New Invoice System to Curb Automated Notices

The Central Board of Indirect taxes and Customs (CBIC) is working on a new advanced invoice management system that will prevent system-generated notices being sent automatically to taxpayers for mismatch in the goods and services tax (GST) returns.

The idea is to cut down on unnecessary litigation and allow taxpayers to fix discrepancies in disclosures and details between various GST forms directly on the portal, officials said.

The move will stop about 200,000 GST mismatch notices issued every year, involving nearly Rs 10 lakh crore in disputes, which end up in unnecessary litigation…and collections were miniscule, they said.

The new system will be ready within this financial year.

Mismatch-related notices had been a major pain point for the industry.

For compliances under GST laws, there are multiple data points, such as the details of outward supplies submitted in form GSTR 1, details of inward supplies received in forms GSTR 2A and 2B, form GSTR 6 for distribution of input tax credit, and form GSTR 3B, which is monthly return for payment of taxes, covering all details of supplies, tax payment etc.

In case of any mismatches between disclosures and details in these forms, the tax authorities send a mismatch notice where the taxpayer needs to provide a clear explanation with reconciliations.

Many of these discrepancies arise due to timing differences or correction of manual errors. However, the tax authorities send notices for every mismatch, requiring the businesses to spend time providing detailed answers to each notice.”

Such mismatches are generally addressed at the time of preparation of the annual returns, where the taxpayers reconcile all the data as per the GST filings as well as the financial statements.

Currently there is GSTR form 1A, allowing the users to make changes in the invoice, which is from the outward side. From the inward side is the invoice management system. But the facilities are optional, and both are not properly tuned.

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