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GST Compliance tightened: Buyers from big firms to show valid e-invoices for tax credit


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Aiming to collect almost the same sum as taxes as last year, the revenue department is tightening compliance requirements related to e-invoicing. The buyers are required to ensure proper e-invoices are issued to them by listed large GST-registered businesses; in the absence of such e-invoices, the buyers could lose input tax credit.

A list released by the department includes over 28,000 GST identification numbers that must only issue e-invoice for B2B sale of items. The rule came into effect from October 1 for firms with more than Rs 500-crore turnover.

E-invoicing system is connected to a central portal which receives and validates invoices in real time. It has been touted as a game changer, and one of the reasons why the proposed overhaul of GST return-filing system was abandoned earlier this year as it was thought that e-invoicing could achieve the same objective without unsettling the current system.

“Every business entity procuring supplies from large vendors must ensure that invoice issued to him is a valid e-invoice with an invoice reference number (IRN). Taxpayers need to doubly ensure that supplies received from the listed vendors must be backed by a valid e-invoice,” Rajat Mohan, senior partner at AMRG & Associates, said.

Although e-invoicing implementation has been delayed owing to pandemic, it is expected that it would be an effective addition to the current system of GST compliance once it becomes mandatory for taxpayers above `100-crore turnover from January 1 next year and is rolled out for all assessees from April 1.

“Even though the current system is catching frauds of fake invoices but it’s flagged only when returns are filed every months but with the real-time nature of the e-invoices, that time won’t be available for unscrupulous elements,” a government source said.

He added that with invoices being stored in a central database while being issued, taxpayers would only have to file simple returns at the end of the month instead of uploading invoices as a separate task that is currently being undertaken.

While the GST collection rose by 10% in October and breached the Rs 1-lakh-crore mark for the first time this fiscal, the April-October collection this fiscal is about 80% of the collection last year.

Source - https://www.financialexpress.com/economy/gst-compliance-tightened-buyers-from-big-firms-to-show-valid-e-invoices-for-tax-credit/2122777/

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Aseem Aggarwal
CA, CPA, CS, B.Com(H)
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aseem@ksafirm.com

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