In a move that will involve data integration and keep a check on tax evasion under the Goods and Services Tax (GST) regime, the electronic invoice, or e-invoice system, of uploading invoices on government portal will be mandatorily rolled out for all B2B transactions by businesses with turnover over Rs 100 crore from April 1 next year.
Also, for B2C invoicing issued by businesses with annual turnover over Rs 500 crore, an electronically scannable quick response (QR) code will be mandatory from April 1, the Central Board of Indirect Taxes and Customs (CBIC) said in a set of notifications.
The e-invoice system will be first rolled out on a voluntary basis beginning January 1 for businesses having turnover over Rs 500 crore, then for businesses with an annual turnover over Rs 100 crore from February 1. The decision to roll out the e-invoice system comes six months after the GST Council gave its approval for the system in June.
The CBIC has notified details of portals for uploading of the electronic invoices and specific categories of businesses, which would have to adopt the system next year.
Abhishek Jain, tax partner at EY said, “An official notification for effectuating e-invoicing for a specified class of businesses further fosters the government’s intent of mandatorily implementing this by April next year. Businesses would need to on priority execute an ‘as is’ mapping in their current invoicing system vis-a-vis the new requirement and commence executing the requisite changes in IT processes to be ready for this new change.”
The e-invoice will help streamline the indirect tax system and ensure better compliance by keeping a check on tax evasion. The system is also proposed to be expanded to lower thresholds and subsume e-way bill in the future.
Leakage and evasion have been a big concern in the GST regime and with slowing GST revenue collection over the last few months, with the exception of November, a renewed focus is on the usage of data streamlining and analysis to catch tax evasion. A total of 9,385 cases of tax fraud involving amount of Rs 45,682.83 crore has been detected by the tax authorities under the GST regime since its roll-out from July 1, 2017, the government data placed in Parliament in July showed. Till October 2019-20, 999 cases were registered for GST evasion and Rs 8,134.39 crore has been recovered, the government data showed.