GST e-invoice rules: From October 1, e-invoicing for companies with total revenues of Rs 10 crore and above, under the Goods and Services Tax or GST scheme, will become mandatory. The government has currently lowered the cap from Rs 20 crore in an effort to address revenue leakage and improve corporate tax compliance.
“In said notice, in the first paragraph, with effect from 1 October 2022, the words “twenty crore rupees” are replaced by the words “ten crore rupees”, according to the communication of the Central Administration of Indirect Taxation and Customs (CBIC) in a notification date August 1. The rules have been notified based on the recommendations of the GST council, it said.
What does this move mean for companies?
According to experts, the announcement of the Central Board of Indirect Taxation and Customs (CBIC) on the mandatory e-invoice for businesses will improve tax compliance and move towards making it mandatory for all GST taxpayers.
“Reducing e-invoicing to a threshold of Rs.10 crore will further expand the GST tax base and provide tax authorities with more data, enabling better compliance. The gradual lowering of the e-invoicing threshold indicates that e-invoicing will eventually become mandatory for all categories of GST taxpayers,” said MS Mani, partner at Deloitte India.
The move will also ensure that smaller suppliers that have to adhere to this mandate do not miss out on a pre-tax credit.
“Reducing the e-invoicing threshold is in line with government efforts to curb the threat of GST fraud and improve compliance. This would also mean that large companies must ensure that their smaller suppliers adhere to this mandate so that they do not end up losing input credits.” Rajat Bose, partner at Shardul Amarchand Mangaldas & Co, told News18.com.
“The Deloitte GST Survey@5 found that 90 percent of the CXOs interviewed thought the GST implementation was a welcome step. It is only natural that the IRS now strives to cover the wider economy under GST. Therefore, this move to reduce the mandatory e-invoicing requirement from Rs 20 crore to Rs 10 crore will be welcomed by the industry,” said Bela Sheth Mao, partner at Deloitte India.
“The 45th GST council meeting recognized the need for revenue enhancement and the preferred path is through fiscal policies rather than administrative interventions. We may see more such tax policies that not only increase revenues but also provide security to the GST law,” added Mao.
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