A ‘Committee on Invoice’ set up by the Goods and Services Tax Council has recommended two procedural changes that makes the invoice the core of the validation process for every sale of goods or service, which, if implemented, could dispense with the need for businesses to file GST returns, and yet improve compliance and collections.
The first suggestion relates to business-to-business (B2B) transactions and could make compliance simple while 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 end-consumers.
The two proposals, which are in the ‘draft’ stage, are to be placed before the GST Council soon.
The argument is that that the invoice – which validates every sale of goods or 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 name of the seller and the buyer, the supply date, a description of the product or service, the value, and the tax.
The committee has proposed that each invoice bear a ‘distinct invoice number’ (DIN), which will 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, 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’, issued 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 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.