How B2B e-commerce is easing GST compliance for MSMEs
By Peter George
From the time of its implementation in July 2017, GST has undergone many amendments and even today businesses need to put in efforts in undertaking GST compliances. Having said that, the government is taking steps to simplify the GST filing process to address compliance concerns of MSMEs. The intention is to make it simple and to keep up with the spirit of Digital India.
Importance of GST compliance: All taxpayers registered under GST need to comply with its rules and regulations. To monitor how businesses are adhering to GST regulations, the government is constantly updating profiles of registered persons on the GST portal which can be checked by PAN or GSTIN. Some details provided are status of the registration and compliance in return filing.
As a seller, one has to ensure invoices are rightly issued and uploaded in the GST return for the buyer to avail credits. As a buyer, one needs to ensure that invoices are correct so that there is no tax credit loss.
Challenges MSMEs face: While GST began with different forms for inward and outward supplies as well as a monthly return, at present taxpayers need to furnish two single returns on a monthly basis. To further ease compliances for MSMEs, the GST Council approved implementation of a new return filing system, whereby with effect from January 1, 2021, GST taxpayers having an aggregate annual turnover of up to Rs 5 crore are required to fill four GSTR 3B forms against the previous 12.
Educating taxpayers on this relatively new law is one of the challenges due to its ever-evolving nature. Some areas around GST compliance that are noteworthy are real-time uploading of invoices (e-invoicing, which is applicable to taxpayers with pan-India turnover of Rs 50 crore), and actions to claim input tax credit (ITC). A pain point here is that small businesses must devote time and have dedicated personnel for this.
Businesses that deal with multiple vendors have to ensure that every time they get an invoice, their GST number is accurately printed on it. When this does not happen, these invoices become non-compliant. Also, for non-compliance by vendors, businesses can end up losing 5-28% ITC.
Dealing with multiple vendors adds to the hassle of handling physical invoices and different formats. Businesses need to put in extra effort in keeping track of these invoices and uploading them on the GST portal. This further increases chances of error and the risk of being non-compliant.
It is here that e-commerce platforms can help MSMEs ease their GST compliance issues.
How B2B e-commerce addresses these challenges: As MSMEs shift to online marketplaces to expand their business, e-commerce platforms can help MSMEs ease their burden in undertaking GST compliances. They can leverage various benefits by getting access to GST-compliant invoices in one centralised location and saving the time and effort they put in to follow up with different suppliers.
As a buyer, once businesses update their GST number on e-commerce platforms, every invoice would carry their GST number. E-commerce platforms carry lakhs of products with a GST-compliance badge and are equipped with filters that help MSME buyers connect with only registered GST vendors, leading to smooth business transactions. Moreover, invoices on B2B platforms are digital and standardised, making it easier to file for ITC to save more on business purchases. E-commerce platforms are also integrated with data analytics to help understand spending and ITC details to plan budgets better.
As a seller, MSMEs can leverage the same e-commerce systems and have tax-compliant invoices generated and get access to periodic reports which come handy at the time of undertaking monthly/quarterly GST compliances and audits.
E-commerce is a great ally for MSMEs and is becoming a pillar of support for them by helping them manage indirect spends, make buying more convenient, and aiding in GST compliance, thus improving their profitability.
The author is director, Amazon Business