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.

Ways to Get Advance Authorisation on Export Inputs

Advance Authorisation Scheme (AA) is a tax and duties neutralization scheme under foreign trade policy (FTP).  The main goal for the introduction of AA is to limit the working capital requirements for exporters.

Under this scheme, any input goods that increases value to an export product during the manufacturing process will be left from any duty-charges. Along with the components of the export product, fuels, oil and catalyst taken during the integration/ production procedures can also be imported tax-free.

The imported goods are removed from below duties:

  • Basic Customs Duty
  • Additional Customs Duty
  • Education Cess
  • Anti-dumping duty
  • Safeguard Duty & Transition Product-Specific Safeguard Duty
  • Integrated tax
  • Compensation Cess
  • as and where applicable.

Applicability Of Advance Authorisation

The advantages of the AA scheme can be availed by any manufacturing exporter or any other exporter tied with a supporting manufacturer.  The scheme is applied to

  • Physical exports,
  • Exports to SEZ,
  • Intermediate supply
  • Supplies made to specified categories of deemed exports

Additionally, AAS is issued to sub-contractors to any project (in case of deemed exports), United Nations Organizations (UNO), aid programs of the United Nations or other multilateral agencies; the likes of which are paid for in free foreign exchange.

Getting Advance Authorization

An exporter can get the benefits AA on the below grounds:

  1. Standard Input-Output Norms (SION):
    SION is a set of standard norm that defines how much input is necessary to manufacture the given export product. The DGFT issues these norms, on the recommendations of Norms committee. SION is available for a wide range of products.
  2. Self-declaration:
    Without SION for a particular product, the exporter can apply to the regional authority. The regional authority, upon detailed review, can issue AA to the exporter.
    The exporter can also make an application to the norms committee, before the fixation of norms. By receiving the necessary documents, the Norm committee can change the norms or issue an Ad-hoc norm. The ad-hoc norms are valid for a single authorisation and repeat authorisation for the same cannot be issued.
  3. Self-Ratification Scheme:
    Exporters registered under Authorised Economic Operator(AEO) can get AA under this scheme. The exporter can opt-in for AA in case SION or valid ad-hoc norm is unavailable. The exporter can also opt-in for the scheme if he wants to import additional manufacturing inputs, though SION is notified for the given goods. Under the scheme, ratification by the norms committee is not necessary. The exporter can directly apply to the regional authority, who may issue Advance Authorization upon completion of the valid conditions.

P.S: AA can be issued for annual requirements on SION notified goods. To get Annual Advance Authorisation, the exporter needs to have a performance record of the last 2 financial years.

Calculation Of Value Addition (VA)

As per AA, inputs exported should add a minimal value of 15%. In order to calculate VA

VA = (A-B) x 100/B

Where,
A = FOB value of export realised / FOR value of supply received.
B = CIF value of inputs covered by the authorisation, plus any other imported materials used on which benefit of DBK (Duty Drawback) is claimed.

Exceptions:
The given value addition may change for the below

  • Physical exports for which payments are not received in free convertible currency
  • Minimum VA for tea is 50%
  • Specific spices required for value-added activities such as crushing, grinding, sterilization, manufacture of oil & oleoresins, but not for simple cleaning, grading, re-packing, etc.
  • Gems and jewellery.

Major points to note

  • Advance Authorisation is issued with a validity of 12 months.
  • The export obligation has to be fulfilled within a time span of 18 months or as notified by the DGFT.
  • The authorisation is non-transferable and any import under the scheme can be done by the actual user only.

Enquire with Certicom Consulting for more details.

Combining on Income Provisions under Income Tax Act

Under the Income-tax Act, 1961, an assessee is usually taxed with respect to his own income. However, there are few cases where an assessee need to pay tax in respect of income of other person. The provisions for the same are taken under sections 60 to 64 of the Act. These provisions have been enacted to counteract the tendency on the part of the tax-payers to dispose of their property or deliver their income in such a way that their tax liability can be avoided or minimized.

E.g, in case of people, income-tax is levied on a slab system on the overall income. The tax system is progressive i.e. as the income enhances, the applicable rate of tax increases. Few taxpayers in the higher income bracket have a tendency to direct some part of their income to their family, minor child etc. to minimize their tax burden. For preventing such tax avoidance, combining provisions have been added in the Act, under which income arising to few persons (like spouse, minor child etc.) have to be added in the income of the individual who has directed his income for the requirement of computing tax liability.

Circumstances Where Income of Different Persons Added in Assessee’s Income

Income Transferred Without Transfer of Asset (Section 60)

When an individual transfers the income gathering to an asset without the transfer of the asset itself, These income needs to be added in the total income of the sender, whether the transfer is reversible or irreversible.

Example – Mr. M confers the right to receive rent in respect of his house property to his wife, Mrs. M, without transferring the house itself to her. In such case, the rent received by Mrs. M will be added with the income of Mr. M.

 

Income Coming From Revocable Transfer of Assets (Section 61)

This income is to be added in the hands of the sender.

A transfer is deemed to be reversible if it –

  1. has any provision for re-transfer of the complete or any part of the income or assets to the sender; or
  2. gives access to re-assume power over the whole or partial of the income or the asset.

Exceptions Where Adding provisions are not Attracted even in case of Revocable Transfer (Section 62)

Section 61 won’t apply to any income starting to any individual in the below two cases –

  1. Transfer not irreversible during the life time of the beneficiary or the sender
  2. Transfer made before April 1, 1961 and not reversible for a time period more than six years

Income of Minor Child (Section 64(1A))

All income coming or accruing to a minor child (including a minor married daughter) shall be added in the total income of his or her parent. The income of the minor child will be added with the income of that parent, whose total income, before including minor’s income, is more.

The parent, whose total income, the income of the minor child or children are added, will be entitled to removal of such income subject to a maximum of `1,500 per child under section 10(32).

The below income of a minor child will, however, not be added in the hands of his or her parent –

  1. Income from manual work done by him oractivity involving application of minor’s skill,talent or specialized knowledge andexperience; and
  2. Income of a minor child suffering from anydisability specified in section 80U.

 

Enquire with Certicom Consulting for any further queries.