What is ‘e-invoicing’?

What is ‘e-invoicing’?

‘e-invoicing’ doesn’t mean generation of invoice by a Government portal.

Notified class of registered persons have to prepare invoice by uploading specified particulars of invoice (in FORM GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).


e-Invoicing was introduced aiming at machine-readability and uniform interpretation. To ensure this complete ‘inter-operability’ of e-invoices across the entire GST eco-system, an invoice standard is a must. By this, e-invoices generated by one software can be read by any other software, thereby eliminating the need of fresh/manual data entry.

Applicability

1st Oct 2020 – Aggregate T/o > INR 500 Crores in any preceding financial year from 2017-18 onwards

1st Jan 2021 – Aggregate T/o > INR 100 Crores in any preceding financial year from 2017-18 onwards

1st Apr 2021 – Aggregate T/o > INR 50 Crores in any preceding financial year from 2017-18 onwards

e-invoicing doesn’t apply in B2C transactions (i.e. supply of goods or services or both to an unregistered person)

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Non-Applicability

e-invoice doesn’t apply to the following category of persons irrespective of their turnover-

1. Special Economic Zone units (not SEZ Developers),

2. An insurer,

3. An NBFC,

4. A Goods Transport Agency,

5. A banking company,

6. A financial institution,

7. A person supplying passenger transportation services,

8. A person supplying services of admission to the exhibition of the cinematographic films in multiplex services.

e-invoicing is also not applicable on Import of goods/ services, ISD invoices, Nil-rated/ wholly exempt supplies.

Note:- e-invoicing apply to RCM transactions as well

What documents are presently covered under e -invoicing?

i. Invoices
ii. Credit Notes
iii. Debit Notes

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What supplies are presently covered under e -invoice?

• B2Bsupplies (includes supplies under same PAN),
• Supplies to SEZs (with/without payment)
• Exports (with/without payment)
• Deemed Exports
by notified class of taxpayers are currently covered under e-invoicing.

What are the benefits of e-invoicing?

1. One-time reporting of B2B invoices while generation, which reduces reporting in multiple formats.
2. Most of the data in form GSTR-1 can be kept ready for filing while using e-invoicing system.
3. E-way bills can also be generated easily using e-Invoice data.

4. There is minimal need for data reconciliation between the books and GST returns filed.
5. Real-time tracking of invoices prepared by a supplier can be enabled, along with the faster availability of input tax credit. It will also reduce input tax credit verification issues.
6. Better management and automation of the tax-filing process.
7. Reduction in the number of frauds as the tax authorities will also have access to data in real-time.
8. Elimination of fake GST invoices getting generated.

The impact of the new I-T Annual Information Statement on taxpayers

The impact of the new I-T Annual Information Statement on taxpayers

The updated Form 26AS was introduced in the Budget for 2020-21, and it provides a more detailed picture of the taxpayer than the data of tax received and deducted at source.

The Income-Tax Department has released a new Annual Information Statement (AIS) that incorporates new categories of data such as interest, dividends, securities transactions, mutual fund transactions, and international remittances.

What is the AIS, and how might it assist you?

The Tax Department currently details Form 26AS, a consolidated annual tax statement that includes information on tax deducted/collected at source, advance tax, and self-assessment and is available on the Income-Tax website against a taxpayer’s Permanent Account Number (PAN).

The updated Form 26AS was introduced in the Budget for 2020-21, and it provides a more detailed picture of the taxpayer than the data of tax received and deducted at source.

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The redesigned Annual Information Statement (AIS) includes new categories of information on interest, dividends, securities transactions, mutual fund transactions, and remittances from overseas, as well as data on a variety of other transactions now accessible from the IRS.

The Tax Department stated, “There may be further transactions connected to the taxpayer that are not now visible in the AIS.”

Is it true that Form 26A is no longer in use?

The Tax Department stated that Form 26AS will remain in use until the new AIS is validated and fully functioning.

The Department had informed the new annual information statement in Form 26AS, effective June 1, 2020, in May of last year. All facts provided by banks and financial institutions that were previously recorded in their Statement of Financial Transactions were incorporated in the updated Form 26AS (SFTs).

What are the options for taxpayers now?

The new AIS can be accessed by going to the new Income Tax e-filing portal (https://www.incometax.gov.in) and clicking on the link “Annual Information Statement (AIS)” under the “Services” category.

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A provision has been provided for the taxpayer to submit comments online if they believe the information is erroneous, relates to another person/year, is a duplicate, etc. Feedback can also be provided in bulk by providing numerous pieces of information. Taxpayers can also use an AIS Utility to view AIS and upload feedback in an offline mode.

In the AIS, the reported value and the value after feedback will be displayed separately. If the information is changed or denied, the source of the information may be contacted for confirmation.

For each taxpayer, a simplified Taxpayer Information Summary (TIS) has been prepared, which shows aggregated value for the taxpayer to make filing returns easier.

If a taxpayer provides input through AIS, the derived information in TIS will be instantly updated in real time and used for pre-filing returns. Pre-filling will be made available in stages.

Taxpayers have been encouraged to double-check all connected information and present complete and accurate data on their tax returns.

How to Make a Tax File Declaration to your Employer

How to Fill Out a Tax File Declaration for Your Employer

Employers request an investment declaration from their salaried employees at the start of each fiscal year. A tax file declaration is essentially a list of all the tax-saving investments that an employee intends to make during the fiscal year in question. Even if he or she does not agree to all of these declarations, the employer should be informed.

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Employers request this information in order to determine their employees’ tax liability. This is calculated using deductions from Section 80C of the Income Tax Act, home loans, medical bills, and HRA. Collecting these details at the start of the year makes it easier for the employer to deduct Tax at Source (TDS) on a monthly basis. TDS is governed by Section 192 of the Income Tax Act of 1961, which requires employers to withhold taxes when paying salaries.

It is natural for employees to become tense at the prospect of declaring their investments because they are unsure whether they will be able to fulfil them or not. The important thing to remember is that employees must invest the entire amount declared in the permitted investments, regardless of where they invest. Because the tax deduction is low, the higher the amount of investment, the higher the in-hand salary each month for the employee.

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Understanding with an example

Adhiresh works for a multinational corporation. At the start of the fiscal year, he stated that he planned to invest INR 70,000 in tax-saving mutual funds. In addition, he plans to invest INR 30,000 in a life insurance policy. According to this information, the employer will deduct INR 1 lakh from Adhiresh’s annual income and calculate taxable income on the remaining amount.

TDS is calculated by dividing this amount by 12 and deducting the same amount from Adhiresh’s salary every month.

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What is Form 12BB?

To claim tax benefits or rebates on investments and expenses, a salaried employee must submit Form 12BB to his or her employer. Generally, Form 12BB must be submitted at the end of the fiscal year.

Declaring Investments

The investment declaration at the start of the year is only a guideline for how much you want to invest during the year. During the months of December and January, your employer will request that you submit documents as proof of these investments, which were stated in the investment declaration at the beginning of the year.

The following investments are eligible for investment declaration:

1.Home loan interest:

Your home loan may be accruing a sizable amount of interest each year. Aside from declaring the lender’s name, address, and PAN on Form 12BB, you may be required to submit the provisional interest certificate, which specifies the principal amount for the year and the interest break-up on a provisional basis. The lending bank or financial institution must provide this provisional interest certificate.

2. House rent allowance:

You may be able to claim the landlord’s house rent. The only information needed is the owner’s name, address, and PAN.

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3. Leave travel concession or allowance:

You can claim this amount only if it is included in your salary package.

4. Mediclaim premium:

The premium you pay for health insurance qualifies for tax breaks under Section 80D of the Income Tax Act. Make sure to include the premium amount in your tax return.

5. Deductions under:

Section 80C

 Premiums paid for a life insurance policy or investments made in tax-advantaged mutual funds may be deducted.


Section 80CCD

It includes NPS contributions.


Section 80E

Education loan interest.


Section 80G 

Donations to the government or specific organisations (mostly NGOs).
The amount declared in your investment declaration at the start of the year should correspond to the amount invested at the end of the year.

If you miss your deadline to declare your investments, even by a few days, your employer may over-calculate your tax liability and deduct the extra tax due from your next month’s salary. Even if you pay extra tax, your ITR will take care of it. However, make sure to include your investments in your income tax return.

Spend some time developing a well-thought-out strategy that will allow you to make the necessary investments without disrupting your cash flow. Monthly payment investment plans relieve financial stress, especially at the end of the year.

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How to Completing a Tax Declaration Form

Before the TDS amount is deducted from your salary, you must complete and submit your tax declaration form. To claim a tax deduction using Form 12BB, follow these steps:

  • Log in to the portal and access your income tax account (www.incometaxindiaefiling.gov.in).
  • Locate Form 12BB under the ‘Forms’ tab and download it.
  • Begin by entering your basic information into the form, such as your employee code, employee name, date of birth, and so on.
  • Fill in the columns for housing allowance, LTA, and other deductions.
  • Finally, sign the form and return it to your employer.
  • Make a copy of the form and keep it with you for future reference.

Several scenarios may arise while filling out your tax declaration form, such as:

1.When the amount invested is less than the employee’s declared amount:

If you are unable to invest the specific amount that you declared at the start of the fiscal year, or if you do not provide the necessary documentation to your employer, your tax savings will be assumed to be incorrect. In such cases, your employer will be required to recalculate your tax liability before the end of the fiscal year. If you make an investment after the deadline set by your employer for submitting investment proofs, you must declare and claim it when you file your tax return. If you are eligible, you may also request a TD refund.

2. When the amount invested equals the employee’s declared amount:

Your taxable income is calculated by your employer based on the amount you declared as an investment. If the amount declared at the start of the fiscal year equals the amount invested by you, you are unlikely to be eligible for a tax refund.

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3. When the amount invested exceeds the employee’s declared amount:

In some cases, you may declare a certain amount as your investment at the start of the fiscal year but end up investing more. If your additional investments qualify for an additional tax deduction, you may be able to save more money and file your tax return to receive a refund.

Make certain that your returns are filed on time and that you make significant investments. Furthermore, make it a point to file your tax return in order to protect your hard-earned salary from any unexpected deductions.