On Saturday, February 1st, 2020, the Finance Minister of India, Nirmala Sitharaman, presented the Union Budget for FY 2020-21. As the Annual budget 2020-21 commenced, the citizens of India, businesses and organisations held their breaths to know about the change in the various rules in taxation, benefits and reliefs presented by Finance Minister Nirmala Sitharaman.
During the session, she stated that the government is taking numerous steps to simplify the filing of GST tax and returns. Some of these steps include filing of nil returns via SMS, GSTR 1, GSTR 3B, GSTR 9C and pre-filling of returns, to name a few. She emphasized on the subject of e-invoicing under Goods and Services Tax (GST).
Simplified GST Underway
Finance Minister stated that the implementation of simplified GST invoice will be commenced from April 2020. Since the implementation of GST on July 1st, 2017, numerous transformative steps have been taken in the GST filing infrastructure to ease the burden of businesses, especially the MSME sector.
The new budget also proposed some amendments on GST, especially on invoice rules, that will provide a leeway to the taxpayers.
Here are some of the main reforms introduced in the Union Budget 2020-21.
- Finance Minister proposed 20% reduction in TAT for HMV, such as trucks to assist interstate businesses.
- MSMEs were one of the focus points on this union budget that would enhance a business’s threshold and composition limits.
- In the last two years, more than 60 lakh new taxpayers have declared their assets and 105 crore GST e way bills have been generated. With the new amendments, government aims to increase the number of taxpayers and penalize defaulters.
- During the Union Budget 2020-21 session, the Finance Minister also announced the extension of GST invoice rules financing to MSMEs through TReDs.
- Presently, gold levies an import duty of 12.5%, while GST on gold is 3%. The new amendment proposed in the regulations, provides a relaxation on gold import duty.
- In terms of GST on Real Estate, government has increased the tax deduction benefits against home loan interest, up to ₹45 lakhs.
- To put a check on fake invoicing and fraudulent input tax credit (ITC) refunds as per GST, Finance Minister announced stringent penal provisions, making ITC and GST no. fraud, an offense that is non-bailable. And, this has got approval from the GST Council.
- Finance Minister Nirmala Sitharaman also said that amendments in GST invoice rules and GST tax return framework along with e-invoicing would be effective from 01-04-2020. This is aimed to enhance compliance and prevent revenue leakages because of tax.
- According to the government, the culprits of fraudulent input tax credit and GSTIN rackets involve people like rickshaw pullers, daily wagers, etc.
The implementation of e-invoicing has been approved and issued by the Central Board of Indirect Tax and Customs in December 2019. Finance Minister stated that the e-invoicing will be implemented on a trial basis from January 2020 onwards. It will however be made mandatory for taxpayers from April 1st, 2020.
What are the New GST Invoice Rules for Fraud
According to new amendments introduced by the Finance Minister, those who are committing input tax credit fraud crore would be punishable with imprisonment. This will apply to those who don’t furnish invoice and where the amount of tax evaded or input tax credit wrongly availed is worth over ₹5. The convict may be imprisoned up to five years and it will be cognizable and non-bailable.
What is e-Invoicing Under GST
As mentioned before, amendments introduced in the budget 2020-21 includes e-invoicing. Following is a summary of the e-invoicing under GST:
- E-invoices are required by a registered taxpayer whose sum total turnover in a financial year is more than ₹100 crore for the sale of goods or services to a designated buyer. It will be effective from April 1st, 2020.
- E-invoice shall be filed in Form GST INV-01 after GST registration and getting an Invoice Reference Number (IRN) from the GST Electronic Portal.
- All invoices issued by a business covered in any manner other than e-invoice shall not be valid as a GST invoice.
Steps that Government Should Take (Opinion)
However, before e-invoicing becomes mandatory, it is important for the government to consider a few key points.
- Government should create a robust e-framework to make the GST bill and invoice reporting on the GST tax portal smooth, free from latency, and glitches. Government should also ensure that the portal is secure, and no information leaks out.
- If e-invoicing is to be implemented for small and micro businesses, it needs to have a different framework with lowered brackets. It is crucial for the government to take care of small MSMEs who are already burdened with the compliance procedures, to get an easier filing process.
- A nationwide 24×7 helpdesk with competent and knowledgeable employees should be appointed to help businesses who have queries and concerns about the e-invoicing procedure.
India is one of the few nations to have implemented GST and that too on a massive scale. However, its success lies in systematic execution to ensure that the process is hassle free.
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