E-invoice may get postponed under GST
The government is considering postponing the introduction of e-invoice system under goods and services tax (GST) by three months to July 1, two officials aware of the development said. Adding that such a proposal may be considered by the Goods and Services Tax Council in its Saturday meeting.
“It (deferment) is being considered… The Council has to take up the matter at the meeting… they may announce it after the meeting and consultation with states,” said one of the officials, asking not to be named.
Trials to upload e-invoices to the GST Network (GSTN)— introduced in January— saw a weak response and only 1% of registered businesses used it under the GST regime.
“We need feedback… if only a few companies upload e-invoices now, we will not know the shortcomings of the system. When it becomes mandatory from April 1, a deluge will inundate the system, and then people will say that the government’s systems are not working,” the official added with the condition of anonymity.
The deferment proposal comes close on the heels of finance minister Nirmala Sitharaman at last week’s GSTN meeting pulling up GSTN’s top management and technology provider Infosys.
Sitharaman criticized both for repeatedly failing to address technical issues and for the difficulties faced by taxpayers while filing returns and GST forms, according to people who were present at the meeting.
“Instead of being apologetic, they were trying to justify their mistakes on the grounds that only 0.1% of the returns filed actually faced problems,” said one of the people.
Voluntary uploading of e-invoice to the GSTN portal began on January 1 for businesses with over 500 crore turnover. It was made effective from February 1 for businesses with annual turnover of more than Rs 100 crore. Businesses with a total turnover of Rs 100 crore or more have been mandated to upload e-invoice to the portal since April 1.
Tax experts said the deferment would be beneficial for the industry, because various businesses use different software to issue and upload invoices, which then have to be reconciled with the core system of government.
The additional three months will help the government to build capacities for the exercise of mass digitisation.
“Deferring e-invoicing for a few months is necessary, as neither the industry nor the government seems to be ready for this huge change as of now. From industry’s perspective, transitioning into a new system entails careful analysis of impact on all transactions, changes in IT systems and engaging with vendors and customers,” said, Pratik Jain, national indirect taxes leader at PwC.
The deferment of e-invoicing would give the industry much-needed time, as recent system reforms and alterations in compulsory fields require time to be enforced, said KPMG partner Harpreet Singh.
The schema for the invoice is not yet final and the new returns are also being simultaneously introduced, making the trade anxious about the impact on their already sluggish businesses, EY partner Bipin Sapra said.
“The B2C requirement of the dynamic QR code also needs to be relooked as the current compliances do not require separate invoice-wise reporting for B2C transactions,” he then added.