Intro: Input Credit is a great way for linking the payment of taxes of the buyer and the seller. It also ensures that there is uninterrupted flow of credit throughout the country from the manufacturers to the sellers of various sectors.
Under the GST, tallying the invoice is a superb way to so that any kind of fraud one can avoid and also it will lead to more businesses entering into the formal economy. Also, if another step is taken to make it better, the tax payment can be linked to the availability of Input Credit of the buyer to that of the seller. What the input credit will do is to ensure smooth flow of input credit all over right from the manufacturer to the consumer and all over the nation.
In order for you to avail Input Credit, there are certain conditions that need to be fulfilled which are:
- The dealer should have the Tax Invoice or the Credit/Debit note that has been issued by the supplier that has been registered under the GST act
- Receipt of the goods or services
- The filing of returns has been done
- The tax charge is to be paid by the supplier to the government
In the past, there have been misrepresentations of some businesses and it is not really possible for the Government to detect this kind of a farce in a systematic manner and try to get rid of this problem. With this law coming into practice, the Government is in the hope that the market will self-cleanse itself.
Well, it certainly isn’t easy and there is a cascading effect that is linked to it. There will be effect of businesses shutting down and the collections may also go low which is one issue that needs to be addressed. There will be uncertainty linked to the outcome of the business since there will not be proper accounting and the ability of people to get in touch with new suppliers and customers will be greatly lessened.
In order to prevent any kind of fraudulent claims, non-existent invoices, the proposal of Invoice Matching has been given. This will help a great deal get rid of fraud and also give thrust to get more taxpayers into the network of tax. It is seen as a fantastic move.
For small businesses
For the small businesses, there is invariably, uneven cash flow. If there is even a week’s delay in the payment of money, things can go out of hands for small businesses. If this tax proposal comes into practice, then there will certainly be higher profitability and there will be no willingness to keep the Government in dark and dupe them.
One brilliant benefit of the GST is that it is a system where technology and tax go hand-in-hand. All the fake bills will go away and so will the false claims, thanks to the Invoice Matching and it will give the whole system traceability. Of course, the issue of false companies will stay but with so much traceability, it will be very difficult, rather almost impossible for people to make any fraud claims and get past the filter and not be detected as well.