The noose around the neck of tax evaders is expected to tighten further as the committee on invoice set up by the Goods and Services Tax Council are likely to come into force within this financial year.
The committee has made two procedural suggestions which, if implemented, will dispense with the need for businesses to file GST returns and yet improve compliance and collections.
The Uttar Pradesh government has already issued orders for installation of RFID (radio frequency identity) tags on all commercial vehicles carrying goods with e-way bill from October 1.
The first suggestion relates to business-to-business (B2B) transactions and can make compliance simple. The second relates to business-to-consumer (B2C) transactions and will ensure that the final seller of goods or of a service actually pays the GST collected from the end-consumers.
The two proposals, which are in the draft stage, are to be placed before the GST Council soon. At the heart of the first proposal is the recognition that the invoice – which validates every sale of goods or of a service – is the main document in any transaction and can capture the value chain and the tax.
The invoice has all the details the taxman needs: the names of the seller and the buyer, the supply date, a description of the goods or service, the value, and the tax.
The committee has proposed that each invoice bear a distinct invoice number (DIN), to be obtained by the seller, if necessary, in bulk, from the GST server, and used serially.
The buyer of the goods or the service must cite the DIN when he/she, after value addition, raises his own invoice (with its own DIN), to claim a tax credit.
Since both the invoices are uploaded in the GST server, the two can be matched.
Currently, businesses file GST returns using GSTR 3B form, which is “a skeletal return with only basic data, not reflecting the finer details of the invoice”, says a concept paper on invoice produced by the committee.
“The invoice, as such, is not being captured in its raw form anywhere,” it adds.
For B2C transactions, the proposal is for every citizen to obtain a consumer number. After a transaction (say, eating at a restaurant), the consumer can log on to the GST portal and match the DIN (cited in the restaurant bill) with his/her consumer number. That validates the fact that the consumer paid the GST on the transaction. If no GST is remitted against the DIN, the seller (restaurant owner) will be punishable.
In turn, the consumer can be rewarded for his troubles, perhaps in the form of tax concessions.
“Today, large-scale evasion happens at the B2C level. This measure can stop evasion, and revenues can go up by at least 30 per cent,” said an official of the UP Commercial Tax department.
He said under the DIN, all the invoices will be available with the department and it will obviate the need for businesses to file GST returns.