The Central Board of Indirect Taxes and Customs (CBIC) has announced on Wednesday that e-invoicing will be mandatory in B2B (Business to Business) transactions for taxpayers having turnover of Rs.100 crore. The new regulations will be applicable from January 1, 2021.
Earlier the Electronic invoices were mandatory for those taxpayers having turnover of Rs.500 crore and more. But now it will be extended to those businesses that are having turnover of Rs.100 crore.
"Aligned to the recent communications by various government officials, e-invoicing has now been notified for Rs 100 crore and above companies as well. With only approximately 50 more days, these mid-size companies would need to soon gear up their processes/ IT systems to enable compliance with this new invoicing regulation," said Abhishek Jain, tax partner at EY.
Under e-invoicing payers have to generate invoices on their internal systems (ERP/accounting/billing software) and then report it online to the Invoice Registration Portal (IRP). The IPR will check the credibility of the information provided in the invoices by the taxpayer and after it will return the digitally signed e-invoices with a Unique ‘Invoice Reference Number’ (IRN) and a QR code to the taxpayer.
“The decision of the Government to reduce the threshold for e-invoice compliance from INR 500 Crores to INR 100 Crore 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” said Mr. Mahesh Jaising, Partner & Leader Indirect tax, Deloitte India.
He further added that “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”.
The new policy will help in regulating the current payment system and will also provide a boost to MSMEs.