Government makes e-invoicing mandatory for businesses with Rs 100 cr turnover: What it means

The government has notified mandatory requirement of e-invoicing for B2B transactions for businesses with a turnover of over Rs 100 crore with effect from January 1, 2021. The announcement was made on Wednesday night where the government mentioned that under Goods and Services Tax (GST) law, e-invoicing for business-to-business (B2B) transactions is mandatory for companies with turnover of over Rs 500 crore from October 1. 

In a notification, the Central Board of Indirect Taxes and Customs (CBIC) said e-invoicing will be extended to businesses with a turnover over Rs 100 crore from January 1. Under e-invoicing, taxpayers have to generate invoices on their internal systems (ERP/accounting/billing software) and then report it online to the Invoice Registration Portal (IRP).  

The IRP will validate the information provided in the invoices and return the digitally signed e-invoices with a unique 'Invoice Reference Number (IRN)' along with a QR Code to the taxpayer. 

Mahesh Jaising, Partner & Leader Indirect tax, Deloitte India said called the phased roll out a good move, hoping that it will give MSMEs time to stabilize.  

“The decision of the Government to reduce the threshold for e-invoice compliance from INR 500 Crores to INR 100 Crores is in line with the original plan of the GST Implementation Committee. This approach of introducing the requirement in a phased manner has been a good move, allowing the system to stabilize and giving the MSME’s an additional period of 3 months to implement the changes to their IT systems.  Larger companies who have successfully implemented and complied with the new requirement will now have to shift focus on their procurement processes. Robust mechanisms and checks would need to be put in place to ensure that all vendors who are required to comply based on the revised threshold from January 1, 2020 provide them with valid e-invoices along with the QR code,” he said.  

Meanwhile, Prakash Kumar, Senior Advisor, Deloitte India said it would be interesting to see the preparedness of such taxpayers.  

“This will further aid in curbing tax evasion and increasing tax collections. It would be interesting to see the preparedness of such class of taxpayers, who were actually informed about this date many months ago itself. However, going by the resounding success of the October 1 roll-out for the larger companies, MSME’s too should indeed be able to comply with the new requirement,” he said.