Monthly GST filing will not be necessary after e-invoice system is in place: Finance secretary

In a significant reduction to companies, the federal government plans to put off month-to-month submitting of Goods and Services Tax (GST) returns after the digital bill (e-invoice) is absolutely operationalised, which won’t solely scale back compliance burden but additionally verify tax evasion, finance secretary Ajay Bhushan Pandey stated.

“GSTR-1 and GSTR-3B will ultimately be phased out, once we fully operationalise the electronic invoice (e-invoice),” he stated. In the conventional course, the 2 GST returns (GSTRs) means 24 returns filed by GST registered entities each month. The GSTR-1 is a return indicating gross sales or outward provides made through the month and the GSTR-3B is the abstract return indicating provides made, enter tax credit score availed and tax fee made for the month.

E-invoicing is already underneath implementation in phases. It will likely be necessary for all from the subsequent monetary yr as a part of the federal government’s ongoing efforts in direction of ‘Ease of Doing Business’ and ‘Honouring the Honest’. Once put into operation, each e-way invoice system and submitting of sure GST returns (GSTR) can be finally be withdrawn, stated Pandey, who can also be the income secretary.

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The authorities has already introduced a roadmap to implement e-invoices. Currently e-invoicing is necessary for firms with turnover of Rs500 crore or extra. From January 1, 2021 it will likely be obligatory for firms having turnover of over Rs100 crore, and from April 1, 2020 it will likely be necessary for all.

“Actually our objective is, once you have an electronic invoice it should ultimately do away with your e-way bills, and also eventually do away with GST returns because from the e-invoice itself your returns can be generated. Then, at the end of the month the taxpayer has to simply validate his return and make the payment of taxes,” the finance secretary stated.

The authorities on October 1 launched the e-invoicing system for companies with an annual turnover of over Rs500 crore, which replaces the bodily bill and permits patrons and sellers to have actual time info of the invoices. Eventually, e-invoice will auto-populate GST returns and companies won’t be required to generate e-way payments.

To be certain, the introduction of e-invoicing system was initially scheduled from April 1, 2020, however it was postponed to October 1 due to the sudden outbreak of Covid-19 pandemic.

The finance secretary stated “The e-invoice system will lead to a massive reduction in compliance and at the same time it will be good for industry, good for the taxpayers and very difficult for the fraudsters.”

The authorities, which has launched a significant drive in opposition to GST frauds, believes that e-invoicing system will immediately eradicate pretend invoices, presently rampant to fraudulently declare enter tax credit score (ITC).

“Rationalisation in the number of returns would really aid businesses by reducing the compliance burdens, which have significantly increased in the GST regime, especially for the service sector. Any method of auto-population of data in the monthly returns, with a facility for businesses to amend the data, would also go a long way in improving the ease of doing business,” MS Mani, associate at consulting agency Deloitte India, stated.

Chartered accountant at Taxmann, Sunil Kumar stated, “E-invoicing system auto-populates e-invoice data submitted by taxpayer over Invoice Registration Portal to GSTN [GST Network] portal which eventually helps in auto generation of GST returns.”

“Entry of invoices and access to the invoices data on real time basis, will leave less scope for invoice manipulation, thereby reducing the instances of fake invoice and tax invasion. E-invoicing system invites strong IT infrastructure,” he added.

According to specialists, this reform will result in huge discount in compliance burden as an organization having enterprise operations in 25 states should file each GSTR-1 and GSTR-2B individually in 25 jurisdictions, each month. “If an entity operates in 25 states, it has to file 50 returns per month, hence 600 monthly returns in a year,” Mani stated. This is along with the 2 annual returns – GSTR-9 and 9C to be filed for every registration, he added.