E-invoicing for Businesses with a Turnover exceeding Rs.10 Cr to be Mandatory Soon

Businesses having an annual turnover of more than 10 crore rupees and then for more than 5 crore rupees will soon be obliged to provide electronic invoices. As of right now, companies with a yearly turnover of more than 20 crore rupees are required to use electronic invoices.

E-invoicing establishes a standardised invoice format that is machine-readable. The Goods & Services Tax Network (GSTN) uses this method to electronically validate B2B invoices before they can be used on the common GST site.

Every invoice submitted using the electronic invoicing system will receive an identification number from the GSTN-managed invoice registration portal (IRP). Businesses must use electronic invoicing; otherwise, their invoices will not be accepted. The recipient is not permitted to claim input tax credit (ITC) on the item in question in this case, and further fines may apply.

IT system checks

E-invoicing reportedly began with companies with a 500 crore rupee yearly revenue and was then scaled back to 100 and 20 crore rupees, according to Revenue Secretary Tarun Bajaj. The current strategy is to reduce it first to 10 crore and eventually to 5 crore.

“There is a timeline for decreasing the threshold to 10 crore, but first we want the IT system to be stable. We want to make sure that our IT system is effective because the number of assessments between 10 crore and 20 crore would significantly increase. In the upcoming three to four months, GSTN should have the plan finished,” he said.

During the July 1 celebration of the five-year anniversary of the GST, taxpayers also brought attention to the problem. The Central Board of Indirect Taxes & Custom (CBIC) Chairman Vivek Johri responded to this by saying, “One of the presenters talked about cutting the threshold for e-invoices to 5 crore, that is the decision already been reached and it is about to be implemented.”

Introducing in a phased manner

The GST Council advocated the introduction of an electronic invoice (or “e-invoice”) in GST over the course of several phases during its 37th meeting on September 20, 2019. The government has already stated that requiring businesses to comply with mandatory requirements won’t put them at a financial disadvantage because the GSTN has accredited a number of accounting and billing software products that offer small taxpayers free access to the most fundamental accounting and billing systems.

Small taxpayers in this context refer to companies with annual revenues under Rs.1.5 crore. Small taxpayers who do not currently have accounting software can utilise one of the software packages that have been empaneled. These solutions come in online (cloud-based) and offline (loaded on the user’s computer system) modes.

Businesses reportedly utilise a variety of accounting and billing programmes, each of which creates and stores invoices in its own electronic format, according to tax officials. Both the systems of suppliers and receivers as well as the GST System are unable to comprehend these various formats. For instance, without the usage of a connector, a computer running the “Tally” system cannot read an invoice created by the SAP system.

There is no way to have interfaces for all accounting/billing software programmes, which number over 300. In this case, “e-invoicing” strives for uniform interpretation and machine-readability. An invoice standard is necessary to provide this full “inter-operability” of e-invoices throughout the entire GST eco-system. This eliminates the requirement for a new/manual data entry by allowing e-invoices generated by one software to be read by any other software.

Source: TheHindubusinessline