From next year, e-invoicing under Goods and Services Tax (GST) will be mandatory for businesses having an annual turnover of more than Rs 5 crore. They will have to move to e-invoicing under GST from January 1. The decision is in line with the Centre’s plan to bring all businesses with turnover above Rs 1 crore under the purview of this framework by next fiscal.
The GST Network has asked its technology providers to make the portal ready to handle the increased capacity by December. The target is to bring businesses with over Rs 1 crore turnover under this framework by next fiscal year, which will further plug revenue leakages and improve compliance, a government official in the know of it told Economic Times.
“As per the GST Council recommendation, e-invoicing will become mandatory for businesses over Rs 5 crore turnover from January 1,” the official said.
The GST Council had decided on the phased implementation of electronic invoice with the aim to bring all the small businesses under the formal economy.
What is e-invoicing?
In simple words, e-invoicing is a self-help system for registering the invoices and obtain digitally signed electronic invoices. Under this system, invoices are authenticated electronically by GSTN for further use on the common GST portal. Under the electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).
It would help in syncing sales data of a small business vendor and large corporate clients, which is used to claim tax credit. This would help in swift detection of false ITC claims, broaden GST base and improve compliance, the official noted.
Businesses with an aggregate annual turnover of Rs 10 crore and above have moved to e-invoicing for business-to-business (B2B) transactions from October 1. E-invoicing for B2B transactions was first made compulsory for companies with turnover of Rs 500 crore from October 1, 2020.
This threshold was then lowered to businesses with turnover of Rs 100 crore from January 1, 2021 onwards and again was revised to companies having a turnover of Rs 50 crore from April 1, 2021. From April 2022, it was extended to businesses with turnover above Rs 20 crore.
E-invoicing benefits for businesses:
Resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
Allows interoperability and help reduce data entry errors.
Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
Faster availability of genuine input tax credit.
Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.
