The Goods and Services Tax (GST) landscape in India is set to witness a significant change starting August 1. Businesses with an aggregate turnover of Rs 5 crore or more will be required to mandatorily opt for e-invoicing under the GST regime. This move, announced by the Central Board of Indirect Taxes and Customs, aims to streamline tax collections, enhance compliance, and curb tax evasion. Let’s delve into the details of this new mandate and its implications for businesses.
From August 1, GST taxpayers with an aggregate turnover exceeding Rs 5 crore in any financial year will be obligated to generate e-invoices for both the supply of goods or services, as well as exports. This measure marks a significant reduction in the previous threshold, which was set at Rs 10 crore.
E-invoicing is a digital process wherein GST-registered businesses upload all their Business-to-Business (B2B) and export invoices to the Invoice Registration Portal (IRP). The IRP then provides a unique Invoice Reference Number, which is transferred to the GST portal. This streamlined approach ensures accurate matching of invoices between buyers and sellers, while minimizing duplication and errors.
The decision to make e-invoicing mandatory for businesses with a lower threshold stems from the government’s commitment to boost tax collections and improve compliance within the GST framework. By leveraging technology and facilitating real-time invoice matching between clients and vendors, the tax authorities aim to enhance transparency and modernize the tax collection system, thereby expanding the GST base.
Srivatsan Sridhar, Founder and CEO of Skydo, expressed his views on the matter, highlighting the importance of e-invoicing in combating tax evasion and promoting adherence to tax regulations.
With the revised threshold, a significant number of midsized and expanding small businesses will now come under the ambit of the e-invoicing system. While this might present some initial challenges, it offers long-term benefits in terms of tax compliance and operational efficiency.
Starting August 1, the GST landscape in India will experience a major transformation as businesses with an aggregate turnover of Rs 5 crore or more will be mandated to adopt e-invoicing. This shift is aligned with the government’s commitment to boosting tax collections, improving compliance, and modernizing the tax collection system. By leveraging technology and fostering transparency, the move aims to strengthen the foundation of the GST regime.