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GST: Pseudo extension in implementation of e-invoicing

Livemint |
Gunjan Prabhakaran, Partner and Leader
Indirect Tax

01 October 2020

The government has finally gone live with the implementation of the e-invoicing system from today, i.e. October 1, for taxpayers having an aggregate turnover of more than ₹500 crores, in any of the preceding financial years for B2B supplies. This is a very significant step towards digitisation of the tax framework, which is not only expected to reduce the compliance burden in the long run but also help in curtailing tax evasion.

Though the purported benefits of e-invoicing system have been fairly acknowledged and remain undisputed, the approach adopted by the government in implementing the same has been quite startling. While on one hand, the Ministry of Finance has left no stone unturned in supporting businesses amidst the current pandemic, the GST policy wing, on the other hand, has dismissed all requests for the deferment of e-invoicing implementation. It is quite surprising that even while the GDP has hit a record low and businesses are struggling to make ends meet, policymakers have remained unmoved with respect to the date of implementing e-invoicing.

Empirical evidence under GST suggests that a delayed implementation is always better than a hasty implementation. Hurried implementation without ensuring the readiness of the stakeholders may distort the benefits and increase their burden. However, despite past experiences, the CBIC kept issuing several notifications at the eleventh hour but still went ahead with the pre-decided timelines.

It has been always said that ‘a stitch in time saves nine’. Accordingly, CBIC came out with a notification and a press release in the late hours of 30 September 2020 wherein certain relaxations have been provided. While printing of QR codes on B2C invoices has been deferred till December 1, it has also been decided to provide a one-time relaxation to taxpayers by stipulating that invoices raised in October this year shall be deemed to be valid invoices even if it is not generated per the e-invoicing schema. Thus, penal provisions would not be attracted for such invoices. However, this relaxation is subject to the condition that the Invoice Reference Number (IRN) for such invoices is obtained from the Invoice Reference Portal (IRP) within 30 days of the date of invoice.

It is clear that businesses are set for extremely challenging times this October, which is not only the first month of e-invoicing but is also the last month of furnishing credit notes, amendments etc. pertaining to FY 2019-20 and filing of annual returns and audit reports for FY 2018-19. It would be interesting to see whether the Authorities adopt a more considerate and pro-active approach to support the taxpayers or will the road continue to be a bumpy ride.