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GST: CBIC issues Clarification on reporting 4-digit/6-digit HSNs

GST: CBIC issues Clarification on reporting 4-digit/6-digit HSNs

The Central Board of Indirect Taxes and Customs ( CBIC ) has issued Clarification on reporting 4-digit/6-digit HSNs.

GST helpdesk is in receipt of some tickets at helpdesk wherein it was reported that certain 6-digit HSN codes are not available in HSN Master/ not accepted on e-invoice/e-Way bill portals.

Background: Notification No. 12/2017-Central Tax dated June 28, 2017, as amended vide Notification No. 78/2020 – Central Tax, dated October 15, 2020, mandates taxpayers to declare specified digits, as follows, of Harmonised System of Nomenclature (HSN) / Service Accounting Code (SAC) Code on raising of tax invoices, w.e.f. April 1, 2021.

S. No. Aggregate Turnover in the preceding Financial Year
1. Upto INR 5 crores
2. More than INR 5 crores

Number of Digitals of HSN Code
4
6

It may be noted that specific 6-digit HSNs, as available in the HSN/Customs Tariff (with corresponding description of goods) are allowed in the system. It also follows that the declaration of HSN at 4/6 Digits has to be out of valid HSN codes only.

However, there are instances that some taxpayers are trying to report truncated first 6-digits out of an otherwise valid 8-digit HSN; which are actually not available in Tariff at 6-digit level and with no corresponding description of goods; these are invalid and hence not being allowed in the System.

Taxpayers may, therefore note that based on the harmonious interpretation of the Notifications, as referred above, read with Customs Tariff Act, 1975, as made applicable to GST; the number of digits of HSN, as specified vide Notifications No. 12/2017 & 78/2020 (Central Tax), are the minimum number of digits of HSN to be mentioned on the invoice.

Example: Where HSN 6 digits are specified to be reported in invoice, valid HSN codes as available in tariff, at both 6-digits and 8-digits can be mentioned. Similarly, where HSN at 4-digits are specified, valid HSN codes as available in tariff, at 4-digit, 6-digit and 8-digit can be mentioned. However, the 4/6 Digit HSN Codes, which are not available in the tariff; along with specific description, Unit and GST Rate; are not allowed to be mentioned.

Further, if the HSN of any Goods/Service is otherwise valid but not accepted on GST Portal / e-invoice Portal / e-way Bill portal, please raise a ticket on GST Self-Service Portal: https://selfservice.gstsystem.in/ > Report Issue > Type ‘HSN’ in ‘Type of Issue/Concern’ search box > Select relevant sub-category, e.g. ‘e-Invoice – IRP – HSN Code related’.

Source: TaxScan 

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India’s GST e-invoicing system registered nearly 40 cr invoices in first 6 month

India’s GST e-invoicing system registered nearly 40 cr invoices in first 6 month

The Indian government’s GST e-invoice system has registered over 39.81 crore e-invoices over its first six months, the government announced today. Over 37.42 lakh of these e-invoices were generated on March 31 alone, which is the highest for a single day in the last six months. Over 47 lakh recipients were involved in these transactions.

The Indian government’s e-invoice system was launched in October last year and required taxpayers whose annual aggregate turnover came in at over Rs. 500 crore to use the system. The government added businesses with turnovers over Rs. 100 crore to this on January 1, 2021. Businesses with turnover of over Rs. 50 crore will also be required to use the e-invoicing system from April 1 onwards, and it’s expected to be extended to all businesses in India eventually.

The e-invoicing system is meant to add transparency to companies’ sales reporting processes and reduce errors. A digital system is also expected to make it much more difficult for companies to file fake invoices. On the other hand, experts have said that the system may pose troubles for small and medium enterprises (SMEs), which don’t always have big technology investments. According to the revised definition of MSMEs, announced last year, the vast majority of small businesses in India fall under this ,

The government’s system requires companies to raise invoices through their own enterprise resource planning (ERP) systems and submit them to the government’s Invoice Registration Portal (IRP). The government said the National Informatics Centre (NIC) has taken “pro-active measures” to educate taxpayers about common errors in reporting their invoice. It also sends daily emails with details of these errors and telephone calls to taxpayers who are making the most errors. An invoice reference number (IRN) with a QR code will also be made available to those who submit their GST invoices.

Source: Live.Mint 

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GST e-invoicing welcome step for midsize firms but might be a challenge for micro, small units: FISME

GST e-invoicing welcome step for midsize firms but might be a challenge for micro, small units: FISME

Mandating businesses with over Rs 50 crore turnover (midsize firms) to generate e-invoices is a welcome move but it might be a problem for micro, and small businesses who don’t invest much in technology and lack digital literacy, according to Animesh Saxena, President, Federation of Indian Micro and Small & Medium Enterprises (FISME). E-invoicing was earlier made mandatory under Goods and Services Tax (GST) law for business-to-business (B2B) transactions by businesses with a turnover of more than Rs 500 crore from October 1, 2020, and over Rs 100 crore from January 1, 2021. Earlier this month, the Central Board of Indirect Taxes and Customs (CBIC) had notified the same for businesses with more than Rs 50 crore turnover. As per the MSME definition revised last year, enterprises with turnover ranging from Rs 51 crore to Rs 250 crore are classified as medium units.

“Some level of preparedness will be required but we assume companies with over Rs 50 crore turnover to be digitally literate in managing their accounts. If the government extends the e-invoicing mandate in the future to micro and small enterprises, then it might be a problem as they don’t invest much in technology and most work is outsourced. It might become an additional cost burden for them. Also, broadband connectivity could be a problem for such firms in small towns and villages,” Saxena told Financial Express Online.

Importantly, e-invoicing will allow immediate validation of the tax invoices, which is beneficial for both the taxpayer and input tax credit recipient as the errors and reconciliation requirements may get reduced significantly. However, “mid-sized businesses who do not have a well-equipped in-house IT team will have to incur CAPEX and OPEX costs for numerous activities such as modifying accounting systems to adhere to the e-invoicing, integrating their accounting systems with the IRP portal (either through APIs or third-party softwares), and undergoing detailed training for the staff to get accustomed to the e-invoicing norms and accounting infrastructure,” Saket Patawari, Executive Director – Indirect Tax, Senior Director – told Financial Express Online.

Out of 6.33 crore MSMEs, over 99 per cent are micro and small businesses in India, according to the MSME Ministry’s FY20 annual report. Medium enterprises are only 5,000 while small businesses are 3.31 lakh and micro enterprises are 6.30 crore in India. “There won’t be any impact on medium enterprises as their sphere is very less while micro and small are in majority. Micro and small owners do everything on their own in a small set-up and it might an additional responsibility for them if implemented ahead by the government. However, in contrast, this would also bring more transparency and make them more formal to benefit from government schemes. I think gradually the government will extend this to micro and small enterprises as well,” Sanjiv Layek, Executive Secretary, World Association For Small And Medium Enterprises (WASME) told Financial Express Online.

The e-invoicing system is also likely to help enterprises access instant loans as banks would be able to analyse requests based on the invoices even as the compliance requirement would be reduced as the GST system would populate the returns based on details available in the e-invoice, Financial Express had reported earlier citing officials working on the system. Moreover, as per another official, e-invoicing would help to generate invoice in a standard format, which can be read by any system, and reporting of e-invoice to a central system becomes possible.

Source: Financial Express Online.

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Small firms face a daunting task as e-invoicing kicks in from April 1

Small firms face a daunting task as e-invoicing kicks in from April 1

Come April 1 and e-invoicing will be mandatory for business-to-business (B2B) transactions for taxpayers having a turnover of over Rs 50 crore from April 1, 2021.

At present, issuing electronic invoices is mandatory for businesses with a turnover of Rs 100 crore and more.

E-invoicing replaces the physical invoice and will soon replace the existing eway bill system, and taxpayers will not have to generate separate e-way bills.

The challenges

However, small firms may find it challenging to comply with the new norms.

Small businesses in small towns may face some difficulties with technology-led business processes.
A business needs to validate mandatory invoice information before uploading it to e-invoice systems to avoid rejections, otherwise, they may have to spend more time.

Firms will need to be vigilant while generating e-invoice as there are restrictions with the cancellation of the invoice, which must be carried out within the same day of the transaction.

How does e-invoicing work?

E-invoicing replaces the physical invoice and will soon replace the existing e-way bill system, and taxpayers will not have to generate separate e-way bills.

Under e-invoicing, taxpayers have to generate invoices on their internal systems (ERP/accounting/billing software) and then report them online to the Invoice Registration Portal (IRP).

The IRP will validate the information provided in the invoices and return the digitally signed e-invoices with a unique ‘Invoice Reference Number (IRN)’ along with a QR Code to the taxpayer.

Gaming the system

Small businesses use informal sales invoices to under-report turnover, which will be curbed by the move.

E-invoicing makes it difficult to show lower retail sales as the wholesale purchases are already reported to the government. The tax authorities can seek an explanation for the mismatch in wholesale buys and the final sales. If the purchases are higher and sales are lower, the taxman can ask the business to show inventory.

Benefits

The government expects e-invoicing to bring other major advantages, such as improving the payment cycle for industry and giving a boost to invoice-based lending to MSMEs.

Last month, the board had exempted non-banking financial companies, insurance companies, banks and financial institutions, and exports from

using dynamic quick response or QR codes on e-invoices issued to consumers. Exports have been exempted from the QR code requirement since such shipments are treated as business-to-business supplies. The board had notified the mandatory use of dynamic QR codes on such invoices issued by companies with an aggregate turnover of more than Rs 500 crore in March last year.

Source: Economic-Times.


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GST e-invoices spell end to sales under-reporting

GST e-invoices spell end to sales under-reporting

The practice among small businesses of issuing ‘kacha bills’ or informal sales invoices to under-report turnover is likely to become a thing of the past with the government quietly extending the scope of e-invoicing to ever more businesses.

The requirement of e-invoicing —live reporting of business-to-business transactions to a government portal—which is being applied to ever more small businesses is set to make it harder to keep their final retail sales under wraps as the wholesale purchases have already been reported to the authorities.

The effect is two-fold, said experts. One, it makes it easier for small firms to claim credit for taxes already paid on the wholesale purchases and, two, exposes them to questioning by the authorities if final sales are not reported. As per current plan, from 1 April, businesses with sales of more than ₹50 crore will have to generate e-invoices on their business-to-business transactions, down from the current threshold of ₹100 crore. The government’s idea is to make this obligation applicable to all business-to-business deals later this year. The move shows that the government’s idea of formalizing the economy through goods and services tax (GST), which initially faced a backlash from traders and small firms, is now reaching its final stage.

To be sure, GST has already helped in checking tax evasion and large businesses are compliant with the technology-driven tax system. It is segments of the market where retail margins are high that are prone to tax evasion, as high retail margins make it perversely attractive to forgo credit for taxes already paid on procurement and under-report retail sales. Pharmaceuticals and construction materials, excluding cement and steel, are among high-margin businesses, an industry expert said seeking anonymity.

E-invoicing keeps authorities informed about who purchased goods from a distributor or stockist. If the buyer does not report his eventual retail sales, authorities can ask him to show the inventory. Once fully rolled out, e-invoicing is set to give a strong push to the formalization of the economy and give a big boost to tax compliance not only in GST, but also for income tax as under-reporting sales by small firms becomes harder. Experts said this would be a big feat compared to even what has been achieved by some of the western economies.

“The extension of e-invoicing across all business transactions over a period of time would make the GST one of the most advanced information technology-enabled indirect tax system among countries of comparable size and diversity,” said M.S. Mani, partner, Deloitte India.

According to Niraj Hutheesing, founder and managing director of Cygnet Infotech, a tech firm that helps clients digitize businesses, the primary challenge among micro, small and medium enterprises for implementing mandatory e-invoicing is their readiness to manage data. Since e-invoicing is being done in a phased manner, it is comparatively easier for small businesses to replicate the way solutions are implemented by large businesses. Large corporations are helping vendors and suppliers with software systems that will enable them to comply with e-invoicing requirements, and even small accounting software providers are modifying their software to include e-invoicing as a solution, said Hutheesing.

Source: Live-Mint. 

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GST e-invoicing mandatory for turnover of Rs 50 cr and above from April 1

GST e-invoicing mandatory for turnover of Rs 50 cr and above from April 1

E-invoicing under the goods and services tax (GST) regime will become mandatory for entities with a turnover of Rs 50 crore and more from April 1 for business to business transactions, the government said in a notification on Monday. This will be the third phase of e-invoicing roll out, which was rolled out for entities with Rs 500 crore and more turnover from October 1 last year and later extended to entities with Rs 100 crore and above from January 1 this year. The government had earlier planned to extend e-invoicing to all entities from April 1, 2021, but has refrained, taking care of interest of small entities.

The system is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance. It will help prevent tax evasion once it is made mandatory for small and medium firms in phases.

Rajat Mohan, partner, Associates said, “Government had earlier planned to roll out the electronic invoicing system for all business-to-business (B2B) transactions from April 1, whereas government has now zeroed on a threshold of Rs 50 crores. Keeping MSME organisations with turnover of upto Rs 50 crores out of the E-invoicing net would help them thrive and grow without any change in business processes.

Under e-invoicing, companies have to generate an invoice registration number (IRN) from a government portal and it has to be shown to the authorities while moving goods. Sectors like transportation, insurance and banking companies, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempt from e-invoicing. Besides, units in special economic zones too are exempt from this.

Source: Business-Standard 

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GST: NIC issues list of GSTINs on whom E-Invoicing is Mandatory

GST: NIC issues list of GSTINs on whom E-Invoicing is Mandatory

The National Informatics Centre (NIC) has issued a list of GSTINs dated January 27, 2021, for whom e-invoicing shall be mandatory.

There are 73308 GSTNs who are enlisted by the NIC for whom it is mandatory for the taxpayer to upload the invoice details and register supply transaction on the Government Invoice Registration Portal.

‘E-invoicing’ or ‘electronic invoicing’ is a system where the taxpayer will upload his invoice details and register his supply transaction on the Government Invoice Registration Portal (IRP) and get the Invoice Reference Number (IRN) generated by the IRP system.

The taxpayer will first prepare and generate his invoice using his ERP/accounting system or manually and then upload these invoice details to IRP and get the unique reference number, known as IRN.

It is noteworthy that the e-invoice does not mean preparation or generation of taxpayer’s invoice on the government portal. It is only intimating the government portal that invoice has been issued to the buyer, by registering that invoice on the government portal.

Source: TaxScan. 

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GSTN issues Advisory on Auto-population of E-Invoice details into GSTR-1

GSTN issues Advisory on Auto-population of E-Invoice details into GSTR-1

The Goods and Services Tax Network (GSTN) has issued an advisory on Auto-population of E-Invoice details into GSTR-1.

From 1-10-2020, certain notified taxpayers have been issuing invoices after obtaining Invoice Reference Number (IRN) from Invoice Registration Portal (IRP) (commonly referred as ‘e-invoices’).

From 1-1-2021, the taxpayers with aggregate turnover above Rs. 100 Cr. had also started reporting invoices to IRP.

Details from the reported e-invoices are being auto-populated in respective tables of GSTR-1. Update on the same was last published on 30/12/2020.

A detailed advisory regarding methodology of auto-population of e-invoice details into GSTR-1 is already published on GSTR-1 dashboard.

It is observed that, while pulling the e-invoice data for the month of December, 2020 into GSTR-1, details of some invoices were not populated into GSTR-1. This inadvertent gap is being rectified on priority and details of those invoices will be pushed to GSTR-1 shortly.

However, taxpayers should not wait for the same and advised to proceed with preparation and filing of GSTR-1 for the month of December, 2020 (before the due date), based on actual data as per their records.

As already noted in the afore-mentioned advisory, the taxpayers may modify/delete only those documents where the details auto-populated from e-invoices are not as per the actual documents issued.

Otherwise, the details of e-invoices auto-populated in GSTR-1 can be edited/deleted by the taxpayer. However, in such cases, the ‘Source’, ‘IRN’ and ‘IRN date’ fields will be reset to blank in respective tables of GSTR-1 and accordingly won’t get reflected in GSTR-2A/2B/4A/6A also. Such edited documents will be treated as if they were not auto-populated but uploaded separately by taxpayer.

Other than the details auto-populated from e-invoices, taxpayers are required to add details of any other supplies made, in respective tables of GSTR-1.

An additional facility of consolidated excel download of all documents auto-populated from e-invoices is available in GSTR-1 dashboard. This file includes details of cancelled documents also.

However, any subsequent modifications made to the auto-populated documents (in GSTR-1 tables) would not be reflected in this excel file.

Source: TaxScan.

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GST E-Invoice System completed 3 months; Enabled more than 37000 Taxpayers to Generate more than 1680 Lakh IRNs

GST E-Invoice System completed 3 months; Enabled more than 37000 Taxpayers to Generate more than 1680 Lakh IRNs

GST e-invoice system, the game-changer in the GST system, has completed a journey of three months and has facilitated the smooth transition of the taxpayers to the new platform. It has enabled more than 37000 taxpayers to generate more than 1680 Lakh Invoice Reference Numbers (IRNs), during the last three months from the NIC developed e-Invoice system.

Starting with 495 lakhs during October 2020, the generation of e-Invoice has increased to 589 lakhs in November 2020 and 603 Lakhs in December 2020. Interestingly the e-way bill generation from the NIC (National Informatics Centre) developed e-way bill system is also highest from September to December 2020 compared to the same months of previous years.

The response of the system is good and the generation of IRNs is hassle-free during this period. However, there have been common errors such as repeated requests on the same document number, simultaneous requests on the same document number, requests with validation or calculation errors, etc.

Proactive measures are taken by the NIC Help desk, including communication with taxpayers about the issues through mails and telephonic calls and suggestion of corrective measures, has facilitated in bringing the errors down. NIC has also started sending daily updates to the generators of IRN about the number and value of the IRN generated by him/her.

The Government has reduced the aggregate turnover cut off to Rs. 100 Crores per annum for the generation of IRN by the taxpayers from 1st January 2021. NIC has already enabled the API and offline tool based sites for these taxpayers. NIC is also geared up with adequate infrastructure to handle the generation of e-invoices from these taxpayers from 1st January 2021. NIC portal facilitates the big taxpayers, whose turnover is more than Rs. 500 Crores, to enable direct API access to their suppliers and clients from their systems.

Keeping the requirements of small taxpayers in view, NIC has developed the offline Excel-based IRN preparation and printing tool, called a NIC-GePP tool for the small taxpayers. This application will allow the taxpayers to enter the invoice details, prepare the file to upload on the NIC IRN portal, download the IRN with QR code, and print the e-invoice with QR code.

Source: TaxScan.


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E-invoicing under GST pick up speed, posts 17% growth in November

E-invoicing under GST pick up speed, posts 17% growth in November

E-invoicing under goods and services tax (GST), overcoming early hiccups, picked up pace right in the second month of its roll-out, with bill generation posting 17 per cent growth in November over the previous month. This paves the way for the second phase of e-invoicing, which is to make it mandatory for entities with a turnover of Rs 100 crore and more from January 1 and the rest from April 1 for business-to-business transactions.

The e-invoicing system is now mandatory for entities with a turnover of Rs 500 crore and more. About 56 million invoice reference numbers (IRNs), or e-invoices, were generated in November against 48 million in October, reflecting economic demand revival.

Days ahead of Diwali, 3.26 million IRNs were generated on November 6, the highest since the rollout on October 1.

Daily invoice generation has now improved to 2.5-2.7 million per day compared to an average of 1.5 million a day in October.

“There are almost no complaints. This is because these are large firms with sound tech systems. We are prepared to roll out the next phase from January 1,” said a government official. The system is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance. It will help prevent tax evasion once it is made mandatory for small and medium firms.

With close to 20,000 GSTINs (GST identification numbers) in the Rs 500 crore and above category already there, another 90,000 GSTINs are estimated get added on January 1. E-invoicing testing for these entities started on November 15.

The e-invoice data started auto-populating the GSTR 1 or the sales return form from Friday. “The e-invoicing system will do away with the need for separate e-way bills,” said the official.

Abhishek Jain, tax partner, said firms with a turnover of Rs 500 crore and more, with small initial hiccups, smoothly adopted mandate, and this was evident from the increased number of IRN generation. While in the medium run, this mechanism will replace the existing e-way bill system, the Centre is hoping to dispense with filing GST returns for MSMEs.

Source: Business-Standard.


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