Uncertainty over implementing e-invoicing for businesses with turnover of more than ₹5 cr

Uncertainty prevails over implementing e-invoicing for businesses with turnover of more than ₹5 crore. The Goods and Service Tax Council had made it mandatory for businesses with an annual turnover of over ₹5 crore to move to e-invoicing from January 1.

The Central Board of Indirect Taxes and Customs (CBIC) is yet to come out with a notification in this regard. Though experts feel the system is good, the time is too short to bring down the threshold for implementation.

At present, e-invoicing is mandatory for businesses with turnover exceeding ₹10 crore. E-invoicing prescribes a standardised format of an invoice. An identification number is issued against every invoice by the invoice registration portal (IRP) to be managed by GSTN. The invoice not registered on the portal will not be valid. In such a situation, input tax credit (ITC) on the same cannot be availed by the recipient, and will attract applicable penalties. 

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Earlier, on multiple occasions, Finance Ministry officials had said that following the recommendations of the GST Council, the threshold was being lowered in phased manner after implementing it for a turnover of ₹10 crore or more from October 1. The plan is to implement it for a turnover exceeding ₹5 crore from January 1, 2023.

Though tax officials did not say when the notification will be out, they said the system is good for policy making. It can help in analysing the four-digit harmonised system data to zero in on sectors which contribute more to GST and also identify those that have higher potential, but not contributing enough. Also, it will help weed out fake ITC.

Accounts upgrade

Parag Mehta, Partner, NA Shah Associates, said the notification for ₹5-crore threshold is still not out and it will be difficult to implement it in the next six days.

The assessees with turnover between ₹5 crore and ₹10 crore are small assessees and if the limit is reduced to ₹5 crore they will need to register on the portal and upgrade their accounting systems very quickly. The staff will also have to be trained for the same in a short span. 

“One good thing is the e-invoicing portal, as on date, functions very smoothly and has been taking the load in an efficient manner. The normal accounting systems have also been fairly upgraded to support the business,” he said.

According to Harpreet Singh, Partner with KPMG, for multinationals, it becomes imperative to determine whether their suppliers are covered under lower e-invoice threshold, so that they can update their supplier master and tag such suppliers with additional checks/controls while processing the invoices to avoid input tax credit loss.

Rajat Mohan, Senior Partner with AMRG, said SME and MSME businesses need to be prepared for the implementation of an e-invoicing regime from January 1.

Systematic implementation of e-invoices would be a must for business continuity. For a supplier of goods, businesses are generally advised to implement an IT solution that would ensure compliance with e-invoicing rules and e-way bill rules.

On the other hand, supplier of services may use free software tools to generate e-invoices and even monthly batch processing of invoices would be suitable. “Familiarising people with e-invoicing utility and vetting of HSN codes on the e-invoicing portal are other important pre-requisites,” he said.

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