Section 271(c) of the Income Tax Act penalizes 100% to 300% on GST tax evasion. Recently tax evaders were found using fake invoices in their tax compliance. Thus, to bring an effective measure against tax evasion, India’s government has launched GST e-invoice under GST applicability. E-invoicing GST India is applicable for taxpayers with a turnover exceeding 100 crores since 1st April 2020.
Meanwhile, the GST council had launched a phase-wise trial for tax evasion. It was implemented on 1st January 2020, for taxpayers with turnover above 500 crores. Small businesses may find it challenging to adapt to technological changes instantly. Thus, e-invoicing in India is not mandatory for small companies, as it will disrupt the GST system. E-invoice under the GST invoice format aims at simplifying the GST tax returns system for taxpayers. Businesses above inevitable turnover get a unique number for each e-invoice that they generate. It is matched with the invoices report filed in the sales returns and tax paid.
The proposed system is currently linked to the GST portal. Where the generated B2C and B2B invoices are directly linked to the portal within 24 hours. The procedure to file compliance is the same as before. The government looks forward to filling the returns in prior through e-invoicing to reduce the adjustment issues. The GST e-invoice also allows small and medium enterprises (SMEs) to take loans instantly. The e-invoice under GST applicability on the turnover threshold is to avoid the splitting of sales. According to M S Mani (partner, Deloitte India), plugging into GST tax evasion loopholes will substantially increase the collections over time. The e-invoice GST structure was proposed based on the models followed in Latin America, Europe, and South Korea.
According to the structure followed in India, the invoices are reported to the (Invoice Registration portal) IRP. The IRP usually generates the unique Invoice Reference Number (IRN). The IRN digitally signs the invoice and the QR code. This system has successfully boycotted the need for an e-way billing system. According to the statement made by Pratik Jain, the government has successfully implemented the system. The council implemented the GST e-invoice structure after prepping in the phase-wise trial period. As of now, there are nearly 1.21 crore businesses registered under the GST e-invoicing applicability in India.
Rajat Mohan stated that the e-invoice under GST format has boycotted manual filing and invoice data processing. The government has limited the mandatory audits for procurements based on e-invoices to stimulate businesses. Businesses can file GST compliance directly from their accounting software/ERP system. grofleX offers e-invoicing solutions that enable business owners to file tax compliance in no time.
Conclusion
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