Govt plans to make GST e-invoicing must for companies with Rs 5-cr turnover

At present, any firm with Rs 20-crore turnover is mandated to file this

The government is planning to make GST e-invoicing mandatory for companies with a turnover of Rs 5 crore and above, thus bringing the threshold down from the current Rs 20 crore, according to a government official.

This could happen this fiscal year. First this could apply to entities with a turnover of Rs 10 crore and then to Rs 5 crore. This is for plugging revenue leakage and ensuring easy compliance, said the official, who is privy to the plan.

The move is aimed at digitising higher volumes of transactions, greater transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance.

The GST Network (GSTN), which facilitates invoices, is expected to be ready for the next phase in three-four months, the official cited above said. Taxpayers will have sufficient elbow room for this, he added.

E-invoicing (electronic billing) started in October 2020 and was made mandatory for entities with a turnover of Rs 500 crore and above. This threshold was brought down to Rs 100 crore and later to Rs 50 crore in 2021 for business-to-business (B2B) transactions.

Taxpayers must generate invoices on their internal system or billing software and then report them to the invoice registration portal (IRP) — a requirement to get input tax credit (ITC).

The GSTN is learnt to have initiated the process of empanelling at least six registration portals to facilitate higher volumes of transactions. It currently has one invoice registration portal for all businesses.

“Increasing portals will provide adequate IT infrastructure and an eco-system to ensure uninterrupted invoice registration services to businesses. It also provides taxpayers an option to choose between the services of different portals. In addition, it helps the GST system to balance the load in case anyone IRP portal faces any challenge due to a long queue,” another official said.

Widening tax net

• Plan to lower the threshold to Rs 10 crore first and then to Rs 5 crore
• GSTN expected to be ready for the next phase in 3-4 months
• 219,000 GSTINs for turnover between Rs 20 cr and Rs 50 cr. Only 153,000 generate invoices
• 86,963 GSTINs for turnover between Rs 50 cr and Rs 100 cr. Only 48,217 generate invoices
• e-invoicing system was launched in October 2020

The GSTN has entered into agreements with four companies for setting up IRPs — Cygnet InfoPath, IRIS Business Services, Defmacro Software (Cleartax), and Ernst & Young LLP.

“The GST Council had last week been apprised about the development of the empanelment to increase the portals and it has given its nod for it,” another official said.

According to the official data, of the 219,000 eligible GST identification numbers (GSTINs) with a turnover between Rs 20 crore and Rs 50 crore, 153,000 are generating invoices. Similarly, those with a turnover of Rs 50-100 crore generate 48,217 invoices among the 86,963 GSTINs.

“Lowering the threshold will help in plugging revenue leakage and provide a better reconciliation of credits at the buyer’s end. Physical invoices have problems of matching data and human errors. This will be mitigated and more credit will be available all around,” said Bipin Sapra, partner, EY.

Under e-invoicing, companies have to generate an IRP from a government portal and it has to be shown to the authorities while moving goods.

Sectors like transportation, insurance and banking, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempt from e-invoicing. So are units in special economic zones.