E-invoicing and GSTN

E-invoicing and GSTN

Subject: Economy

Section :Fiscal Policy

Context:

Businesses with an annual turnover of more than ₹10 crore will soon be required to issue e-invoice.

Concept:

• The GST Council, in its 37th meeting on September 20, 2019, recommended the introduction of an electronic invoice in GST in a phased manner.
• E-invoicing started with those having an annual turnover of ₹500 crore, then it was brought down to ₹100 crore and to Rs 20 crore.
• E-invoicing prescribes a standardized format that can be read by a machine. 
• It is a system in which B2B invoices are authenticated electronically by the Goods & Services Tax Network (GSTN) for further use on the common GST portal.
• Under the electronic invoicing system, an identification number is issued against every invoice by the invoice registration portal (IRP) managed by the GSTN.
• Invoices of businesses that do not comply with the mandatory e-invoicing are considered invalid. This means the input tax credit (ITC) cannot be claimed by the recipient; it can attract penalties, too.
• As on date, e-invoice is mandatory for businesses with an annual turnover of over Rs 20 crore.
• With more than 300 accounting/billing software products, there is no way to have connectors for all. For example, an invoice generated by the SAP system cannot be read by a machine that is using the ‘Tally’ system, unless a connector is used.
• In this scenario, e-invoicing aims at machine-readability and uniform interpretation.
• To ensure this complete ‘interoperability’ of e-invoices across the GST ecosystem, an invoice standard is a must.
• By this, e-invoices generated by one software can be read by any other software,thereby eliminating the need for a fresh/manual data entry.

The Goods and Service Tax Network (GSTN)

• It is a non-profit, non-government organization which manages the entire IT system of the GST portal.
• Private players own a 51% share in the GSTN, and the government owns the rest. The authorized capital of the GSTN is Rs 10 crore (US$1.6 million), of which 49% of the shares are divided equally between the Central and State governments, and the remaining is with private banks.
• Goods and Services Tax Network (GSTN) has built an Indirect Taxation platform for GST to help taxpayers in India to prepare, file returns, make payments of indirect tax liabilities and do other compliances.
• It provides IT infrastructure and services to the Central and State Governments, taxpayers and other stakeholders for implementation of the Goods and Services Tax (GST) in India.
• The GST System Project is a unique and complex IT initiative as it established for the first time a uniform interface for the taxpayer under indirect taxes through a common and shared IT infrastructure between the Centre and States.
• Mission
  • Provide common and shared IT infrastructure and services to the Central and State Governments, Tax Payers and other stakeholders for implementation of the Goods & Services Tax (GST).
  • Provide common Registration, Return and Payment services to the Tax payers.
  • Partner with other agencies for creating an efficient and user-friendly GST Eco-system.
  • Encourage and collaborate with GST Suvidha Providers (GSPs) to roll out GST Applications for providing simplified services to the stakeholders.
  • Carry out research, study best practises and provide Training and Consultancy to the Tax authorities and other stakeholders.
  • Provide efficient Backend Services to the Tax Departments of the Central and State Governments on request.
  • Develop Taxpayer Profiling Utility (TPU) for Central and State Tax Administration.
  • Assist Tax authorities in improving Tax compliance and transparency of the Tax Administration system.
  • Deliver any other services of relevance to the Central and State Governments and other stakeholders on request.