E-commerce platforms to undertake e-invoice compliance on behalf of suppliers - an analysis

E-commerce companies seem to be caught in a ’good cop bad cop’ play with the Government. On the one hand, tax authorities are breathing down the necks of e-commerce companies due to CAIT’s prolonged feud and concerns regarding predatory pricing, allegedly demanding they give a detailed break-up of the discount in the pricing details. On the other hand, e-commerce companies will be able to see some relaxation as they could get the green light from the Government to upload e-invoice for vendors under the goods and services tax framework. This article outlines how uploading e-invoices for vendors is critical to the smooth functioning of e-commerce companies.

This move comes as a part of the clarifications/ frequently asked questions that were issued to the general public as a part of the ongoing e-invoicing trials. The question asked whether e-commerce companies could request for an e-invoice on behalf of their supplier. While the Government has not officially made the announcement, officials have said that e-invoicing being undertaken by e-commerce companies on behalf of suppliers could be a possibility, probably after the e-invoicing trial run ends. The clarification is expected to go a long way in removing ambiguities such as no requirement of invoice registration portal validation for delivery challans and billing of supply.

Tax experts believe that permitting e-commerce companies to handle e-invoice compliance on behalf of their suppliers will be helpful to facilitate compliance for such kinds of suppliers, who might not have the resources or the awareness to thoroughly follow compliance guidelines. That being said, the Government has also clarified that e-invoicing on behalf of the supplier will only occur after explicit permission from the supplier. If the vendor of an e-commerce company wishes to raise e-invoice by themselves, they can do so.

While the Government has empanelled eight accounting software to help taxpayers low on resources with their e-invoicing needs, e-commerce giants like Amazon, Flipkart, Ajio who are likely to have a robust automation system for uploading their invoice already in place will be able to give their suppliers the advantage of faster uploading and validation of e-invoice, this is likely to lead to fewer disputes and faster reconciliation of issues around verification of input credit, which in turn will lead to the faster issue of ITC.

The implementation of e-invoicing was announced by the Goods and Services Tax Network as a part of the New Returns System under GST 2.0. Its standardized schema was introduced on a public platform after the 37th GST Council Meeting in September 2019. After much discussion on the standardized schema, e-invoicing was introduced on January 1st, 2020 on a voluntary basis to companies with an annual turnover above Rs. 500 crores and to companies with an annual turnover above Rs. 100 crore on February 1st, 2020. E-invoicing is expected to be made mandatory for all business to business transactions starting in the new financial year 2020-21.

In a recent announcement, the Government has pushed the date for mandatory e-invoicing from April 2020 to July 2020. This is mainly because only 1% of companies have registered for e-invoicing and with negligible feedback, tax authorities are not sure their system is completely glitch-free.