New Invoice Rules Under GST for FY 2020-21

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 implementing GST on July 1st, 2017, the authorities have taken numerous transformative steps in the GST filing infrastructure to ease the burden of businesses, particularly 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, taxpayers have declared their assets, exceeding 60 lakh, and generated a total of 105 crore GST e-way bills. With the new amendments, government aims to increase the number of taxpayers and penalize defaulters.

• To add to this, 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. Overall, the aim is to enhance compliance and prevent revenue leakages due to taxes.

• 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. Moreover, it will be made mandatory for taxpayers from April 1^st, 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 1^st, 2020.

• After GST registration, taxpayers file e-invoice (Form GST INV-01) with the obtained Invoice Reference Number (IRN).

• Non-e-invoice issued by a business is invalid as a GST invoice.

Steps that Government Should Take (Opinion)

Before e-invoicing becomes mandatory, it is important for the government to consider a few key points.

• Government needs a robust e-framework for smooth GST bill and invoice reporting on the tax portal. Moreover, the government should also ensure that the portal is secure, and no information leaks out.

• To implement e-invoicing for small and micro businesses, the government requires a revised framework with reduced brackets. The government must prioritize simplified filing procedures for burdened small MSMEs to ease compliance.

• Businesses should appoint a 24×7 nationwide helpdesk with competent employees to assist with e-invoicing queries and concerns.

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.

Disclaimer: All the views and opinions expressed in this article are those of the author. They do not purport to reflect opinions of the website, company, owners, or its subsidiaries.