Government to Eliminate GST Edit Option to Curb Fake Invoices: Revenue Secretary
The government is considering a significant change in the Goods and Services Tax (GST) system to combat the issue of fake invoices. Revenue Secretary Sanjay Malhotra revealed that the proposal, aimed at improving compliance and reducing fraudulent practices, will be discussed at the next GST Council meeting, expected later this month.
Currently, both buyers and sellers have the flexibility to edit invoices even after tax credit is claimed. However, this feature has been misused by some individuals to facilitate fake invoicing. To address this concern, the government plans to remove the edit option, thereby locking invoices and preventing alterations after submission of GSTR-1 and GSTR-3B.
Malhotra emphasized the need to tighten the GST system to control the proliferation of bogus entities and fake billing. He highlighted that while the data exists to address fake invoicing, it is not fully utilized in the current system.
The proposed change aims to block suppliers with fraudulent motives from altering invoice information post-submission, effectively managing false Input Tax Credit issues, and minimizing commercial disputes among parties involved.
However, implementing this change may present certain challenges. It could reduce flexibility for correcting genuine errors, increase administrative workload, and pose potential system integration issues. Small businesses may face compliance hurdles, and initial inaccuracies might escalate disputes. Additionally, the transition may require investments in technology and training.
Pritam Mahure, a GST expert, expressed concerns about the impact on genuine taxpayers, particularly regarding the correction of non-intentional mistakes. Currently, credit is claimed based on GSTR 2B, but it seems that going forward, credit more than GSTR 2B may not be claimed, potentially affecting genuine taxpayers.
While the proposed change aims to enhance the integrity of the GST system, careful consideration of challenges and mitigation strategies is essential. The government’s efforts underscore its commitment to combating fraudulent practices and ensuring transparency in the indirect tax regime.
