The Goods and Service Tax (GST), introduced in India, on July 1 2017, supplanted a number of indirect tax laws required under central and state governments. The fundamental subject was to have a 'one country, one tax' which would improve the simplicity of doing business for taxpayers and align the Indian Indirect tax laws with International Standards, timely compliance and transparency, guarantee convenient and at last lessen the taxation rate for the taxpayer. The journey since its implementation has been nothing short of a roller coaster ride not only for taxpayers but even the government. As
GST completes 30 months in India, it is time to ascertain the key milestones which are expected to be achieved in 2020.
E invoicing - To align with the international best practices (Like in European, South Korea and some from Latin America) and to increase the interoperability of e-invoices across the entire GST ecosystem, e-invoicing has been introduced. Under the new concept, e-invoices generated by one software can be read by other software, thereby eliminating the need for fresh data entry.
This would mean that adoption of a standard template will also ensure that an e-invoice shared by a seller with his buyer or bank or agent or any other player in the entire business ecosystem can be read by machines and hence eliminate data entry errors. In the first phase, E-invoicing has been made mandatory from April 1 for registered persons having aggregate turnover exceeding Rs. 100 crores and shall be applicable only on tax invoice, credit note and debit note. With the new e-invoicing ecosystem, transactions will have more transparency, authenticity and accuracy.
Overall the e-invoicing system shall strengthen the authenticity of the invoice for banks to discount invoices specifically in context of MSMEs and thereby reduce loans turning bad. While traditional factoring based on sample invoicing often demands very high interest rates, mandatory e-invoices would mean lenders having access to more data to protect their lending. The possibility of more data would also mean less risk and lower interest rates for small businesses.
Countries in Latin America which have launched e-invoice have become global leaders in factoring, especially Invoice based factoring. Even otherwise, it has been seen from the countries which have implemented mandatory e-invoicing, their tax revenue has increased manifold. For instance Mexico implemented e-invoicing for all businesses starting in 2012 and made it mandatory in 2014. Between 2012 and 2017, the tax revenue rate for the government increased from 37.4 percent to 57.7 percent (approximately).
Thus, with the introduction of one step i.e. e-invoicing, the government is attempting to achieve the following:
- Seamless flow of data/information between various aspects of GST framework such as e-invoicing, e-way bills and GST returns to avoid duplicity of work
- Increase liquidity of the invoices via banking, authenticated transactions, and the reduction in bad loans and
- Increase in the tax revenues for all states leading to growth of the country
International Tourist Refund scheme - This is another initiative that will make the Indian GST comparable with global practices. This refund scheme essentially provides an opportunity to the foreign tourists to purchase goods during their stay in a country on payment of GST and obtain a refund of the GST so paid, at the time of exit from the country.
Nearly 52 countries have adopted such a refund mechanism. It has been noted that such a scheme helps in attracting tourists and is in line with the avowed objectives of the GST regime of zero rating of goods for exports and Make in India initiative. Presently section 15 of the IGST Act has not been enacted. This provides the power of refund of the integrated tax paid on supply of goods to tourists leaving India.
Integration of the Customs portal – Another initiative of integration and automation expected in 2020 is the alignment of the customs portal i.e IceGate with the GSTN portal. Presently, the customs portal is integrated with GSTN, only with respect to export invoices.
Here the details of the shipping bill are filed against the corresponding GST export invoices and submitted in GST returns. However, integrating the bill of entry filed at the time of clearance of goods from port with the GSTN portal of the registered person such as the return form GSTR 2A in case of domestic buying, will ideally help in eliminating the black market for goods. This is likely to plug another leakage point for GST revenue. The same is in line with the international best practices followed by countries which have implemented the GST/ VAT regime.
Lastly, in addition to the above expectations, it is also expected from the GSTN network to work on the bandwidth challenge considering the Indian ecosystem, so that the above changes which are planned can be smoothly implemented without effect.
Source: moneycontrol.com