GST E-Invoicing Mandatory For Companies With Turnover Of Rs 5 Cr And Above; Experts Support

Centre is now planning to make GST e-invoicing compulsory for businesses with a turnover of Rs 5 crore and above. It would lead bringing the threshold down from the recent Rs 20 crore, said a government official said.

E-invoicing recommends a normalised organisation of a receipt that can be perused by a machine. It is a framework where B2B solicitations are verified electronically by the Goods and Services Tax Network (GSTN) for additional utilisation on the common GST portal.

Vicky Jain, Co Founder and CEO, uKnowva

This is quite a welcome move and a win-win situation for both companies and the Government. Tax filing would be a simple and error-free process for all companies. It will also bring greater transparency, automate data entry work, and improve compliance. This is also an eco-friendly and sustainable decision and would reduce carbon footprints; this new change will definitely reduce stress on the environment and make SMEs & MSMEs more aware of environmental sustainability.

Saket Patawari, Executive Director, Nexdigm

This is part of the Government’s plan to digitalise GST invoicing in a phased manner. With the threshold being lowered to Rs 5 crore, many businesses would now be required to generate unique Invoice Reference Number (IRN) and QR Code for their B2B supplies. The Government is also gearing up by expanding the e-invoicing infrastructure to facilitate higher volumes of transactions, which should ensure uninterrupted online invoice registration for the businesses. Said move could yield higher GST revenue as the e-invoices would automatically get captured in the GST returns, thereby plugging any kind of tax leakages.

However, the Government should be mindful of the fact that most of the businesses falling under this category are small scale units who may take time to transition to technology driven real-time invoicing. Accordingly, some leniency could be shown towards non-compliant taxpayers. As we draw closer to the last phase of e-invoicing, it would be interesting to see if the compliance would be extended to sectors like transportation (goods andpassengersr), banking, insurance, and SEZs which are currently exempt.

Mohan Ramaswamy, CEO & Founder, Rubix Data Sciences

Before the government introduced the GST e-invoicing system, it had no proof of completed transactions between businesses. So, the GST e-invoicing system helps tax authorities monitor B2B transactions where GST is applicable and ensures legitimate claims for Input Tax Credit (ITC). For the government, GST e-invoicing has created much-needed transparency to curb tax evasion and fraud. Widening the net by lowering the turnover limit to Rs 5 crores for e-invoicing will help clean up the system further.

For businesses, GST e-invoicing entails digitization of the return-filing process, eliminating manual calculations. When properly implemented, this system reduces errors, saves effort, and enables real-time generation, authentication, and tracking of invoices. GST e-invoicing promotes interoperability between businesses and facilitates easier provision of supply chain finance. 

While this sounds like a win-win for all, businesses with a turnover of Rs. 20 crores and above have just about started adjusting to the e-invoicing system. GST e-invoicing requires investment in technology and a fair bit of training and awareness creation among employees. SMEs with a turnover of  Rs 5 crores may not be technologically savvy and may lack the trained personnel to make this transition seamlessly. GST e-invoicing may not be possible for all of them immediately, and the government could meet with some resistance to this move. 

Perhaps, introducing this in a more staggered way—first for turnover above Rs 10 crores and subsequently above Rs 5 crores—may be more realistic. If the government is keen to directly reduce the limit to Rs. 5 crores, the time available for entities to implement GST e-invoicing should be longer so as to enable a smooth transition.