NEW GST COMPLIANCE MEASURES
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- The government has decided to lower the threshold for businesses to generate e-invoices for business-to-business (B2B) transactions, from Rs 10 crore to Rs 5 crore.
- It has rolled out the automated return scrutiny module for GST returns in a backend application for central tax officers.
The rationale behind the move
- To curb tax evasion and increase compliance under the Goods and Services Tax (GST) regime.
- Amid rising instances of GST fraud and cases of fake invoices, these changes are expected to broaden the compliance mandate for more businesses, especially small and medium enterprises.
- It will also help boost the GST revenue collections.
What is the automated return scrutiny module?
- Recently, Finance Ministry had given directions to roll out an automated return scrutiny module for GST returns at the earliest.
- This will enable the officers to scrutinize GST returns of center-administered taxpayers selected on the basis of data analytics and risks identified by the system.
- Discrepancies on account of risks associated with a return will be displayed to the tax officers. They will interact with the taxpayers through the GSTN common portal for communication of discrepancies noticed in returns.
- This will lead to subsequent actions in the form of either issuance of an order of acceptance of reply or issuance of show cause notice or the initiation of audit/investigation.
- The automated return scrutiny module has already commenced with the scrutiny of GST returns for FY 2019-20, with the requisite data already with the tax officers.
What are the changes for e-invoicing?
- At present, businesses with turnover of Rs 10 crore and above are required to generate e-invoice for all B2B transactions.
- The government has now lowered the threshold for businesses to generate e-invoice for business-to-business (B2B) transactions to Rs 5 crore from Rs 10 crore under GST. The changes will come into effect from August 1, 2023.
What does e-invoicing envisage?
- The GST Council in its 37th meeting in September 2019 approved the standard of e-invoice with the primary objective to enable interoperability across the entire GST ecosystem.
- Under this, a phased implementation was proposed to ensure a common standard for all invoices, that is, an e-invoice generated by one software should be capable of being read by any other software and through machine readability, an invoice can then be uniformly interpreted.
- With a uniform invoicing system, the tax authorities are able to pre-populate the return and reduce the reconciliation issues.
- With a high number of cases involving fake invoices and fraud availing of input tax credit, GST authorities have pushed for the implementation of this e-invoicing system which is expected to help to curb the actions of tax evaders and reduce the number of frauds as the tax authorities will have access to data in real-time.
- E-invoicing was initially implemented for large companies with turnover of over Rs 500 crore, and within three years the threshold has now been lowered to Rs 5 crore.
- E-invoicing for B2B transactions was made mandatory for businesses with turnover of over Rs 500 crore from October 1, 2020.
- Then it was extended to businesses with a turnover of over Rs 100 crore from January 1, 2021, after which it was extended to businesses with a turnover of over Rs 50 crore from April 1, 2021, and then the threshold was lowered to Rs 20 crore from April 1, 2022. It was further reduced to Rs 10 crore from October 1, 2022.
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Read about 47th GST Meeting: https://www.iasgyan.in/daily-current-affairs/gst-collections-and-revisiting-47th-gst-council-meeting-recommendations
Q. As GST evolved and started gaining stability in the last 5 years, the government, taxpayers and tax administrators have been proactively working closely to remove the hurdles, which is inevitable for the massive transformative exercise of redrawing the country’s indirect tax horizon. What more steps are needed to be taken to address the remaining gaps between the expectation and progress so far?