By TIOL News Service

NEW DELHI, JAN 31, 2018: THE CII has backed the idea mooted by Mr Nandan Nilekani before the GST Council. Mr Nilekani had proposed that “If the buyer accepts supplier invoices on the GST System, this automatically determines the input tax credit (ITC). In the proposed model, there will be no mismatch or reversal.”

According to CII, simplification of GST compliances would result in higher number of returns filed, increased collection of revenues, and easier working capital management by trade and industry. The GST network (GSTN) functioning and return filing formats could be tweaked to ensure acceptance of invoices.

CII stressed the need for designing a fool-proof and effective return filing system where seamless and speedier input tax credit (ITC) can be availed by the recipient, as against the current requirement of filing three GST returns. In some sectors with thousands of invoices daily, this exercise leads to complexities such as mismatches, ITC reversal with interest, and reclaim of ITC.

Currently, the buyer is responsible for ensuring tax payment by suppliers to avail ITC. Mismatch in invoices due to filing errors leads to funds being held up. A successful model should align with the natural business process, according to Mr Nilekani.

Mr Nilekani further suggested that the proposed process will offer multiple channels for upload and acceptance of invoices and filing of returns. Small taxpayers with no automated accounting systems can view and accept pending invoices directly on the portal, and SME taxpayers with some level of automation can use Excel based offline tool to download, compare and accept pending invoices.

Large tax payers with fully automated accounting will do the reconciliation and acceptance directly in their accounting system and upload results directly through authorised entities. Uploading of invoice data may be done on a continuous basis by the supplier, as feasible, throughout the tax period i.e. till filing of GSTR 1 Return on 10th of the next month, and the time limit set for 10 days shall be eliminated.

CII had earlier recommended similar measures for easier invoice matching at the time of initial release of the Model GST law. The recommendations made by Mr Nilekani seem practical and are expected to be business friendly for the successful transition to GST, stated the CII press release. CII also suggests trials and tests before introduction of such a system.

Further, to keep the system simple, it is also suggested that uploading of invoices with total amount with GSTN of recipient should suffice instead of invoices at line-item level. Acceptance of invoices by buyers and suppliers as per normal business process should be used for ITC payment.

This will pave the way for smoother implementation of GST and simplification of return filing system, which it turn will enhance tax revenues towards a successful Good and Simple Tax, said CII.