The Indian government announced that businesses with an annual turnover exceeding ₹5 crore must adopt e-invoicing for business-to-business (B2B) transactions under the Goods and Services Tax (GST) to improve compliance and address revenue collection gaps.
What Happened? Currently, businesses with an annual turnover of more than ₹10 crore must use e-invoicing. The Central Board of Indirect Taxes and Customs (CBIC) issued a notification substituting “₹10 crore” with “₹5 crore” from August 1, 2023.
According to an ET report, the GST Council aims to incorporate all small businesses into the formal economy by implementing e-invoicing in phases. The GST Network has instructed technology providers to prepare the portal for increased capacity by the end of July to prevent any glitches.
See also: More Legal Troubles For Ashneer Grover As FIR Filed Over BharatPe’s ₹81 Cr Allegations
E-invoicing employs a machine-readable standardized format. It helps synchronize sales data between small business vendors and large corporate clients, which is necessary for claiming tax credits. Additionally, it enables swift detection of false input tax credit (ITC) claims, broadens the GST base, and enhances compliance.
E-invoicing became compulsory for companies with a turnover of ₹500 crore on October 1, 2020. Subsequently, authorities lowered the threshold to ₹100 crore on January 1, 2021, and then to ₹50 crore on April 1, 2021. From April 2022, they included businesses with turnovers above ₹20 crore. Finally, as of October 1, businesses with an annual turnover of ₹10 crore and above must use e-invoicing for B2B transactions.
Read next: Groww Eyes India Return Joining Trend of Shifting Domicile Amid Tightening Regulations
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.