GST e-invoices will be mandatory for businesses with a turnover of 20 crores from April 1, 2022

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The Central Board of Indirect Taxes and Customs (CBIC) has reduced the threshold for required e-invoice (electronic invoice) issuance under the Goods and Services Tax (GST) to 20 crores from 50 crores earlier.

From April 1, businesses with a turnover of 20 crores or more will be required to issue e-invoices. If the invoice is not genuine, the recipient will not be able to claim ITC (Input Tax Credit) and would be subject to penalties. Taxpayers must generate invoices on their internal systems or billing software beginning in the next fiscal year and then report them online to the invoice registration portal. This is essential in order to receive an input tax credit. This revision, according to experts, appears to be tailored to the government’s digital economy strategy.

Only business-to-business (B2B) transactions will be addressed by the e-invoicing system. The scope of the law excludes all financial institutions in the insurance and banking industries. Non-banking financial enterprises, goods and passenger transportation agencies, business units operating in special economic zones, and government departments are also exempt from the system.

The new system, which goes into effect on April 1, will add 180,000 GST identification numbers (GSTINs) to the existing 240,000, bringing the total number of GSTINs to roughly 420,000.

E-invoicing for B2B transactions was first made required under the GST law on 1 October 2020 for enterprises with a turnover of more than 500 crores. From 1 January 2021, it was extended to entities having a turnover of more than 100 crores, and from 1 April 2021, it was extended to companies with a revenue of more than 50 crores.

Simplifying Norms of compliance

E-invoicing provides a standardized invoice format that can be read by a machine. It is a mechanism in which GSTN (Goods & Services Tax Network) electronically authenticates B2B (Business-to-Business) invoices for use on the common GST site. The Invoice Registration Portal (IRP), which is controlled by the GSTN, will issue an identifying number against each invoice under the electronic invoicing system.

”The government has increased compliance automation to a bigger group of taxpayers by making it mandatory for all taxpayers with a turnover of more than 20 crore to issue an e-invoice. This will not only simplify compliance but also aim to plug revenue leakages caused by input tax credit fraud. it can also cut down on time spent chasing payments or dealing with disputes around missed payments,”

Sudhir Singh, Marg ERP Ltd. said. 

Advantage of e-invoice

According to tax officials, e-invoices have a number of benefits, including auto-reporting of invoices into GST returns and auto-generation of e-way bills (where required). Standardization and interoperability will be facilitated by e-invoicing, resulting in fewer conflicts between transacting parties, shorter payment cycles, lower processing costs, and increased overall corporate efficiency.

Businesses use a variety of accounting and billing software, each of which generates and stores invoices in its own electronic format. The GST System, as well as the systems of suppliers and receivers, do not understand these varied formats. For example, unless a connector is utilized, an invoice created by the SAP system cannot be read by a machine that uses the ‘Tally’ system.

There is no way to have interfaces for all of the accounting/billing software systems because there are over 300 of them. The goal of ‘e-invoicing’ in this case is machine readability and uniform interpretation. An invoice standard is required to ensure total ‘interoperability’ of e-invoices across the whole GST ecosystem. This allows e-invoices created by one software to be read by any other software, obviating the need for manual data entry.

Standardized format

GSTN has impaneled seven accounting and billing software solutions that provide basic accounting and billing systems free of charge to small taxpayers, thus the government has already made it clear that mandatory conditions would not increase financial strain to businesses.

Small taxpayers are defined as businesses with a revenue of fewer than 1.5 crores. Small taxpayers who do not currently have accounting software can utilize one of the impaneled software solutions, which are available in both online (cloud-based) and offline (loaded on the user’s computer system) modes.

List of such companies available on the website of GSTN includes Adaequare Info with the product uBooks (cloud), Cygnet Infotech with the product Cygnet FACE (on-prem), Focus Softnet with the product FocusLyte (cloud), IRIS Business Services with the product CaptainBiz (cloud), Relyon Softech with the product Saral Accounts (on-prem), Seshaasai Business with the product GenieBooks (cloud), and Zoho with the product Zoho Books are among the (cloud).

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