New e-invoicing rule to bring 180k more firms into GST compliance fold
Mandatory electronic invoicing of business-to-business (B2B) transactions for companies with annual turnover above INR 20 crore will increase goods and services tax (GST) registrations by 75%, a government official said.
The new system, which takes effect on 1 April, will add 180,000 GST identification numbers (GSTINs), up from the existing 240,000, to around 420,000, the official said on condition of anonymity.
Under the GST law, e-invoicing for B2B transactions was first made mandatory for companies with a turnover of over INR 500 crore on 1 October 2020. It was then extended to entities with a turnover of over INR 100 crore from 1 January 2021, and then for those with a turnover of more than INR 50 crore from 1 April 2021.
While 53,523 companies came under the GSTIN ambit in October 2020, 91,583 GSTINs were added in January 2021, and 95,461 in April 2021, taking the total number to 240,567. GST collections breached the INR 1.3 trillion mark for the fourth time during 2021-22 in January.
“Widening the scope to cover small and medium entities will not only help expand GST coverage, but plug the leakages. This will further bolster GST collections,” he said seeking anonymity. “Currently, there are about 240,000 eligible GSTINs for over INR 50 crore annual revenue threshold. We hope to add at least 75-80% more by lowering the threshold to INR 20 crore in April. E-invoicing has helped improve compliance, which is visible in robust GST collections. It also helps prevents tax evasion.”
A company can have more than one GSTIN, if it runs a business in two or more states, or Union territories, or the registration process involves multiple business verticals in a single state. “E-invoicing allows real time tracking of invoices prepared by a supplier, reducing scope of frauds. The practice of evasion by small and medium enterprises, will stop now,” said another official, also requesting anonymity. “It will reduce the manual reporting process, thereby the scope of manipulation of invoices, and will ensures only genuine input tax credit can be claimed.
