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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-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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New GST rule is not applicable for MSMEs

New GST rule is not applicable for MSMEs

Micro, small and medium enterprises (MSMEs) do not require to pay minimum 1% Goods and Services Tax (GST) liabilities in cash as businesses with annual turnover of less than Rs 6 crore are exempted from the new rule, a finance ministry official said.

The Central Board of Indirect Taxes and Customs (CBIC) last week introduced a change in the GST rules that restricted the use of input tax credit (ITC) for discharging GST liability to 99%, the official said requesting anonymity. The move was aimed at curbing the misappropriation of ITC through fake invoicing, he said.

“In order to protect small businesses and genuine taxpayers there are some exemptions to this rule,” he said. The new rule is not applicable in such cases where registered entities have already deposited more than Rs 1 lakh as income-tax in last two years.

It is also not applicable to registered entities who have received a refund of more than Rs 1 lakh in the preceding financial year on account of export, he said adding that government departments and local authorities are also exempted from the rule.

“A legitimate business runs for profit and a minimum value addition is expected from them. It is only where a lot of fake credit is used that no tax payment in cash is made,” he said giving the reason behind implementing the new rule.

This rule will help to control fake invoices fraudsters who avail and pass on ITC by dummy, fake and dormant entities which show high turnovers, but have no financial credibility and flee after issuing fake invoices and misusing ITC, he added.

The new rule is the outcome of a through deliberation by the GST Law Committee to check the menace of fake invoices and misappropriation of ITC, he said. The government in November launched a nationwide drive to nab such fraudsters. “So far, 175 people have been arrested under the ongoing drive and more than 1,800 cases have been booked against over 8,000 fake entities,” he said.

Source: Hindustan-Times

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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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GST e-invoicing for all B2B transactions from April 1, 2021: Finance Secretary

GST e-invoicing for all B2B transactions from April 1, 2021: Finance Secretary

The government will roll out the electronic invoicing (e-invoicing) system for all business-to-business (B2B) transactions under the Goods and Services Tax (GST) regime from April 1 next year that will replace physical invoices, finance secretary Ajay Bhushan Pandey said.

The government introduced the e-invoicing system on October 1, 2020 for businesses with an annual turnover over Rs 500 crore. “By January 1, 2021, it will be available to taxpayers with an annual turnover over Rs 100 crore,” he said.

“It is a great step forward as e-invoicing has many advantages both for the business and the tax administration. Buyers and sellers will be able to have realtime information of the invoices. It 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,” he said.

Pandey said the e-invoicing system may eventually dispense with the present system of filing GST returns for smaller businesses and micro, small and medium enterprises (MSMEs) because e-invoice will pre-populate returns for such businesses and they will be required to simply pay the taxes.

“The returns will be automatically generated for all supplies for which e-invoices have been issued,” he said after reviewing the progress of the e-invoicing system that was introduced on October 1 for businesses with an annual turnover of over Rs 500 crore. The meeting was attended by senior officials from the Central Board of Indirect Taxes and Customs (CBIC), the National Informatics Centre (NIC) and the GST Network (GSTN).

After review of the progress in the last seven days, Pandey said the implementation of e-invoicing is getting progressively robust. “This is the beginning of a new chapter of the ease of doing business and paying taxes in India. From the first to the seventh day Invoice Reference Number (IRN) generation has grown by 163% and have touched the count of 13.69 lakh IRNs on the seventh day, i.e., on October 7,” he said.

“As e-invoicing is an exceedingly progressive system, we expect that it will also have other major advantages of improving the payment cycle for the industry and give boost to invoice based lending to MSMEs,” he said.
India has been able to build and develop this massive e-invoice system in GST in just seven to eight months, he said. According to a note prepared by GSTN, between October 1 and October 7 more than 69.5 lakh IRNs were generated by over 71 thousand users.

“On the very first day of e-invoicing system, more than 8.40 lakh IRNs were generated by 8,453 users while on October 7 about 13.69 lakh IRNs were generated by 14,100 users, it said.

To be sure, the introduction of e-invoicing system was initially scheduled from April 1, 2020, but it was postponed to October 1 because of the suddent outbreak of Covid-19 pandemic. In order to make the system gradually adjust to the e- invoicing system, it was prescribed that the taxpayers having aggregate turnover of Rs. 500 crore and above only would be required to issue e-invoice from October 1.

Source: Hindustan-Times.

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FM asks GST officers to proactively address issues faced by biz in tax compliance

FM asks GST officers to proactively address issues faced by biz in tax compliance

Finance Minister Nirmala Sitharaman on Wednesday asked GST officers to foresee the issues faced by domestic businesses and address them proactively so that they can compete on a global scale and build a self-reliant India.

In a message to tax officers on the third anniversary of Goods and Services Tax (GST), Sitharaman also said there is scope for easing compliance further for taxpayers, especially MSMEs.

Asking taxmen to focus on the clarion call by Prime Minister Narendra Modi for an ‘Atmanirbhar Bharat’, she said for this motto of self reliance tax, especially GST, administration will have a large role to play.

“We must foresee the issues faced by our business community and proactively address the same to enable them to compete on a global scale. Only by this proactivity can we ensure much needed economic growth in near future,” she said in the message on the occasion of GST Day, 2020.

GST, which subsumed over a dozen local taxes, was introduced on July 1, 2017. Since then the GST process has been simplified and return filing made easy especially for small businesses.

The GST administration has also introduced SMS-based return filing system for ‘NIL’ filers.

Sitharaman said more efforts are required to ease tax compliance further for taxpayers and made an assurance that the government is committed to continuing these reforms in future as well to facilitate taxpayers.

“We must strive to make the tax administration so simple that taxpayers find it easy to comply with all their tax obligations. This is the true essence of ‘ease of doing business’ as far as tax administration is concerned,” she said.

The Minister also said the COVID-19 pandemic has led to some disruptions in the economic activities in the country.

She also congratulated Central Board of Indirect Taxes and Customs (CBIC) and its officers for handholding taxpayers during this crucial time and disbursing record amount of refunds to ease their cash flow.

Source: Economic-Times.

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Government gives leeway to MSMEs from penalties, interest for GST non-compliance

Government gives leeway to MSMEs from penalties, interest for GST non-compliance

The government on Friday announced some leeway for small and medium companies in the Goods and Services Tax (GST) framework during the GST council meeting. The relief came in the form of reduced penalties and intrest for small and medium companies.

The government has announced relief by the way of waiver or reduced late fee and interest for delayed filings and payment of taxes by the dealers who have a turnover of less than Rs 5 crore. Tax experts say that many companies were unable to comply with the regulations and slapping them with interest and penalties was a double whammy for them.

The government also allowed tax credit on the corporate social responsibility, which many say would go a long way at a time when many companies are looking to spend more on Covid related relief work.

“Allowing input tax credit for goods and services used in CSR expenditure, GST paid on additional health insurance premiums due to COVID-19, masks, hand sanitizers etc. to be used in offices, was one relaxation/ clarification that the businesses were looking forward to. Guess, one would now need to wait for the next meeting, to get clarity on this critical business expenditure,” said Harpreet Singh, Partner – Indirect Tax, KPMG in India.

Industry trackers say that the government is trying to do a balancing act as it needs more revenue through GST but also doesn’t want to create hurdles for companies in terms of compliance. The government is worried that it would face a major shortfall in revenue collections due to Covid pandemic at a time when even companies are facing major issues with their revenues and cash flows.

“The Government is faced with a tough balancing act. On one hand, it needs robust GST collections to help meet its regular plus the extraordinary nature of expenses during the pandemic. On the other hand, businesses are looking for reliefs from the Government to help them tide the major disruptions, loss of revenue and uncertainties. The announcements made in today’s GST council meeting are a reflection of the tight balancing act that the government has on hand,” said Saloni Roy, Senior Director.

All the announcements are set to benefit the smaller organisations more than the larger ones, say experts.

Abhishek Jain, Tax Partner, said, “While there was not much for larger businesses, the late fee waivers and additional moratorium for smaller businesses is quite a welcome move. With the current financial flu, smaller businesses were aggressively seeking stimulus and some of their requests have been well considered by the council.

Source: Economic-Times.

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CBIC clears Rs 11,052 cr GST refund claims since April 8

CBIC clears Rs 11,052 cr GST refund claims since April 8

The Central Board of Indirect Taxes ( CBIC) on Monday said it has sanctioned GST refund claims worth Rs 11,052 crore in 47 days.

In a tweet, the CBIC said it is “committed to ensuring liquidity to GST taxpayers especially MSME sectors during the lockdown”.

The tweet added that 29,230 refund claims amounting to Rs 11,052 crore disposed of between April 8-May 24, the CBIC added.

Refunds have been sanctioned while ensuring work from home, it added. The finance ministry had on April 8 said that to provide relief during COVID-19 it has been decided to issue all pending GST and custom refunds which would benefit around 1 lakh business entities, including MSME.

The total refund granted will be approximately Rs 18,000 crore, it had said.

The CBIC had earlier asked its field officers to avoid asking for physical submission of documents from entities who are claiming GST and Customs refunds and instead use official email for all communication.

The CBIC had said that the decision to process pending refund claims has been taken with a view to provide immediate relief to the taxpayers in these difficult times even though the GST Law provides 15 days for issuing acknowledgement or deficiency memo and total 60 days for disposing off refund claims without any liability to pay interest.

Source: Economic-Times

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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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I-T dept, GSTN, CBIC caution people against phishing emails promising refunds

I-T dept, GSTN, CBIC caution people against phishing emails promising refunds

The two apex tax bodies – income tax department and CBIC – on Sunday asked taxpayers to beware of phishing emails promising refund.

Separately GST Network, the company handling the technology backbone for Goods and Services Tax, cautioned against a fraud website onlinefilingindia.in asking taxpayers not to reveal personal and bank details.

“BEWARE of FRAUD website onlinefilingindia.in. It is trying to BAIT taxpayers to reveal personal and bank details. DO NOT respond to messages, mails and lookalike websites which ask for your personal details,” GSTN tweeted.

It further said that some fraudulent messages are being circulated on WhatsApp, Email and SMS claiming to process refund.

“Miscreants are attempting to take undue advantage of COVID-19 crisis by sending out fake messages with phishing links. One such link takes to a portal claimed to have been developed by GSTN. the same is fake,” GSTN tweeted.

Fraudsters may also pose as tax officials or GSTN personnel and send fake email asking to urgently verify or update account. Taxpayers are advised to remain cautious against such messages, it added.

GSTN also issued a list of Do’s and Don’ts and asked taxpayers to call GST help desk 1800-103-4786 in case of any query.

Earlier in the day, the tax department had tweeted: “Taxpayers Beware! Please do not click on any fake link which promises to give refund. These are phishing messages and are not sent by the Income Tax Department”.

Similarly, the Central Board of Indirect Taxes and Customs (CBIC) in a late evening tweet asked taxpayers not to click on any fake link which promises to give refund.

“These are phishing messages and are not sent by CBIC or @Infosys_GSTN. Visit gst.gov.in for online filings related to GST,” the CBIC tweeted.

The Finance Ministry had on April 8 said it will fast track issuance of pending income tax refunds up to Rs 5 lakh which will benefit around 14 lakh taxpayers, to provide relief to individuals and businesses hit by COVID-19 outbreak.

As per latest data, between April 8-20, the department had issued nearly 14 lakh refunds involving an amount of over Rs 9,000 crore to various taxpayers — including individuals, HUFs, proprietors, firms, corporate, start-ups, MSMEs.

The CBIC too had cleared over Rs 10,700 crore worth refunds in GST and Customs duty between April 8-23.

The ministry has decided to issue all pending GST and Custom refunds which would benefit around 1 lakh business entities, including MSME. The total refund granted will be approximately Rs 18,000 crore, it had said. JD BAL BAL

Source: Economic-Times

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