E-invoicing under the goods and services tax (GST) regime will become mandatory for entities with a turnover of Rs 50 crore and more from April 1 for business-to-business transactions, the government said in a notification on Monday. This will be the third phase of e-invoicing roll out, which was rolled out for entities with Rs 500 crore and more turnover from October 1st last year and later extended to entities with Rs 100 crore and above from January 1st this year. The government had earlier planned to extend e-invoicing to all entities from April 1st, 2021, but has refrained, taking care of interest of small entities.
The system is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance. It will help prevent tax evasion once it is made mandatory for small and medium firms in phases.
Under e-invoicing, companies have to generate an invoice registration number (IRN) from a government portal and it has to be shown to the authorities while moving goods
Rajat Mohan, partner, AMRG Associates said, “Government had earlier planned to roll out the electronic invoicing system for all business-to-business (B2B) transactions from April 1, whereas government has now zeroed on a threshold of Rs 50 crores. Keeping MSME organisations with turnover of upto Rs 50 crores out of the E-invoicing net would help them thrive and grow without any change in business processes.
Under e-invoicing, companies have to generate an invoice registration number (IRN) from a government portal and it has to be shown to the authorities while moving goods. Sectors like transportation, insurance and banking companies, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempt from e-invoicing. Besides, units in special economic zones too are exempt from this.