What is Electronic Invoicing model?
All the taxpayers will create, issue and distribute invoices directly through the GST network.
Right now, the businesses issue the invoices through their accounting or billing software. Later, at the time of filing returns, they upload the details and invoices on GST portal.
In the electronic invoicing model, the invoices will be issued directly through the GST network. All the information will be transferred to the GST portal in real time, eliminating the requirement of a manual transmission.
Few countries in Europe and Latin America and nations such as South Korea have already implemented the electronic invoicing model. It has shown positive results in reducing the compliance cost and improving the monitoring by the tax authorities.
In the present system of issuing invoices, the authorities can review the sales documents during inspection or audit only. However, e-invoicing provides real-time controlling opportunity, allowing the authorities to clamp down on tax avoidance.
The GST council has set up a committee to analyse the feasibility of e-invoicing. The committee will study the models already set up in South Korea, Brazil and parts of Latin America and Europe and accordingly decide the future steps.
Probably, not. The businesses with turnover higher than the specified limit will have to issue the e-invoices initially.
On the generation of each e-invoice, the taxpayer will get a unique number, which will also be mentioned against each invoice reported in the GST returns.
E-invoicing is not only desirable for the Government, but it will also bring immense benefits to the taxpayers. The overall compliance expenses will come down. Also, the automatic transmission of data will ensure filing of error-free returns resulting in faster assessments too.