Taxation Series: Are you GST ready ? Moving to Marketplace Invoices

Marketplaces are gearing up for GST. As a first step they have started generating Invoices on behalf of sellers and making it mandatory to use the same invoices. Why the change is required so early as the implementation is by September 2017.

This article aims to cover why marketplaces need to implement them now.

Current invoice generation

Currently sellers generate their own invoice, attach them along with the label and dispatch the products. Marketplaces like Amazon allow sellers to update their invoice numbers in the orders while processing them. Snapdeal generates it’s own invoice series. In Indian accounting Invoice number is maintained along with product inventory and amount. For an individual to verify an order on marketplace sales tax officers have to locate the order number through Invoice numbers. Since it is maintained differently at both ends verifying and reconciling becomes a huge task.

With GST marketplaces will require to upload all the Invoice details on the GST portal. Sellers also have to upload the details as well. Any discrepancy in the data will lead to an inquiry on both the marketplace and seller. Here you can see that two different sets of invoices will lead to confusion.

The GST system of Invoice upload is based on eUPASS system used by sellers in Karnataka. These sellers have already had a taste of how to upload individual Invoices. They have already seen Sales and Purchases matching. Assume both the buyer and seller are from Karnataka. Once the seller uploads the data on eUPASS it is available in the buyer’s system. If the buyer uploads the data and seller fails to do it he is sent a notification.

On similar lines GST has GSTR1 and GSTR2 where sales and purchases have to be uploaded and matched. In GST there is no buyer and seller. Only supplier and purchaser. Every supplier’s data should match the purchasers data and vice-versa. This highlights the importance of having a single reference number, in our case Invoice number.

Why the implementation so soon since GST will be in September

Indian accounts or book keeping works in the financial cycle of April to March. If a seller chooses to use his own Invoice series till September and then shifts to GST, it will be chaotic. Marketplaces enforcing the rule now will make a smooth transition to GST. It’s a good practice to maintain your Invoices accurately from day one.

What are the advantages by this system

  1. Since reporting will happen by Marketplaces on sales, you cannot avoid taxes any more. Any discrepancy will lead to legal action against you
  2. Reconciliation will become easier as marketplaces have to provide commission deduction against each invoice.

Changes by Multi Channel Inventory and order aggregators.

Software like unicommerce, easyecom have to fetch Invoices from marketplaces. Currently they fetch only labels. As for Invoices they set a user Invoice series in the system and forward it to marketplace.

Changes by an Individual seller

Sellers have to maintain account books as per marketplaces. Now all payments, commissions and other charges will be mapped to invoice numbers. As a result there should be no mismatch of data. Upload of all invoice details seems to be a complex task. Software like Tally are there to help you out. Sellers in Karnataka have been doing it for the past 4 years.

So prepare yourself for the change and get ready for bigger sales. GST will eliminate many non tax paying/evading sellers. So smile good days are ahead.


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5 Responses

  1. Gourav Agarwal says:

    Nice article. Insightful

  2. ravi says:

    This system is already implanted in A.P too. we are uploading all sales and purchase and need check the mismatch in case of local purchases (with in A.P)

  3. Avnish says:

    What if TCS gets implemented-“”The draft proposes a clause called ‘Tax Collection at Source’ (TCS – Section 56).”” WILL THIS TOTALLY ELIMINATE TAX PAYING/BILLING FROM SELLER SIDE ON E-COMMERCE OR DO WE STILL NEED TO PAY ANY SALES TAX IF IT GETS IMPLEMENTED?

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