New e-invoicing limit to bring 1.8 lakh more entities into GST fold

e-invoicing :According to a government official, mandatory electronic invoicing of business-to-business (B2B) transactions for companies with annual turnover over Rs 20 crore will increase GST registrations by 75%.

According to the official, who spoke on the condition of anonymity, the new system will add 180,000 GST identification numbers (GSTINs) up from the existing 240,000, bringing the total number of GSTINs to around 420,000.

E-invoicing for B2B transactions was first made mandatory under the GST law on 1 October 2020 for companies with a turnover of more than Rs 500 crore. From 1 January 2021, it was extended to entities with a turnover of more than 100 crore, and from 1 April 2021, it was extended to those with a turnover of more than 50 crore.

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In October 2020, 53,523 companies were added to the GSTIN database, followed by 91,583 GSTINs in January 2021 and 95,461 GSTINs in April 2021, bringing the total number of GSTINs to 240,567. In January nancial year 2021-22, GST collections surpassed the 1.3 trillion mark for the fourth time.

“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 ₹50 crore annual revenue threshold. We hope to add at least 75-80% more by lowering the threshold to ₹20 crore in April. E-invoicing has helped improve compliance, which is visible in robust GST collections. It also helps prevents tax evasion.”

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If a company does business in two or more states or Union territories, or if the registration process involves multiple business verticals in a single state, it can have multiple GSTINs. “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.”

Financial institutions, such as insurance, banking and non-banking financial companies, and goods and passenger transportation services, as well as units operating in special economic zones, are exempt from e-invoices, despite the fact that there are around 220,000 companies with an annual turnover of between 20 crore and 50 crore.