GST council makes e-invoices mandatory for businesses with turnover above Rs 5 crore, to plug compliance loopholes

According to a survey of industry leaders by Deloitte, 90 per cent feel that the Goods and Services Tax has made business easier, by consolidating several taxes into one levy. At the same time findings by trader body CAIT show that 66 per cent of small businesses, which account for 30 per cent of India’s GDP, feel that GST registration interrupts their operations. Amidst these contrasts, GST collection hit an all time high of Rs 1.68 lakh in April this year, five years after the tax was first introduced.

Tightening the screws with tech

After exempting e-commerce businesses with low turnovers from GST registration, the GST council has made e-invoicing mandatory for firms with a turnover above Rs 5 crore. The rule to be implemented from January next year, will also be applicable to businesses with a Rs 1 crore turnover in 2023. The move to completely make invoicing digital is aimed at ensuring compliance, after multiple cases of fake invoicing for GST fraud were unearthed. One of the most prominent was a fake invoice scam where Rs 40,000 crore was siphoned off.

E-invoicing makes business hasslefree

E-invoicing involves the digital verification of invoices on a unified portal for GST, which will be developed and ready for use by December. Every invoice will be connected with a number by the registration platform, and the database will be managed by a GST network. The entire idea is to bring small businesses under the purview of the formal economy, boost GST collection further.

Although GST inflows have been above Rs 1 lakh crore a month even after hitting the peak in April, many are saying that the future of tax collection depends on how the Indian economy grows. With a recession ahead, a slowdown in business could impact GST collection negatively as well.