The presentation of this new e-invoicing for large companies, on a voluntary basis, will be discussed at The Goods and Services Tax (GST) Council in its 1st meeting. Under the new chairman, Union Finance Minister Nirmala Sitharaman, on 20th June, which would consider the introduction of an electronic invoicing mechanism for large companies on a voluntary basis, with intent towards capturing transactions on a real-time basis?
On Generation for E-invoice through the GST network portal which is indicated by the interim report filed by a high-level panel, the system will be at first brought in for the companies with a turnover of over Rs 50 crore for simpler compliance. For controlling GST evasion, the finance minister may be going to recommend those companies with Rs. The 50-crore turnover threshold for generating e-invoices on a centralized government portal for business-to-business (B2B) sales as it hopes in the direction of controlling GST evasion. The GST Council, which is going to meet on 20th June, shall take a final verdict on the turnover threshold for issuance of e-invoices for B2B sales following discussion with the states.
A study of return filing showed that as many as 68,041 companies have reported a turnover of over Rs 50 crore as well as represented 66.6% of total GST paid in 2017-18.
Furthermore, while these companies represent only 1.02% of GST payers, they make up practically 30% of the B2B invoices generated in the system.
The turnover threshold for organizations towards generating e-invoices for B2B sales is probably going to be fixed at Rs 50 crore if the GST Council concurs. With this threshold, the taxpayers who are better at putting technology towards integrating their software shall require generating e-invoices for B2B sales.
With e-invoice generation, companies with turnover over Rs 50 crore will be saved from the twin actions of filing returns as well as uploading invoices. From the government's part, this would assist in controlling invoice mistreatment as well as tax evasion.
Also, under the present system, there is a gap amid the time of generation of invoices as well as filing of sales returns. The number of companies filing monthly summary sales returns GSTR-3B and paying GST is higher than those filing outward supply return GSTR-1, in which invoice-wise particulars must be filed. Examination recommends the gap could be either due to complexity in uploading invoices or with the intent of using wrongly the Input Tax Credit (ITC).
The ministry is intending to start the e-invoice system by September.
The data analysis demonstrates that as many as Rs. 3.9 crore B2B invoices worth over Rs 50,000 are generated each month, which works out to be Rs. 12 lakhs for each day.
The number increases to approximately 1 crore for each day if every B2B invoice is generated regardless of the amount which is being considered.
The 1 crore invoice generation each day could be taken care of through GSTN/NIC as this would be similar to the number of e-way bills right now being generated on the portal.
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The ministry held that e-invoice shall increase the simplicity of executing commerce if it turns out to be a part of utilizing business procedure and there would be no requirement for extra reporting.
The government should build up a risk profile of each and every taxpayer and it can be simply figured out that big firms are rarely occupied in actions of tax avoidance, thereby anti-tax evasion measures should be eyed at tier-II and tier-III taxpayers in a phased way.
It is understandable that technology shall keep on having the most significant part to play in the future of taxation in the nation. Tax specialists have said that e-invoicing must make it simpler for organizations, yet sufficient time should be given. Towards the extent of e-invoices, data must be automatically populated in the GST returns and accordingly, compliances would be streamlined. Nevertheless, companies must be given sufficient time to set up for this noteworthy change.
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