New upgraded IT system for GST by July, e-invoicing to be implemented from Oct 1

Shishir Sinha New Delhi | Updated on March 15, 2020

The GST Council on Saturday demanded Infosys to upgrade the Information Technology (IT) backbone by July 30. In the meantime, the council decided to defer introduction of e-invoicing till September 30.

Non-executive Chairman of Infosys, Nandan Nilekani, who made a presentation before the Council on Saturday has suggested that in order to smoothen the rollout of the new return system, and to ensure a better uptake, the transition may be made in an incremental manner. He suggested that the process may be initiated by addressing the compliance related issues first, so that the problem of tax evasion and gaming of the system due to non-linking of FORM GSTR-1 and FORM GSTR-3B is addressed immediately.

Nilekani informed the Council that to augment the capacity of the IT system to concurrently handle 3 lakh taxpayers from the present level of 1.5 lakh taxpayers, hardware procurement process has been initiated, which is slightly impacted by the Covid-19 pandemic. He sought time till January 31, 2021 to complete the task. However, the Council decided to cut short the time to July 30, 2020.

To support the timely implementation of various initiatives, the Council gave a go ahead for deployment of additional manpower (60 in number) on T&M (Time and Material) basis and assured that both on procurement of additional hardware and hiring of manpower, expeditious approvals would be given. However, the GST Council insisted on immediate removal of technical glitches in filing returns.

Considering proposed change in the IT system, it has been decided to implement e invoicing system from October 1, while new return will also be introduced from the same date. Earlier, April 1 was the date for these two aspects.

Annual Return

Meanwhile, the Council decided to give relaxation to MSMEs (Micro, Small and Medium Enterprises) from furnishing of Reconciliation Statement in FORM GSTR-9C, for the financial year 2018-19, for taxpayers having aggregate turnover below ₹5 crore. Due date for filing the Annual return and the Reconciliation Statement for financial year 2018-19 has been extended to June 30 and late fees not to be levied for delayed filing of the annual return and the Reconciliation Statement for financial year 2017-18 and 2018-19 for taxpayers with aggregate turnover less than ₹2 crore.

MS Mani, Partner at Deloitte India said that the approach of the GST Council to proceed with changes in returns and e-invoicing on an incremental basis would permit businesses to embrace these changes in a calibrated manner. Introduction of multiple changes from April 1, as was proposed earlier , would have put added pressure on businesses, which have been grappling with multiple business and regulatory headwinds. “The concerted efforts to overcome the technology challenges faced by businesses in GST would result in more businesses coming under the ambit of GST,” he said.

Rajat Bose, Partner at Shardul Amarchand Mangaldas & Co said that deferment of introduction of new return formats and E-invoicing to October 2020 should give enough time to the industry for getting their systems in place.

Interest on delayed payment

Giving relief to businesses, the council decided Interest for delay in payment of GST to be charged on the net cash tax liability with effect from July 1, 2017. For this law will be amended retrospectively.

Parag Mehta, Partner with NA Shah Associates, said substantial litigation was expected due to notices issued by the department to recover interest in case of late filing of GST returns on liability paid by utilising Input Tax Credit. The issue is now settled as GST council has proposed to charge interest only on the net amount i.e cash liability and amend the law retrospectively. “This will almost nullify the recovery notices for interest amounting to ₹49,000 crore,“ he said while adding that it is a valid and required amendment.

Published on March 14, 2020

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