e-invoicing for businesses with a turnover exceeding ₹10 cr soon; ₹5 cr or more next

Businesses with an annual turnover of more than ₹10 crore and then for more than ₹5 crore will soon be required to issue e-invoice. As on date, e-invoice is mandatory for businesses with an annual turnover of over ₹20 crore.

E-invoicing prescribes a standardised format of an invoice that can be read by a machine. It is a system in which B2B invoices are authenticated electronically by the Goods & Services Tax Network (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 GSTN. Businesses for which e-invoicing is mandated and if they do not do so then, their invoice will not be valid. In such a situation, input tax credit (ITC) on the same cannot be availed by the recipient, besides attracting applicable penalties

Checking IT systems

Revenue Secretary Tarun Bajaj said e-invoicing started with those having an annual turnover of ₹500 crore, then brought down to ₹100 crore and to ₹20 crore. Now the plan is to bring it down first to ₹10 crore and then to ₹5 crore.

“Timeline for lowering the threshold to ₹10 crore is there, but before that, we want stability in the IT system. The number of assesses between ₹10 crore and ₹20 crore would go up substantially, so we want to be sure that our IT system is good. GSTN is working on the plan and they should be ready in the next 3-4 months,” he told BusinessLine in an interview.

The issue was also highlighted by taxpayers during the five year GST celebration event on July 1. Responding to this, Vivek Johri, Chairman of Central Board of Indirect Taxes & Custom (CBIC) said, “One of the presenters talked about reducing the threshold for e-invoices to ₹5 crore, that is the decision already been taken and it is about to be implemented.”

Introducing in a phased manner

The GST Council, in its 37th meeting on September 20, 2019, recommended the introduction of an electronic invoice (‘e-invoice’) in GST in a phased manner. The government has already made it clear that mandatory conditions will not add a financial burden on businesses as GSTN has empanelled various accounting and billing software products which provide basic accounting and billing systems free of cost to small taxpayers.

Here, small taxpayers mean businesses having a turnover of less than ₹1.5 crore. Those small taxpayers who do not have accounting software today can use one of the empanelled software products, which are available online (cloud-based) as well as offline (installed on the computer system of the user) mode.

Tax officials say businesses use various accounting/billing software, each generating and storing invoices in their own electronic formats. These different formats are neither understood by the GST System nor among the systems of suppliers and receivers. For example, an invoice generated by the SAP system cannot be read by a machine that is using the ‘Tally’ system, unless a connector is used.

With more than 300 accounting/billing software products, there is no way to have connectors for all. In this scenario, ‘e-invoicing’ aims at machine-readability and uniform interpretation. To ensure this complete ‘inter-operability’ of e-invoices across the entire GST eco-system, an invoice standard is a must. By this, e-invoices generated by one software can be read by any other software, thereby eliminating the need for a fresh/manual data entry.

Published on

July 03, 2022