The Central Board of Indirect Taxes & Custom (CBIC) has lowered the threshold for mandatory issuance of e- invoice (electronic invoice) under Goods & Services Tax (GST) to ₹20 crore from the earlier prescribed limit of ₹50 crore.
It means businesses with turnover of ₹20 crore or more will have to issue e-invoice from April 1. If the invoice is not valid, ITC (Input Tax Credit) on the same cannot be availed by the recipient, besides attracting applicable penalties. Experts say this amendment seems to be tailored to suit the Government’s digital economy agenda.
Simplifying compliance norms
Bipin Sapra, Tax Partner with EY India, said: “By making it mandatory for all assesses whose turnover is more than ₹20 crore to issue e-invoice, the Government has taken the compliance automation to a larger set of taxpayers, which will not only simplify compliance but also further plug revenue leakages on account of input tax credit frauds.”
E-invoicing prescribes a standardised format of invoice which can be read by a machine. It is a system in which B2B (Business-to-Business) invoices are authenticated electronically by GSTN (Goods & Services Tax Network) for further use on the common GST portal. Under the electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GSTN.
The government has already made it clear that mandatory condition will not add financial burden on businesses as GSTN has empanelled seven accounting and billing software products which provide basic accounting and billing system free of cost to small taxpayers.
Here, small taxpayers means businesses having turnover less than ₹1.5 crore. Those small taxpayers who do not have accounting software today, can use one of the empanelled software products, which are available online (cloud based) as well as offline (installed on the computer system of the user) mode.
List of such companies available on the website of GSTN includes Adaequare Info with product name uBooks (cloud), Cygnet Infotech with product name Cygnet FACE (on-prem), Focus Softnet with product FocusLyte (cloud), IRIS Business Services with product name CaptainBiz (cloud), Relyon Softech with product name Saral Accounts (on-prem), Seshaasai Business with product name GenieBooks (cloud) and Zoho with product name Zoho Books (cloud).
Tax officials say e-invoice has many advantages such as auto-reporting of invoices into GST return, auto-generation of e-way bill (where required). e-invoicing will also facilitate standardisation and inter-operability leading to reduction of disputes among transacting parties, improve payment cycles, reduction of processing costs and thereby greatly improving overall business efficiency.
Businesses use various accounting/billing software, each generating and storing invoices in their own electronic formats. These different formats are neither understood by GST System nor among the systems of suppliers and receivers. For example, an invoice generated by SAP system cannot be read by a machine which is using ‘Tally’ system, unless a connector is used.
With more than 300 accounting/billing software products, there is no way to have connectors for all. In this scenario, ‘e-invoicing’ aims at machine-readability and uniform interpretation. To ensure this complete ‘inter-operability’ of e-invoices across the entire GST eco-system, an invoice standard is a must. By this, e-invoices generated by one software can be read by any other software, thereby eliminating the need of fresh/manual data entry.