Invoice Generation System is a system which helps taxpayers to generate invoices on behalf of the sellers with accurate details of products and tax rates mentioned in the database. It will be added to the GSTN portal. The Goods and Services Tax Network (GSTN) is facing temporary technical glitches after the implementation of the new tax regime, which is hectic for the country. Any of the new IT systems will take nearly six to nine months to evaluate and solve problems as well as get things in a right manner.
How Invoice Generation System will Work for GSTN?
To clarify the concept of IGS let us understand with an example, Assume 2 firms registered under GST with the name of Firm A and Firm B. Firm A’s agrees to sell 100 pieces of the shirt to firm B @ Rs 200 per shirt. GST rate on shirts (garments) is 12 percent. To generate an invoice firm A will use IGS by mentioning the Firm B’s GSTN number. The IGS will automatically fetch the GST rate from the network and the details of the Firm B from the registration records.
After the generation of invoice, it would show that the Firm B have to pay a total of Rs 24,000 to Firm A including GST – Rs 20,000 is the price of shirts and Rs 4000 as taxes. GSTN, as well as Firm B, can view invoice data online. Firm B will accept the invoice details sent by Firm A to state its acceptance of the invoice. Firm B is entitled to make payments of shirts to Firm A. Here the role of IGS will complete and after then GSTN portal is responsible to complete the further process such as the calculation of input tax credit, matching of invoices and so on. Both A and B firm will pay taxes on the calculations made by the GSTN and the invoice data fetched from the IGS.
Benefits of Invoice Generation System
IGS will be benefited with the addition to the GSTN. It is anticipated that it will end to file multiple registrations and returns under GST. Retail firms can use IGS for creating cash memos at the time of making the final sale to the consumer. IGS account of the retailers will already have details of the stock they received from the wholesaler. The government can collect taxes under GST in the last mile of the transactions, one of the weak points till now. It is anticipated that with the addition of IGS at GSTN portal will bring down the technical glitches in the existing system.
Read Also: Goods and Services Tax Sales Bill and Its Proper Format
Let us understand the issues faced by the taxpayers in the existing GSTN system. However, it was created in such a way to handle 300 crores invoices uploaded by one crores traders in a month and the system is not able to handle the heavy rush at a time. It faces a frequent slowdown and the system will require many new upgrades. For example, while generating an invoice at the system with multiple rates and items, the GSTN system determines only the first item of the invoice and treated the remaining as the duplicate.
Sometimes user lost data in the system when they switched tabs in order to gather information such as the details of supplier claiming input tax credit. Security issues such access to unrelated firms have also been reported under this. This kind of issues taken care as they arise in the any of the systems.
Due to the technical glitches at the GSTN portal, the deadlines for filing returns of GSTR 1, GSTR 2 and GSTR 3 has been extended by the government to 10th October, 31st October and 10th November respectively. Although, the extensions for filing returns under GST give enough time to traders as well as GSTN. The processing of refunds as well as the transfer of money to state governments has been blocked by the government. Due to this, the monthly settlement cycle of the GSTN is delaying.
Invoice Generation System will be added to GSTN
The new system will be added to Goods and Services Tax (GSTN) Network with the name of Invoice Generation System (IGS) and it will be owned by the Government.
For preparing invoices and payment of taxes under GST, business entities can use Invoice Generation System (IGS). Business firms are not required to generate invoices in their private systems as they are currently doing. Through IGS, the Government will get the relevant data at the time of invoice generation and the business firms have no need to wait for filing returns.
