In the dynamic landscape of India’s Goods and Services Tax (GST) regime, a recent article highlights a significant issue—over 100,000 small and medium-sized businesses are currently non-compliant with e-invoicing norms. This mandatory requirement under GST, applicable to businesses with an annual turnover exceeding Rs 5 crore, aims to streamline invoicing processes and enhance transparency in transactions.
E-invoicing offers real-time access to invoices, enabling faster accessibility to input tax credit. This feature acts as a deterrent to the manipulation of fake credit, as invoices must be generated before transactions take place. Despite these benefits, a senior official notes that non-compliance is particularly prevalent among businesses with a turnover between Rs 5 crore and Rs 20 crore, constituting 20-30% of those within this threshold.
To address this, the Central Board of Indirect Taxes & Customs (CBIC) has revised the turnover threshold to Rs 5 crore from August 1. The objective is to include more small enterprises, especially those with a turnover between Rs 5 crore and Rs 10 crore, within the ambit of e-invoicing. Micro enterprises with a turnover less than Rs 5 crore remain exempt.
However, challenges persist as some businesses are either unaware or evading tax compliance. Non-issuance or incorrect issuance of e-invoices is deemed an offense under GST law, inviting penalties that could be substantial. The penalties range from 100% of the tax due or Rs 10,000, whichever is higher, for each invoice, to Rs 25,000 for incorrect invoices.
The implications of non-compliance extend beyond penalties. Goods in transit may be detained, input tax credit claims denied, and e-way bills affected. This not only affects suppliers but also the recipients who become ineligible for credit due to invalid supplies.
CBIC Chairman Sanjay Kumar Agarwal emphasized a collaborative approach, aiming to “nudge small businesses” towards adopting electronic billing rather than adopting an intimidating stance.
The e-invoicing mechanism, initially mandated for companies with turnovers exceeding Rs 500 crore in 2020, has gradually included entities with turnovers over Rs 100 crore in 2021 and, more recently, those over Rs 5 crore. This progression aims to eliminate manual reporting for small businesses, ensuring that only genuine input tax credit can be claimed.
Despite the challenges, the e-invoicing mechanism promises improved compliance, transparency in sales reporting, and automation of data entry. As the landscape evolves, businesses must navigate the changing thresholds and embrace electronic billing to stay compliant and benefit from the advantages offered by the GST regime.
For this reference use this link : https://m.rediff.com/business/report/gst-over-100000-small-and-mid-sized-firms-flout-gst-e-invoicing-rules/20231117.htm
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