GST eInvoice – Proposed Provision

The Government of India has proposed the launch of a GST eInvoice facility for issuing GST invoices to curb tax evasion and streamline GST return filing. The regulation would be applicable for businesses exceeding certain turnover limits, which would then be required to generate electronic invoices on Government or GST portal for every sale. In this article, we look at the proposed GST eInovices in detail. Know more about GST invoice.

Scope of the Directive

The proposed model of GST eInvoicing is deemed as a solution or at least a measure that could bring down the instance of tax evasion. Moreover, it aimed at avoiding duplication of efforts and minimizing manual intervention in filing and verifying of tax returns. The issuance of invoices or bills through the GST Network will send the essential data to the authorities on an immediate basis, thereby tremendously improving ease of doing business and reducing tax evasion.

Basic Functionality

According to the proposal, businesses above a specific turnover will be required to generate electronic invoices for the entire sale value of a transaction. The invoice so generated will get a unique number, which can be matched with the invoices reported in the respective GST return. Also, businesses falling under the purview of this enactment will be provided with software facilities that are linked to the GST or Government portal for generating eInvoices.

The GST Council has established a council, comprising of the Central, State tax officials and the Chief Executive of the GST network to examine the feasibility of the proposed system to streamline the generation of invoices and easing compliance burden. The designated body will be engaged in examining similar systems in other countries like Latin America, South Korea and Europe; and will finalize an interim report in due course of time.

Basis of the Mandate

The new system as is suggested could be implemented either based on the turnover of businesses or the value of invoices. Experts hold the opinion that the process should be based on the turnover to discourage the splitting of invoices for a single transaction.

Incentivization of Businesses

For incentivizing businesses to encourage adoption of the new invoice system, the tax authorities may limit the frequency of mandatory departmental audits who adopt such a system.

Similarities to eWay Bill

The method of GST invoice generation is expected to be similar to that of the e-way bill portal or the payment of Goods and Services Tax on the GSTN portal. Similarities apart, the new feature may even replace the e-way bill system that is now prevalent for the movement of goods, as the invoices could then be generated through a centralized Government portal. As of now, e-way bills are required for the movement of consignments that exceed Rs. 50,000 in value.

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