GST Council Reforms: E-Invoicing Proposal, ITC Review and Focus on Tax Base Expansion

According to sources in the finance ministry, the government can provide incentives or some other benefits to businesses adopting the e-invoicing method. It is quite likely that these firms will be exempt from undergoing different types of audit procedures.

Through the connection with the GSTN, the department will get all information relating to sales of businesses, and businesses will be investigated if there is any suspicion of irregularities.

Integrating with e-invoicing may also increase GST collection. However, sources also say that a proposal to make e-invoicing mandatory will not be introduced. It may be an alternative arrangement.

In the future, the government wants to further encourage the business-to-consumer (B2C) system. The central government holds a 33 percent stake in the GST Council.

Finance Ministry sources say that the GST Council will now focus more on expanding the base rather than on rate changes. Because expanding the base will also increase tax collection. To expand the base, the registration and cancellation process was simplified in the Council's last meeting.

Ministry sources say that after the rate changes in September last year, consumption of many food items, on which GST was reduced from 12 percent to 5 percent, has increased.

The 12 percent rate was abolished last year. Sources say that the rate revision process is nearly complete, and in the future, GST rates will not be discussed at every Council meeting. If necessary, rates may be discussed once a year.

On October 8th, at the 57th meeting of the GST Council, a committee of officials from 12 states was formed to expedite payments related to input tax credit (ITC) and resolve related complexities.

This committee includes officials from five large states: Uttar Pradesh, Maharashtra, Karnataka, and Gujarat, four medium-sized states, and three small states. This committee will present its report to the Council regarding ITC payments.