Timely uploading of invoices will help in matching returns, enabling taxpayers to claim input tax credit, says Goods and Services Tax Network CEO Prakash Kumar

GSTN chief executive officer Prakash Kumar. Photo: PTI

New Delhi: Goods and Services Tax Network (GSTN) is preparing to handle as many as 3 billion invoices a month under the new indirect tax regime, but will encourage entities that generate a large volume of invoices to upload them daily to lessen the burden on the system, chief executive officer Prakash Kumar said.

GSTN is the technology backbone for GST and will administer registration, invoice uploading, tax return filing and tax payment system under goods and services tax (GST).

“We are prepared that 50% of the invoices are likely to be uploaded on the last date of filing and that too in the last four hours,” Kumar said in an interview. He pointed out that timely uploading of invoices will help in matching of the returns that will enable the taxpayers to claim input tax credit. “If taxpayers who generate a large amount of invoices upload their invoices daily, then the reconciliation can happen daily and the input tax credit can be claimed,” he said.

In preparation for the rollout of the indirect tax regime, GSTN will soon get its software tested by state-run Standardisation, Testing and Quality Certification (STQC) to get security clearances. The software will then be made available to tax authorities for their feedback by April end.

“There will be load testing, integration testing and security testing that will be done to ensure the system is foolproof,” Kumar said.

GSTN initiated the process of registering taxpayers in November. An estimated 8 million taxpayers will need a GST ID number—a 15-digit number based on their income tax Permanent Account Number (PAN)—to operate under the GST regime, which is expected to come into effect on 1 July.

However, the response to the registration drive has been mixed. Though more than 71% of the 6.9 million value added tax payers have registered, the registration rate in some states remains very low. The pace of registration of central excise and service tax taxpayers has also lagged behind. This is because, the registration process has been largely voluntary in the absence of a law backing it and is dependent on the enthusiasm shown by state governments in increasing awareness.

V. Lakshmikumaran, managing partner of law firm Lakshmikumaran and Sridharan, said businesses are worried about the provision that requires invoice matching to happen for claiming input tax credit.

He said that industry is not showing any urgency to register under GST because the law has still not been finalized. “Taxpayers are waiting for clarity on tax rates, exemption and the final draft of the law. The industry will take at least three months to be ready for a transition to GST,” he said.