Companies have 4 months to implement a payment system based on QR codes
Companies with a turnover of Rs 500 crore or more have been given a four-month window until March 31, 2021 to implement a QR code-based digital payment system without generating fines, two officials said. The move will promote digital India and curb the rampant misuse of fake invoices to misappropriate the input tax credit under the Goods and Services Tax (GST) regime.
The government had also instructed tax officials to verify GST records deemed given to business entities without Aadhaar authentication between August 21 and November 16 this year to ensure that they are conducting genuine business activities and are not using these companies to generate false invoices, officials said requesting anonymity.
The decisions were made recently at a high-level meeting at the Department of Revenue (DoR), which is an arm of the Union Ministry of Finance that manages matters related to direct and indirect taxes, they said.
“It was decided to grant a single exemption on the penalty provisions for a period of four months until March 31, 2021, on the condition that the interested parties establish the necessary process during this period to start with the QR code on the invoices before April 1. , 2021, allowing GST in UPI [Unified Payments Interface]”Said one of the officials.
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To create a cashless society, on March 21, 2020, the government ordered the issuance of dynamic QR code invoices by registered business entities with a turnover of more than 500 million rupees. The system was to come into effect on December 1 of this year. The system requires dynamic QR codes to issue invoices to unregistered customers or persons to track transactions.
The Central Board of Indirect Taxes and Customs (CBIC), a branch of the DoR, is taking various measures to control tax evasion through false invoices, a second official said. “One of those movements is to verify the business activities of all entities that have been granted the GST registration considered,” he said.
Many unscrupulous individuals were found to be misusing GST’s simple registration system to defraud the treasury by generating false invoices and misappropriating ITC, it added. Currently, the GST law allows considerate registration after 21 days of enforcement.
An entity that has considered registration where the applicant has not opted for Aadhaar authentication has to go to the mandatory physical verification of the premises, he said. “In cases where physical verification is difficult, the tax official may request verification of certain additional documents before deciding on granting the registration,” he added.
The CBIC has also introduced a standard operating procedure (SOP) for officers to conduct physical verification of entities that have been granted a considered GST registration without Aadhaar’s authentication, he said.
“This SOP would effectively curb the threat of false invoices and ITC fraud while ensuring proper facilitation of the ease of doing business for genuine applicants / entities without overreach,” he added.
Meanwhile, the government has also stepped up its nationwide crackdown on false GST invoices. The GST Directorate General of Intelligence (DGGI) has so far arrested 92 people for fraudulently using or handing over ineligible ITC through false invoices and has registered 994 cases against more than 3,161 registered false GSTs, the second official said.