The electronic-invoice (e-invoice) under the Goods and Services Tax (GST) regime that starts from January next year will help banks in expeditious disbursal of loans to micro, small and medium enterprises (MSMEs) as creditworthiness of such enterprises can be instantly authenticated, two officials in the finance ministry said requesting anonymity.
“Providing loans to MSMEs is a priority of the government. PSBs [public sector banks] have been told to give loans to the sector according to the laid down prudential norms. E-invoicing will help banks to instantly verify order-books of these firms and help in faster sanctioning of loans. If required necessary directives will be issued [to PSBs],” one of the officials said.
Better credit flow to MSMEs is crucial as they are the backbone of the Indian economy as it is one of the major contributors of India’s gross domestic product (GDP), the official said. According to the Central Statistics Office (CSO) the share of MSME in India’s GDP has been29.7% in 2017-18. The government has been announcing several policy measures to boost the sagging economic growth since August this year. The Indian economy grew at 5% in the June quarter, the slowest pace of grown in six years.
The GST Council has already approved the introduction of e-invoicing in a phased manner for reporting of business-to-business invoices to GST System. “It will start operating on voluntary basis from January 1, 2020 for enterprises having a turnover of Rs 500 Crore or more,”a second official with direct knowledge of the matter said.
The system will be extended to businesses with turnover of Rs 100 crore or more on voluntary basis from February 2020. After that the system will be mandatory for the two categories of firms from April 1, 2020. Companies having turnovers of less than Rs 100 crore will also be able to generate e-invoices from the system from the next financial year, but it will be voluntary for them, the official said.
The GST Network (GSTN) has already standardised the e-invoice after consultation with the industry as well as ICAI, he said. “Having a standard is a must to ensure complete inter-operability of e-invoices across the entire GST eco-system so that e-invoices generated by one software can be read by any other software, thereby eliminating the need of fresh data entry, he added.
Pratik Jain, Partner & Leader-Indirect Tax, PwC India said that the proposed system will “surely help MSMEs as the data would be real time and can be authenticated easily” for funding and other purposes.
The e-invoicing will also bring in ease of doing business as it will pre-populate the GST returns besides reducing the reconciliation problems. The basic aim behind adoption of e-invoice system is to facilitate convenience to the taxpayers by further simplifying the GST return system, the second official quoted above said.
According to Jain the move is in the right direction. “Introduction of this mechanism on a voluntary basis to start with, that too linked with turnover threshold, provides an opportunity to the government as well as industry to prepare for this change. Over a period of time, this should make the compliances easy, particularly if input credit is completely linked with e-invoices. It would be good if large companies start using this on a voluntary basis as soon as they can,” he said.
The generation of e-invoice will be the responsibility of the taxpayer who will be required to report the same to Invoice Registration Portal (IRP) of GST. This portal will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The code will contain vital parameters of the e-invoice and return the same to the taxpayer who generated the document in first place, the second official said. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice, the official said.
To help small taxpayers adopt e-invoice system in a smooth and coherent manner, GSTN has empanelled eight accounting and billing software that will provide basic accounting and billing system free of cost to small taxpayers. Those small taxpayers, who do not have accounting software today, can use one of the empanelled software products, he said.
Published On : 28-11-2019
Source : Hindustan Times
