EWB and GST Returns
e-Waybill and GST Returns are like two separate trains which are running toward each other and the question is if they will crash or couple and continue together.
EWB has not yet launched fully for all interstate transactions but appears to be moving well in the initial trials which have been going on for the last couple of months. EWB is being handled differently by the National Informatics Centre (NIC) running the program as opposed to the Goods and Services Tax Network (GSTN). EWB documentation and data all point to a process which is designed to work in tandem with the GST; in fact the documentation numerous times calls out how the EWB can be used for GSTR1 and reduce compliance time.
Meanwhile, the GST returns have continued with a muddied pace. The last GST Council meeting on 18 January 2018 continued the theme of the evolution of the GST returns. There was another brief delay in GSTR-3B filing with the push for December returns delayed until 22 January from 20 January. Meanwhile, GSTR6 for Input Service Distributors has been delayed until 31 March 2018. Since the start of the GST Era, last July – GSTR2, and GSTR3 have not been filed.
Instead, the filing of these returns has been deferred, and India Inc. has struggled with GSTR1. Today what occurs is every taxpayer has to file GSTR1 and GSTR3B. Taxpayers are still trying to get into a regular cadence around GSTR1, and this should happen soon.
Now there is a light at the end of the tunnel with the Finance Minister unveiling a plan for a new GST return system which scraps the three filings and replaces it with a real-time invoice validation. Suppliers and purchasers would file GSTR3B for output, input and credit liability. Finally, the GSTN would no longer perform any reconciliation of the uploaded data.
This simpler GST filing regime puts to onus on correct data on the supplier and buyer and has them validate each transaction. The EWB system works in a very similar way where the supplier needs to generate e way bill before the transport begins and the buyer has 72 hours to accept it before there is an auto-acceptance of the EWB. There is an open point where there is no auto-acceptance described, but it is likely there will be a provision for auto-acceptance.
In this bold new GST Return world, once again we are confronted with the question of how does a business ensure the tax and credit liability are correct. On the sales or purchase side, the key is to have a taxing process which ensures that every tax invoice or bill you generate uses the correct rate based on the data stored in your system. Now in a world where the standards for commodities change on a monthly basis, for a large business the key will be an intelligent tax engine or tax sensitive ERP which tracks and updates prices based on the CBEC notifications.
The other piece is to have a single place where the transactions can be downloaded, accepted or rejected and compared against ERP data. While it is not required to make the reconciliation, it is still an important step to ensure against problems if the taxman comes. This way when you are reviewing your purchases you can see how long it takes suppliers to uploaded data compared to invoice data; how many errors you find in supplier invoices and if there other patterns which emerge. At the same token; this place is where you can issue your electronic invoices, EWB documents and ensure that you are providing data at the same time.
A single solution which wraps: tax knowledge, invoicing, EWB and data exchange sets you up to have seamless compliance when it comes time to file GSTR1, GSTR2, GSTR3, GSTR3B or whatever else return occurs in the future.
The real-time model envisioned with the e-way bill is the way of the future for GST compliance. Rather than coming up with a complicated filing model; it is better to have a simple filing model which fits in with a business process. Over time – as we get used to the GST and EWB processes we can add more details, and the government can detect fraud easier. But for now, the best way forward is to push ahead with a more straightforward GST return like the EWB.