The businesses having annual aggregate turnover exceeding ₹10 crores in any of the financial year from 2017-18 and onwards would be mandated to generate e-invoices, starting October 2022. The CBIC had recently issued a notification in this regard in a bid to plug the revenue leakages and ensure better tax compliance.
The government has progressively reducing the threshold of e-Invoicing from ₹500 crores in October 2022 to ₹20 cores in April 2022 in steps towards making it mandatory for all taxpayers registered under GST. Currently, the businesses having turnover exceeding ₹20 crores are required to generate e-invoices for B2B and export transactions. The exemptions to banks, financial institutions, NBFC, GTA, SEZ units etc. shall continue to operate.
The reduction of this threshold to ₹10 crores is expected to bring a significant percentage of taxpayers within the ambit of e-Invoicing to further expand the tax base and will provide more data to the tax authorities enabling better compliance. Besides, capturing the transaction details at the invoicing stage itself will help further prevent GST evasion.
The taxpayers having turnover exceeding ₹10 crores would be required to ramp up their IT / accounting systems for e-invoice generation. They would be able to generate e-invoices directly from the Government portal (IRP) by manually uploading the data or can integrate their IT / accounting software through third party integration or use the customized utilities offered by the service providers such as Cygnet Infotech, specifically for SMEs. The taxpayers who do not have accounting software or GST billing software today can use one of the GSTN empaneled software products, which are available online (cloud-based) as well as offline (installed on the computer system of the user) mode.
The e-invoicing mandate for the taxpayers in the range of ₹10 crores would bring discipline in invoicing. The larger organizations would have to ensure their smaller vendors are adhering to the e-invoicing mandate to ensure their ability to claim ITC, but it will also benefit them by simplifying the reconciliation and reduce blockage of credits.
Thus, to be prepared for e-invoice generation from 1st October, taxpayers having turnover exceeding ₹10 crores will be required to streamline their invoicing process through integration of their ERP to GSPs like Cygnet Digital or use e-invoicing software provided by them when integration may not be feasible. Failure to generate e-invoices may lead to penalties and the recipient will not be able to claim ITC on such invoices, impacting the business relations.