movement between states has been affected even more.

While the inter-state e-way bills issued for February and March were about 40 per cent of the total e-way bills for these months, in April, the share of inter-state e-way bills in the total was just 28.3 per cent. Of the 86.09 lakh bills, inter-state e-way bills in April were only 24.43 lakh. For the first six days of May, inter-state e-way bills account for only 30.8 per cent of the total e-way bills.

Interestingly, the Centre is yet to disclose the GST collection figures for April. GST numbers for each month are usually released on the first day of the next month, but the government has deferred the release of the April GST figures. GST mop-up in March 2020 had slid below Rs 1 lakh crore to Rs 97,597 crore, an 8 per cent fall from the March 2019 collection of Rs 1.06 lakh crore.

Source: Indian-Express

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Extremely mobilised on GSTN project, working closely with GST Council: Infosys

Extremely mobilised on GSTN project, working closely with GST Council: Infosys

Infosys is “extremely mobilised” on the GST Network enhancement project and work is progressing at “full speed” even as a large segment of its employees are working remotely amid the nationwide lockdown, its CEO Salil Parekh said. Taxpayers were facing issues due to glitches on the GSTN portal. The portal of GST Network (GSTN), which provides the technology backbone for the goods and services tax (GST), is managed by Infosys.

“I think we’re extremely mobilised, working very closely with the GST Council. In fact, our Chairman Nandan (Nilekani) had met them. There’s a detailed plan that is also internally being developed, we are working towards it. There are some constraints obviously on procurement of some hardware and but as we come closer to July, we’ll have a sense on that basis in terms of the manpower deployment,” Parekh told .

He added that work is progressing at full speed, even amid lockdown situation that has forced majority of Infosys staff to work remotely.

“It’s at full speed, even in this remote working situation. And we’re making every attempt to make sure all of those discussions that we were part of, we are executing upon…As of now, we have everything fully mobilised,” Parekh said.

He added that there will be discussions around July to “make sure all the hardware pieces which need to be procured are fully available, given the supply chain constraints in the hardware”.

Last month, the finance ministry wrote to Infosys saying some of the problems highlighted as early as 2018 are still unresolved and failures month after month lead to genuine taxpayers “getting frustrated” and asked the Bengaluru-based company to provide a plan for quick resolution of glitches on the GSTN portal.

Infosys Chairman Nandan Nilekani had then made a detailed presentation to the GST Council for the transition into a better GST Network system and the requirement of hardware to enhance capacity for addressing the system-related issues that are being faced by taxpayers in the IT system. The Council had agreed to the demand for more skilled manpower and better hardware to enhance capacity and given time till July to improve the GSTN design.

Parekh said about 93 per cent of Infosys staff is now working remotely amid the lockdowns on account of the coronavirus pandemic.

Talking about getting staff back on premises, Parekh said that as lockdowns start to ease off, the company will have between 5 to 10 per cent of its employees on premises.

“…(When) things start to ease off, our first phase will be between 5 and 10 per cent, so it’s a very gradual moving back. Even with that, there will be a lot of attention on social distancing, in transport, even in the seating within the campus, some level of partitions between seating, different usage in terms of hygiene and safety within the campus. We putting in temperature checks,” he said.

He further noted that in some of the centres outside India, the company is undertaking a similar strategy.

“It will be in the range of 5-10 per cent in the first phase, and then we’ll see how that plays out what the situation with the lockdowns is. And then the next phase will kick in,” he said adding that currently many of its locations in India (like Pune and Bengaluru) are in the red zone classification.

IT companies like HCL Technologies and Tech Mahindra are continuing to allow staff to work from home (WFH) to ensure safety of employees amid the nationwide lockdown.

While home ministry guidelines had allowed IT-ITeS companies to operate with up to 50 per cent strength from April 20, many states including Karnataka and Uttar Pradesh have continued imposition of full lockdown.

Industry body Nasscom had also advised members to adopt a staggered approach and start with 15-20 per cent workforce in the first phase, and subsequently scale it up depending on the situation on ground.

About 90 per cent of IT employees and 70-80 per cent of BPO and small and medium businesses in the sector are estimated to be working from home to ensure business continuity.

Source: Economic-Times

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With 9% interest on delayed payment, taxpayers avoid deferring GST filings

With 9% interest on delayed payment, taxpayers avoid deferring GST filings

Many large taxpayers, those with annual turnover of Rs 5 crore or more, are not availing the extension for paying GST and filing returns as many of them find the 9 per cent per annum interest from the due date too exorbitant.

The government has, in order to lessen the compliance burden on businesses given the outbreak of coronavirus, extended the dates of filing GSTR 3B returns due in March, April and May 2020 to last week of June 2020. Usually, the date for filing returns for a particular month is 20th of the next month. So, for March, the date of filing returns in 20 April, and that for April is 20 May.

Those having aggregate annual turnover less than Rs 5 crore, no interest but late fee and penalty will be charged. But for those with turnover of Rs 5 crore or more, an interest at the reduced rate of 9 per annum from due date (against the current rate of 18 per cent) will be charged.

For businesses with large tax liabilities, delaying the tax payment by three months would mean a large interest outgo, and hence those taxpayers, who have sufficient cash-in-hand are planning to pay the taxes and file returns on time.

“The industry has taken a mixed approach on the delayed return filing, depending upon the cash flow situation. The comparison which is done is the 9 per cent interest (on late payment of GST) and the interest on bank loan. However, filings have slowed down on an overall basis,” says Ritesh Kanodia, partner.

But not all businesses are weighing options between paying interest on late payment of GST and interest on bank loan. For many SMEs with turnover of Rs 5 crore or more, the question is whether to pay the salaries or file GST returns.

Nidhi Goyal, managing partner, says: “Those SMEs which have enough cash flow to pay salaries would like to pay GST liabilities on time and save on the 9 per cent interest cost that they otherwise would incur.

Some businesses are also taking advantage of the fact that the load on GST Network, the IT backbone of the GST regime, will be somewhat less, and are finishing some of the compliances despite the extension of dates.

Rajat Mohan, partner in chartered accountancy, says unlike in normal times around the due dates, one invariably face problems in filing returns, right now the GST Network is working smoothly.

Rajesh Gupta, Co-Founder & Director, says: “Due to lockdown, business transactions have been reduced and left with only 10-20 per cent in total, so accordingly, the load on the network is less as compared to normal. So the network is working smoothly and helping taxpayers to work at home. It has enabled almost more than 20,000 registrations with 10-13 days of the first phase of lockdown.”

Source: Business-Today

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GST portal glitches to dominate agenda of Council meeting on Saturday

GST portal glitches to dominate agenda of Council meeting on Saturday

Glitches on the goods and services tax (GST) portal will dominate the agenda of the Council meeting on Saturday, even as states will vehemently seek resolution of delayed compensation issue. Infosys Chairman Nandan Nilekani has been asked to make a presentation before the Council.

“Hassles on the GST portal even 30 months after roll-out is unacceptable and that has been communicated to both GST Network and Infosys,” said a government official.

States are likely to demand that Infosys should have a point of contact in each state to resolve these glitches, the official said.

Meanwhile, the electronic invoice facility is likely to be deferred by three months from April 1 to July owing to lack of readiness of both GSTN and the taxpayers.

Finance Secretary Ajay Bhushan Pandey took a detailed meeting with Infosys officials on March 7 on the GSTN-related matters, more importantly ahead of the crucial roll-out of new simplified returns from April 1. GSTN’s tech support partner Infosys has been asked to come up with a plan for quick resolution within a fortnight.

System capacity constraints and the inability of GST Network to provide smooth return filing will be taken up at the Council.

With new returns format to be rolled out from April, it was imperative for GSTN and Infosys to work effectively, he added. The department of revenue, in a letter to Infosys on March 5, highlighted that the issues flagged in 2018 were still unresolved and that failures month after month resulted in genuine taxpayers getting frustrated.

“It is requested to go through the pending issues, day-to-day disruptions and the future road map and come up with a plan for quick resolution within 15 days. Infosys has set high international standards and it is expected that the efficiency which your organisation is known for should be visible in GST project also,” the letter said.

It also said even though the GST system has been in operation for the last 30 months, there have been instances of taxpayer complaints on facing issues in filing returns in the last two days of filing of returns.

“It is noticed that MSP (Master Service Provider) Infosys has been repeatedly asked to take timely action and to identify the root cause of issues after each event and taken corrective action. However, problem still persists,” it said.

The ministry said such glitches on the portal led to an unhealthy tax compliance requirement, more so when on account of such disruptions some taxpayers end up becoming liable for payment of late fee, interest.

The ministry is working to shore up GST revenues. In the April-February period this fiscal year, GST collection stood at Rs 11.24 trillion, down from Rs 12.67 trillion in the year-ago period.

No response at peak hours, wrong computation of late fees for annual returns for FY18, and offline tool not available for GSTR9 are among a list of problems flagged in the letter.

Compensation cess issue will be raised by the states, who are likely to ask for full compensation for the fiscal year, irrespective of collections and pitch for extension of compensation period. The Centre, meanwhile, is expected to clearly tell states that they will be compensated only as much as is collected in the cess fund, according to the law.

With only 56 per cent of compensation dues for October and November worth Rs 19.958 crore disbursed last month, states are expected to strongly seek a resolution on the matter.

The Centre is supposed to compensate states on a bi-monthly basis for any losses they incur in the first five years of GST implementation. The loss is estimated if they do not record 14 per cent increase in the subsumed indirect taxes keeping 2014-15 as the base year.

The Centre has released a total of Rs 120,498 crore as GST compensation to the states and Union Territories so far in FY20 out of Rs 87,821 crore collected till February.

Source: Business-Standard.

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Nandan Nilekani gets govt summons over persisting GSTN glitches

Nandan Nilekani gets govt summons over persisting GSTN glitches

The government has asked Infosys chairman Nandan Nilekani to explain why the IT major has failed to fix glitches in the GST Network.

According to TNN, Nilekani will have to make a presentation when the GST Council meets next.

The government recently staggerred the deadline for filing returns as Infosys executives were unable to address the concerns. These include a slow platform, log-in errors, as well as delays in getting one-time passwords (OTPs).

Meanwhile, in a strongly worded letter to Infosys on March 5, the ministry said some of the problems highlighted as early as 2018 are still unresolved and failures month after month lead to genuine taxpayers “getting frustrated”.

According to the report, the failure happened despite summons to senior company executives by revenue secretary A B P Pandey, prompting the finance ministry to take up the issue with Nilekani over a month ago. Finance minister Nirmala Sitharaman has also held discussions on the issue, discussing the GST Network, as well as Infosys’s role.

The IT company has developed the software for GST Network (GSTN) — which provides the technology backbone for Goods and Services Tax (GST).

The GST Council, headed by Sitharaman, is scheduled to meet on Saturday.

Officials admitted that the IT platform has not stabilised even two and a half years after GST was rolled out. Even earlier, a ministerial panel had ticked off Infosys as it believed that the IT major had not deputed senior executives across states to tackle glitches that had emerged, prompting the Bengaluru-based company to deploy better quality manpower.

Repeated problems with the platform, which taxpayers claimed often delay filings beyond the deadline and lead to penalties, have also led to the Supreme Court recently asking the government to resolve technical difficulties.

Source: Economic-Times

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Gig economy workers may soon have to register under GSTN

Gig economy workers may soon have to register under GSTN

The government is looking to get services professionals such as plumbers, electricians and beauticians listed on online platforms onto the Goods and Services Tax Network, in what could be yet another move to bring gig economy workers into the fold of the formal workforce.

The Department for Promotion of Industry and Internal Trade ( DPIIT) is considering making it mandatory for online marketplaces such as UrbanClap, HouseJoy and Bro4u to only engage service professionals who have a GST Number or GSTIN, senior government officials in the know of the matter told ET.

While the majority of plumbers, electricians, individual fitness trainers that make use of such online platforms will have a turnover of less than Rs 40 lakh annually, exempting them from paying GST, the government’s move to mandate GSTIN is more in line with having a database of such professionals. “Today, these professionals go into people’s houses and there’s absolutely no way for us to identify them,” said a senior government official.

“While they may not have to pay GST or make the quarterly filings, if they are registered on the network, we can trace them if there’s any untoward event,” said a government official who did not want to be named.

He added that companies such as UrbanClap may be asked to keep a log of all the jobs done by these services professionals, which were facilitated through their platform.

UrbanClap declined to comment as there was no formal communication from the government on the issue. Calls and messages to executives from Housejoy and Bro4u did not yield a response.

“There are several issues that we are examining like consumer safety and protecting the rights of these workers,” said another senior government official, who added that the DPIIT was currently evaluating the matter.

“Even today, there is voluntary GST registration, so it’s not something very big that we are asking them to do.”

Discussions to get services professionals listed onto the GSTN come ahead of the ecommerce policy, which is expected to come out before the close of the current fiscal.

Sources told ET that while the updated policy may dilute sections on data sharing, it could further define rules for online marketplace, inventory-led models and hybrid models.

The ministry of labour and employment is mulling bringing out regulations around the social security of gig economy workers. In its draft Code on Social Security, 2019, the ministry has proposed that all gig workers should be entitled to life and disability cover, health and maternity benefits, old age protection and other benefits

Source: Economic-Times

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GST returns can now be filed in a staggered manner

GST returns can now be filed in a staggered manner

In a moved aimed at de-stressing the GST system, the finance ministry on Wednesday staggered last dates of filling GSTR-3B, a monthly return form, and has provided three dates for different categories of taxpayers.

Currently, the last date for filing GSTR-3B is 20th of every month. With the changes, there will three dates — 20th, 22nd and 24th — of every month for different categories of tax payers.

In the past, glitches in the return filing system of GST Network were reported on the last day of filing of returns and trade and industry had to face problems.

It may be noted here that about one-fifth of the total GSTR-3B returns were filing on the last day (January 20).

“From now on, the last date for filing of GSTR-3B for the taxpayers having annual turnover of Rs 5 crore and above in the previous financial year would be 20th of the month. Thus, around 8 lakh regular taxpayers would have the last date of GSTR-3B filing as 20th of every month without late fees,” the ministry said in a statement.

The taxpayers having annual turnover below Rs 5 crore in previous financial year will be divided further in two categories.

The tax filers from 15 states/UTs — Chhattisgarh, Madhya Pradesh, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh — will now be having the last date of filing GSTR-3B returns as 22nd of the month without late fees.

This category would have around 49 lakh GSTR-3B filers who would now have 22nd of every month as their last date for filing GSTR-3B returns.

For the remaining 46 lakh taxpayers from the 22 States/UTs of Jammu and Kashmir, Ladakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha having annual turnover below Rs 5 crore in previous financial year the last date will be 24th.

The ministry further said it has also taken a note of difficulties and concerns expressed by the taxpayers regarding filing of GSTR-3B and other returns.

“The matter has been discussed by the GSTN with Infosys, the Managed Service Provider, which has come out with above solution to de-stress the process as a temporary but immediate measure,” it added.

For further improving the performance of GSTN filing portal on permanent basis, several technological measures are being worked out with Infosys and will be in place by April 2020.

A total of 65.65 lakh GSTR-3B forms for the tax month of December were filed by January 20.

Source: Economic-Times

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States seek real-time access to GST returns, e-way bills

States seek real-time access to GST returns, e-way bills

Certain states have sought real-time access to annual Goods and Services Tax (GST) returns and e-way bills in order to check tax evasion, which can potentially address the ongoing fund crunch and help compensate states for their revenue shortfall, two officials aware of the matter said requesting anonymity.

Currently, these data are stored in the GST Network, which compiles reports and sends them to all the states and Union territories with a time lag.

Kerala finance minister Thomas Isaac confirmed the development and said,“Kerala may not require compensation cess at all if it is permitted to have real-time access to annual returns and e-way bills, so that tax evasion could be curbed,” Isaac said.

According to Isaac, ineffective tax collection is one of the three key reasons for tardy GST revenue collections across the country and real-time information would help many states nab evaders through the use of data analytics. The other two reasons, according to him, are the economic slowdown and steep cuts in GST rates.

“I will raise this issue in the GST Council,” he said. The GST Council is the apex decision-making body of the federal indirect tax structure that was rolled out on July 1, 2017. It is chaired by the Union finance minister and has finance ministers of states and Union territories as members.

Officials said states’ access to real-time data could be possible if they formally raised the issue at the council. Several states have been raising the issue of large-scale GST evasion at the council. In August last year, West Bengal finance minister Amit Mitra estimated GST evasion at ₹1 lakh crore and demanded an exclusive meeting on the issue.

Owing to inadequate compensation cess funds, the Centre has not yet compensated states for their revenue shortfall over two months – October and November. Ideally, that should have been paid by the second week of December. Even in the past, there was a delay of about two months in paying compensation for August and September, which was paid just two days ahead of the 38th GST Council meeting on December 18, 2019.

An amount of ₹35,298 crore was released on December 16 to pay states for their dues in August and September. The GST law assures states 14% growth in their revenue for five years and the Centre is committed to meeting any shortfall in revenue through cess money, which is levied on luxury goods and sin products such as liquor, cigarettes and tobacco products.

The finance minister of another state, who did not wish to be named, said that there was scope for improvement in GST compliance but that would not be able to meet the entire revenue gap. Commenting on the proposal on real-time access to GSTN data, the minister said, “I doubt this will eliminate the revenue deficit. The ball is always in our court , provided those at the helm allow it to be dealt with efficiently.”

Experts said access to data would certainly help states in better compliance. Common access could be given to states through login IDs and passwords. Pratik Jain, partner and leader, indirect tax, said, “Logistically it should not be difficult.”

The Union government is making all-out efforts to plug revenue leakages of both central GST (CGST) and state GST (SGST). It will hold a national conference on January 7 to address the issue, the officials cited above said. This conference is being organised to curb fraud and evasion and check fake input-tax credits.

Source: Hindustan-Times

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E-commerce cos may get to upload GST e-invoice for vendors

E-commerce cos may get to upload GST e-invoice for vendors

 In a significant relaxation for the ecommerce sector, the government could allow online platforms such as Amazon and Flipkart to upload e-invoice for vendors under the goods and services tax (GST) framework. As part of ongoing trials of e-invoicing, a detailed set of clarifications in the form of frequently asked questions have been issued. “Ecommerce operator can request for e-invoice on behalf of supplier,” the clarification said. The matter has been taken up by the government and could be allowed once the trial period is over, a government official told ET. “Trials are now on…It will require an amendment… The issue has been taken up.” The GST Network has issued a detailed set of FAQs.

“Allowing ecommerce platforms to undertake e-invoice compliance on behalf of suppliers would go a long way in facilitating compliance for such suppliers,” said Prashanth Agarwal, partner. Given the criticality, it’s important for businesses to keep track of them. Further, businesses should participate in the testing phase as part of their preparation to go live on April 1, Agarwal said.

Voluntary uploading of e-invoices on the GSTN portal kicked off from January 1, for businesses having turnover over Rs 500 crore. For businesses having annual turnover over Rs 100 crore will be effective from February 1. Only 10,000 line items per einvoice would be allowed, as per the FAQ. Foreign services providers will have to set up local entities to integrate with the invoice registration portal (IRP), as per the FAQs.

Experts say these clarifications will help businesses gear up for the new system.”With specifications for e-invoice API being released to various companies, the government’s intent to soon implement it is reinforced,” said Abhishek Jain, tax partner, EY. “FAQs released provide clarification on ambiguities such as no requirement of invoice registration portal validation for delivery challans and bill of supply, 10,000 line items being allowed per e-invoice, amendments in the GST law on invoicing to align with e-invoices, etc and its timely release should help businesses gear up better for this new system.” The e-invoice system of uploading invoices on government portal will be mandatorily rolled out for businesses with turnover over Rs 100 crore from April 1.

Also, for B2C invoicing issued by businesses with annual turnover over Rs 500 crore, an electronically scannable quick response (QR) code will be mandatory from April 1. The e-invoice will help streamline the indirect tax system and ensure better compliance by keeping a check on tax evasion.

Source: Economic-Times

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