Govt. mulls rating firms on GST compliance

Subject : Economy

Section: Fiscal Policy

Concept :

The government is mulling the introduction of tax compliance ratings for vendors under the Goods and Services Tax (GST) regime and a pilot project is on the anvil to try out biometric authentications for applicants to be able to register with the GST framework.
While GST officials are cracking down on fake invoicing and other tax evasion techniques, they have also found more than 11,000 firms that were considered ‘fake registrations’, some of which were undertaken through identity theft.

Automated Return Scrutiny Module

The that uses data an ARSM is a part of the ACES (Automation of Central Excise and Service Tax)-GST backend application analytics to identify risks and discrepancies in GST returns.
This helps tax officers to scrutinize the GST returns of Centre Administered Taxpayers who are selected based on the risks identified by the system.
The module also generates alerts if any non-compliance is detected.
The automated return scrutiny module has already commenced with the scrutiny of GST returns for FY 2019-20, with the requisite data already with the tax officers.

e-Invoicing Under GST

e-Invoicing is a system where B2B (Business to Business) invoices and some other documents are electronically authenticated by the GSTN (Goods and Service Tax Network) for further use on the GST portal.
e-Invoicing involves submitting already generated standard invoices on a common e-invoice portal, automating reporting with a one-time input of invoice details.
An identification number is issued against every invoice by the Invoice Registration Portal (IRP), which transfers the invoice information in real-time to the GST portal and the e-Way Bill portal.
E-Way Bill is a compliance mechanism wherein by way of a digital interface the person causing the movement of goods uploads the relevant information prior to the commencement of movement of goods and generates an e-way bill on the GST portal, and therefore facilitating faster movement of Goods.
This eliminates manual data entry while filing returns and generating e-way bills.

Objectives:

The GST Council in its 37th meeting in September 2019 had approved the standard of e-invoice with the primary objective to enable interoperability across the entire GST ecosystem.

Significance:

With a uniform invoicing system, the tax authorities are able to pre-populate the return and reduce the reconciliation issues.
With a high number of cases involving fake invoices and fraud availment of input tax credit, GST authorities have pushed for implementation of this e-invoicing system which is expected to help to curb the actions of tax evaders and reduce the number of frauds as the tax authorities will have access to data in real-time.