In the upcoming financial year, the government is considering eliminating the flexibility for buyers and sellers to revise their output liability by locking invoices and removing the edit option, as revealed by Revenue Secretary Sanjay Malhotra. This proposal, aimed at enhancing compliance and combating fake invoicing, will be presented at the next GST Council meeting.
Malhotra emphasized the need to improve compliance to control the misuse of the trust-based system by unscrupulous entities engaged in creating bogus companies. The move is part of an effort to tighten systems and address the challenges posed by fake billing.
The current system allows both buyers and sellers to edit invoices even after tax credits have been claimed. The proposed change involves removing the edit facility, ensuring that invoices are locked after submission of GSTR-1 and GSTR-3B.
While this modification is expected to prevent fraudulent alterations to invoice information and reduce false Input Tax Credit issues, it may introduce challenges such as reduced flexibility for correcting genuine errors, increased administrative workload, and potential system integration issues. Small businesses may encounter compliance hurdles, and there could be disputes arising from initial inaccuracies.
Some experts express concerns about the impact on genuine taxpayers, as the proposed changes may limit their ability to correct non-intentional mistakes. The potential restriction on claiming credit beyond GSTR 2B could also affect genuine taxpayers. The decision is likely to be discussed at the next GST Council meeting scheduled for later in February.
