E-invoicing must for turnover above `10 crore from October

In a move to ensure better compliance, the finance ministry said that the goods and services tax (GST) e-invoicing is compulsory for firms with a turnover of over Rs 10 crore from October 1. At present, businesses with turnover of Rs 20 crore and above are required to generate electronic invoice for all businessto-business (B2B) transactions.

The move aims at attracting more taxpayers under e-invoicing, which may deter the generation of fake invoices, thereby help plug leakages and increase collections. "The GST registered businesses with annual turnover of Rs 10 crore or more will have to generate e-invoices for B2B transactions from October 1," said a notification issued by the Central Board of Indirect Taxes and Customs (CBIC) on August 1.

The GST Council, comprising finance ministers of the Centre and states, earlier planned to implement electronic invoice in a phased manner. In the first phase, e-invoicing for B2B transactions was started with a very high threshold of over Rs 500 crore from October 1, 2020.

In the second phase, businesses with a turnover exceeding Rs 100 crore were mandated to issue e-invoices from January 1, 2021. Later in the third phase, firms with a turnover of over Rs 50 crore had to generate einvoices from April 1, 2021. It has been extended to firms with a turnover of Rs 20 crore and above from April 1, 2022.

The e-invoice has enabled the government to bring into its system more taxpayers, whose number rose from about 1.25 crore in October 2020 to about 1.38 crore at present. Going forward, the CBIC plans to further lower the threshold for einvoice generation to Rs 5 crore.

Experts opined that the move will help mop up more tax from GST payers and improve compliance. "This will further expand the GST tax base and provide more data to the tax authorities enabling better compliance. The progressive reduction of the e-invoicing threshold indicates that, over a period of time, e-invoicing will become mandatory for all categories of GST taxpayers," Deloitte India partner M.S. Mani said.