GST Council meeting: E-invoice mandate may soon cover B2C transactions

The GST Council may propose a pilot project for voluntary e-invoicing in select sectors for B2C transactions

Businesses across the country may soon be required to issue electronic invoices, or e-invoices, directly to consumers for the sale of goods and services.

The Goods and Services Tax (GST) Council, in its forthcoming meeting on Monday, is expected to discuss extending the e-invoicing mandate to cover business-to-consumer (B2C) transactions. Currently, e-invoicing is compulsory for businesses with a turnover of Rs 5 crore and above, but only for their business-to-business (B2B) transactions.

“A pilot project may be proposed to introduce voluntary e-invoicing in selected sectors, in collaboration with states willing to participate,” a government official familiar with the plan told Business Standard. The move aims to curb tax evasion and enhance compliance in consumer transactions.

The GST Council’s law committee is learnt to be working on bringing enabling provisions in the GST law. Upon approval, the GST Network (GSTN) will need to be upgraded to accommodate this change, including the development and finalisation of the required commercial model.

The pilot programme is expected to provide the tax department with insights into the feasibility and potential impact of implementing B2C e-invoicing within the Indian context. According to sources, the tax department believes that extending e-invoicing to B2C transactions could yield multiple benefits for taxpayers, consumers, and tax administrators alike. 

Among the anticipated advantages are environmental sustainability, through reduced paper usage, and lower transaction costs, which would enhance cost efficiency for businesses. Additionally, consumers would be able to verify the authenticity of their bills relatively easily, besides paving the way for GST refunds for foreign tourists in the future.

Once the Council approves the plan, the threshold for mandatory e-invoicing may be examined in line with the criteria for B2B transactions. However, any such adjustment would likely occur later, as the initial phase will be voluntary, another official explained.

The implementation of e-invoicing for B2B transactions had been progressively rolled out under the GST law. In October 2020, businesses with a turnover exceeding Rs 500 crore were first mandated to issue e-invoices. This requirement was later extended to companies with turnover above Rs 100 crore from January 1, 2021. By April 1, 2021, the threshold was reduced to Rs 50 crore, and further lowered to Rs 20 crore a year later.

On October 1, 2022, businesses with turnover above Rs 10 crore were also brought under the e-invoicing regime. Most recently, from August 1, 2023, the threshold was set at Rs 5 crore.

Despite this phased implementation, challenges remain, particularly for businesses with turnovers between Rs 5-10 crore, according to officials. Tax authorities have reportedly been urging non-compliant businesses to meet the e-invoicing requirements.