GST collections decrease, the cost of compliance increases

As the monthly collections of GST are lower than the target number, tax officials are under increasing pressure to stop evasion, which in turn makes things difficult for companies and industry.

Consider this As a measure to stop the evasion of GST, the electronic invoice system for all interstate movements of goods was launched on April 1, 2018, and Karnataka State is the first to make it operational. However, almost two years after its introduction, electronic invoices remain a pain point for the industry.

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E-Way Bills

The transit of goods from one place to another, either interstate or intrastate, and with a value greater than Rs 50,000 is facilitated by the presentation of “E-Way Bills” on the common GST portal.

Problems related to the E-way Bill bill states that the process is an important buffer and should be eliminated with the introduction of electronic invoicing.

This will be a definitive classification of companies with a rigorous evaluation of their performance in innovation, financial health, and financial growth.

With the introduction of GST, the cost of compliance should have dropped, but practically the cost of compliance has multiplied. With the electronic invoice, there is a great requirement to open stores in different areas because the electronic invoice expires. It’s only one day for every 100 kilometers.

Although the electronic bill can be rectified or revised, the process is quite cumbersome. The extension of the electronic invoice is done when the carrier applies. But, in reality, thousands and millions of buyers continue to pick up merchandise after electronic invoices have expired.

Recently, exporters have faced scrutiny for claiming excessive tax credit to inputs and tax authorities have identified people who have probably evaded taxes.

Consequences of bad practices and evaded taxes

The government has presented a list of risky exporters and they have about 5000 odd exporters on that list. According to the government, these exporters have committed some bad practices and evaded taxes.

Even customs officials have become openly active due to the risky list of exporters, which has caused shipments to get stuck. It’s a full challenge, especially in the craft sector where you need to constantly innovate, you need to present new products because the buyer asked a new product every time. If the shipment gets stuck, it is difficult for exporters to survive. When the shipment gets stuck, it stops the whole cycle.

GST collections

As GST collections are lower than the target number, tax authorities have been under increasing pressure to stop evasion. Possibly two or three months in a year when the collections crossed Rs a lakh crore.

These are typically around the holiday season and around April. This year’s performance was better than the previous one in terms of GST collections.

Have been seeing a slowdown in consumption is also hurting tax collection and a prolonged period of economic uncertainty will push further.
The encouragement by us people to spend and consume more and also there is a philosophy that if they have tax rates slower, increment in compliance, lower prices, so people also consume.

The tax collection of a nation is an objective assessment of its market. If the markets have shrunk, you can call it a recession and not a recession. The fact is that consumption has been reduced and, therefore, there is a lower tax collection.

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7 Steps to follow for GST E-Invoice Generation

The usage of E-invoicing is good to go to be moved down for B2B transactions in India from the month of January 2020. According to the suggestions of the GST board, the proposed E-invoicing system has 2 angles for example

  • Adoption of a standard for the invoice, which will empower standardization and quick data trade
  • Enlisting the standard invoice with Government, through Invoice Registration Portal (IRP), which will guarantee the credibility of invoices.

The E-invoicing system at first will be accessible on deliberate reason for taxpayers satisfying the criteria (having a specific turnover or specific invoice value), in this way presenting the same for every one of the taxpayers.

In a brisk review, E-invoicing is a component being acquainted under GST with control tax avoidance and enable an invoicing standard in India. With the usage of E-invoicing, the GST system will be able to approve all the B2B transactions electronically and pre-populate the same in taxpayer’s GST return forms, according to the relating details.

Advantages Of GST E-Invoicing System

The advantages of presenting E-invoicing under GST include:

  • Auto-Populated GST Anx 1, GST Anx 2 and GSTR 1 (for B2B invoices).
  • Auto-populated Part A for Eway Bill generation (taxpayer should give vehicle details in Part B to finish EWB generation)
  • Auto-sharing of transferred invoices (on IRP) with the buyers for compromise.
  • The system will auto-coordinate input credit liability with output tax.

Features Of Proposed E-Invoicing System In India

Clearing the haze about a significant misguided judgment encompassing the E-invoice generation, it isn’t required for a taxpayer to produce E-invoice through the government’s tax portal. In fact, the taxpayer can keep utilizing any accounting software of his inclination, with the main need being, the software’s capacity to create the invoice in the given e-invoicing format.

Moreover, the provider/seller is required to present these E-invoices on the GSTN portal for the approval purpose, following which, it tends to be utilized for return filing and EWB generation. Unraveling the whole procedure of E-invoice generation, directly from the invoice creation to having the same with purchasers (for compromise), here is a step by step guide  for producing a Valid E-invoice:

  • Invoice is made utilizing an accounting or billing software according to the recommended format for E-invoicing.
  • Provider can create an extraordinary Invoice Reference Number (IRN) utilizing a standard hash-generation algorithm. Generation of IRN by provider is optional. Without IRN, the IRP system of government will create the same.
  • JSON file for each B2B invoice (created through the accounting software or any outsider tool/device), alongside the IRN, whenever produced is uploaded on the Invoice Registration Portal (IRP)
  • The IRP will approve the created hash/IRN connected with JSON (whenever uploaded by the supplier)or produce an IRN and verify the file against the central registry of GST for any duplication. The IRN will be the one of a kind character of the E-invoice for the whole financial year.
  • Upon successful confirmation, the invoice will be updated with IRP’s computerized signature on the invoice information and a QR code will be added to the JSON file.
  • The transferred information will be shared to the E-way bill and GST syatem, which will be utilized for auto-population of GST Annexures and
  • The portal will send the digitallly signed JSON alongside IRN and QR code back to the seller. The invoice will likewise be sent to the purchaser on their registered email id.

While the E-invoicing system is being acquainted with check tax avoidance and simplified GST compliance for a taxpayer, it ought to be noticed that choosing the correct invoicing arrangement can play a major role in your consistence venture. IRIS Onyx, an e-invoicing arrangement from IRIS GST, is a one-stop platform for you to view, share and work together with your clients and providers the same, while dealing with the whole correspondence with the GST systems in a problem free way.

Enquire with Certicom Consulting for more details.