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GST e-Invoice

The Government of India has given effect to the proposed GST e-Invoicing facility. The facility is intended to be used for issuing GST invoices from a central database which is populated and administered by the Central Board of Excise and Customs (CBIC).  The purpose of the facility is to curb tax evasion and streamline GST return filing. The system of e-Invoicing would be applicable for businesses exceeding the specified turnover limits. The turnover limit has been fixed as one hundred crore rupees. The business meeting the turnover criteria are required to generate electronic invoices on the GST portal for every sale. The requirement for GST e-invoicing is mandatory for businesses which exceed the turnover criteria commencing from 01.04.2020. However, for businesses having a turnover exceeding five hundred crore rupees, the mechanism of e-invoicing should be implemented with effect from 01.01.2020. In the present article, the system of GST e-Invoices is explained.

The model of GST e-Invoicing is formulated as an appropriate solution to curb instances of tax evasion. Also, it is aimed at avoiding duplication of efforts and minimising manual intervention in filing and verifying of GST returns. The issuance of invoices or bills through the GST Network will send essential data to the authorities on an immediate basis, thereby significantly improving ease of doing business and reducing tax evasion.

Basic Functionality

Businesses exceeding the specific turnover will be required to generate electronic invoices for the entire sale value of the transaction. The invoice generated will contain a unique number, which can be matched with the invoices reported in the respective GST returns. Also, businesses falling under the purview of the e-invoicing system will be provided with software facilities that are linked to the GST portal for generating eInvoices.

The Ministry of Finance has established a council, comprising of the Central, State tax officials and the Chief Executive of the GST network to examine the improvements which can be made to the system to streamline the generation of invoices and easing compliance burden. The designated body will be engaged in reviewing similar systems in other countries like Latin America, South Korea and Europe. Based on the systems taken up for scrutiny, the government will implement the e-invoicing system in India.

Advantage of e-Invoicing

Under the e-invoicing system, records of sales made by businesses are instantly updated in the GST portal. The accounting entry made by the assessee in the books automatically sends the sale information to the government database. The updation is made irrespective of the accounting software employed by the assessee. Hence, there is no need for the assessee to update the information on the GST portal manually. The arrangement saves time and effort for businesses, particularly companies which have multiple sale transactions with significantly high frequency. Also, automation reduces tax evasion. Since tax evasion is reduced, the GST revenue collection system of the government is made further robust.

Alternative Model

The system of e-invoicing can be implemented either based on the turnover of businesses or the value of invoices. The council has suggested that the process should be based on the turnover to discourage the splitting of invoices for a single transaction.

Incentivization of Businesses

For incentivising businesses to adapt to the new e-invoicing system, the GST authorities may limit the frequency of mandatory departmental audits for assessees who adopt such the e-invoicing system.

Similarities to eWay Bill

The method of GST invoice generation is similar to that of the e-way bill portal for the payment of GST on the electronic portal. Also, the new feature may replace the e-way bill system that is now prevalent for the movement of goods, as the invoices can then be generated through a single centralised Government portal. At present, e-way bills are required for the movement of consignments that exceed fifty thousand rupees in value.