India Inc frets over supply mismatches due to launch of e-invoicing in Oct

Says frequent changes in format prevent companies from preparing for it, fears drop in GST collections if made mandatory

Companies fear disruption of their operations because of e-invoicing under the goods and services tax (GST) system, which is to be kicked off on Thursday, and they have demanded that it be made voluntary initially.
 
Under the system, firms with annual turnover of over Rs 500 crore have to raise e-invoices through a unique invoice reference portal and generate the IRN (invoice reference number) from October 1. Failing this, they will not be able to move goods for business-to-business (B2B) transactions. For business-to-consumer (B2C) transactions, they have to fix QR code, which is to be generated by companies. 
 
E-invoicing was to come into effect from April 1, but was deferred by six months.
 
So, why are companies hesitant on adopting it now? Experts believe this is because of the frequent changes the government has made in the scheme — the most recent changes were made as late as September 26, they said.
 
On top of it, companies also have to file annual returns for 2018-19 audit certificates by September 30, which they said is pushing them against the wall. Companies expected its extension but there was none till the time of going to press.
 
“Frequent changes in the versions of scheme, with the latest version released in July, change in validations at the portal, change in structure of JSON (Javascript Object Not­ation), are some of the issues that have made transition to e-invoicing a challenge,” said Ha­r­preet Singh, partner, KPMG.
 
Schema is a structure of mandatory fields that companies are required to fill. There are 28 fields such as name of the customer, their address, GST number, quantity of goods supplied, etc. Singh said the government changed the number of fields to be validated by the portal just two weeks ago. First it said 6-8 fields were to be validated and then increased that by 3-4 fields, he said.
 
A tax expert said, “The problem is that the government kept changing specifications till as late as September 26”.
 
It was also not clear which year’s turnover would be considered for selecting firms that reached the Rs 500 crore turnover threshold. The Centre clarified as late as two weeks ago that it could be any of the previous three years, he said.  He said the data has to be sent from the firm’s system to the invoice reference portal, companies have to re-print it on e-invoice. “There are lots of changes that you require in the ERP system. This cannot happen in 15 days or a month or two months, it requires time. Lots of global teams are also involved. Not more than 10-15 per cent are ready.”
 
He feared that many firms might not be able to issue invoices and face supply chain problems. “There could be impact on GST collections at a time when India is entering the festive season and the economy is at an all-time low.”
 
Tax evasion among firms with a turnover of over Rs 500 crore is very less, the expert said, adding that no country has undertaken such a big reform during the pandemic.
 
Abhishek Jain, partner at EY, called for making e-invoicing voluntary till December 31 so that companies get used to it.
 
Archit Gupta, founder ClearTax, said it would make sense to go live now and perhaps give time to make e-invoicing compulsory.
 
Singh said the government has not come out with specifications of the QR code that companies have to fix on invoices for B2C transactions.
 
The GST Council has approved e-invoicing to check tax evasion and arrest fraudulent claims as well as to help taxpayers through one-time reporting of invoicing details for all GST filings as well as minimising invoice mismatches during reconciliation.