New Delhi: A new GST threshold for businesses turnover of over 5 crore will kick in from today. A Ministry of Finance in May had issued a circular with regard to the Goods and Services Tax (GST) system. The circular had stated that Businesses with turnover of over 5 crore will be required to generate e-invoice from August 1.
Starting on August 1, companies with a B2B transactional value of over Rs 5 crore will be required to produce an electronic or e-invoice. For all B2B transactions, companies must currently generate an electronic invoice if their annual revenue is Rs. 10 crore or more.
E-invoicing was initially (2020) implemented for large companies with turnover of more than Rs 500 crore, and within 3 years the threshold has now been lowered to Rs 5 crore. E-invoicing for business-to-business (B2B) transactions was made mandatory under GST law for companies with annual revenues over Rs 500 crore starting on October 1, 2020, and then for those with annual revenues over Rs 100 crore starting on January 1, 2021.
Companies that had a turnover of more than Rs 50 crore started producing B2B e-invoices from April 1, 2021. from April 1, 2022, the barrier was reduced to Rs 20 crore. The threshold was further reduced to Rs 10 crore as of October 1, 2022.
Srivatsan Sridhar, Founder and CEO, Skydo, said, "By implementing e-invoicing, the government aims to combat tax evasion and facilitate real-time invoice matching between clients and vendors. This step ensures transparency and enhances compliance by modernizing the tax collection system contributing to a broader GST base. E-invoicing offers numerous benefits as it enables real-time validation and matching of invoices between buyers and sellers, reducing the chances of errors, duplication, and tax evasion."
"However, there are also some disadvantages and challenges associated with its implementation. Initial set up costs can be a barrier for small businesses initially as implementing e-invoicing systems and processes requires an initial investment in hardware, technology, software, and training. It also involves the transmission and storage of sensitive financial data, which can be susceptible to cyber threats and hacking attempts," he added.
Meanwhile, the GST council is likely to meet on tomorrow, i.e August 02, to finally decide the implementation of GST on online gaming. The council will also decide whether the 28% GST will be levied on the deposits or on every game. The revenue secretary yesterday had acknowledged that levying 28% tax on every game will lead to repeated taxation of the same rupee resulting in the effective tax rate going as high as 50%-70%.
