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gst e-invoice
GST Network issues FAQs on einvoicing scheme ahead of Oct 1 launch

GST Network issues FAQs on einvoicing scheme ahead of Oct 1 launch

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E-invoicing will not be applicable for business-to-consumer supplies or import bills of entries, while special economic zone units, banking companies, insurers, goods transport agencies and passenger transport companies will be exempt from issuing them.

The GST Network issued clarifications through frequently asked questions on Monday, ahead of the October 1 launch of the scheme for businesses with more than Rs 500 crore turnover. The scheme will introduce a standard invoicing standard for all companies.

“Businesses will continue to issue invoices as they are doing now. Necessary changes on account of e-invoicing requirement to enable reporting of invoices to Invoice Registration Portals (IRP) and obtain Invoice Reference Number (IRN), will be made by ERP or accounting and billing software providers in their respective software,” the IT backbone provider of GST said.

Businesses will need to get the updated version having this facility, GTSN clarified. A dedicated mobile app to scan and verify validity of e-invoice quick response (QR) code will be provided by the government.

“These FAQs not only clarify the key doubts of the industry on the subject matter, but also throw light on the modus-operandi of e-invoicing system,” said Abhishek Jain, tax partner .

E-invoices will be needed for business to business transactions, for exports, credit and debit notes. Suppliers of services by way of admission to exhibition of cinematograph films in multiplex screens will also need e-invoicing.

E-invoicing will enable auto-reporting of invoices into GST return, auto-generation of e-way bills, facilitate standardisation and inter-operability leading to reduction of disputes among transacting parties, improve payment cycles, reduction of processing costs and thereby greatly improving overall business efficiency.

Source: Economic-Times.

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

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

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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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GST Evasion
GST Council meet on 21 June to focus on checking tax evasion

GST Council meet on 21 June to focus on checking tax evasion

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Goods and Services Tax Council, the federal indirect tax body, is set to take several decisions to curb tax evasion in its first meeting to be chaired by new finance minister Nirmala Sitharaman on 21 June.

The government plans to increase scrutiny on businesses amid lower-than-expected GST collections after handholding them through the first two years of the tax reform. The 35th meeting of the GST Council will seek to introduce compliance requirements, initially on big businesses and eventually on all merchants to curb tax leakage.

The proposals before the council include compulsory generation of e-invoicing by large companies, validation of e-way bills (electronic permits issued for the movement of goods) with the data generated at toll plazas and geotagging of companies, said a person familiar with the discussions in the council.

Generation of e-invoices will improve the transparency of transactions and act as an extra layer of regulatory oversight on transactions of large companies.

One existing safety feature in the GST framework is the rebate for taxes paid on past transactions in the value chain that forces buyers and sellers to keep a tab on each other. “E-invoicing on the designated portal will be implemented initially on companies with a large turnover, which will be specified. Once the system works, it can be extended to others,” the person cited earlier said on condition of anonymity. This is likely to be limited to business-to-business transactions initially.

Experts said the benefits of the tax reform would now start becoming visible. “In the pre-GST era, the common man was used to much higher tax burden due to the cascading effect of taxes. Now it has come down. Now that the initial period of disruption is over, the benefits of liberal and nominal tax rates will accrue to the economy in the coming years. The fruits of indirect tax reform will be felt in the near future,” said V. Lakshmi Kumaran, managing partner at Lakshmikumaran and Sridharan Attorneys, a law firm.

A serious tax evasion concern that tax authorities have been grappling with is the multiple use of e-way bills generated for transportation of goods to suppress the actual value of the supply of items. Validating e-way bills with the data generated by radio-frequency identification-enabled vehicles’ payments at toll plazas is expected to curb this practice, said the person.

Geotagging of companies for GST compliance will take enforcement activities under the indirect tax system to the next level. At present, the ministry of corporate affairs (MCA) is implementing a geotagging scheme for companies aimed at identifying every active company and the people behind them. Pooling the geo-tagging information available from the MCA database with the data generated by indirect tax authorities will help in verifying the credentials of different parties to a transaction.

However, all measures to improve compliance will be implemented only in a gradual way, starting with the largest businesses. The slow recalibration of the tax system is meant to avoid a backlash that the tax reform had witnessed immediately after its rollout two years ago, forcing the council to defer tax return filing deadlines several times and temporarily suspend some of the safety features of the new system.

With revenue receipts below targets, the central government, which has the Constitutional obligation to compensate states for their revenue shortfall in the first five years of GST implementation, and states that worry about loss of revenue in the subsequent years are keen to gradually increase enforcement measures.

Experts said grievances that some businesses and traders, especially the smaller ones, have about GST are not about the indirect tax per se, but on account of the light the technology-driven tax sheds on sales, that makes it harder to avoid paying tax on income. No big tax rate cut is likely in the forthcoming meeting of the council.

Source: Live-Mint.

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