GST Council meet on Friday; Pvt fintech firms set to enter e-invoicing zone

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The Goods and Services Tax (GST) Council on Friday will discuss bringing in private financial technology companies to set up four more invoice generation portals (IRPs) in view of the unsatisfactory progress in e-invoicing. These will be in addition to the existing one being operated by the government’s National Informatics Centre (NIC).

Seven months since the launch of the e-invoicing facility under the GST regime to facilitate compliance and plug revenue leakages, only about half the eligible GST identification numbers (GSTINs) are generating these invoices, the government data shows. This will facilitate handling large volumes of e-invoices amid plans to make e-invoicing mandatory for all entities and extend it to business-to-consumer transactions as well.

Besides, the move aims to bring in efficiency through competition in the sphere as taxpayers will be given a choice to generate invoices on any portal.

“There are challenges in the e-invoicing mechanism that needs to be addressed and will be discussed in the GST Council meeting. Having just one e-invoicing portal may not work as we plan to reduce the turnover threshold. We will take before the Council the proposal to allow credible and capable companies from the fintech domain to set up more IRPs,” said a government official.

While the private e-invoice portals will have to provide free e-invoice registration service to businesses, they may be allowed to provide over-the-top (OTT) services to clients for a payment.

“This model was adopted for GST suvidha providers too,” said another official. The e-invoicing system was launched in October 2020 and made mandatory for entities with a turnover of ₹500 crore and above. The threshold was brought down to ₹100 crore from January 1 and later to ₹50 crore from April 1 this year for business-to-business transactions.

Of the 240,000 GSTINs eligible to generate e-invoices with a turnover of at least ₹50 crore, only 118,000, or 49 percent, generated e-invoices in April, the data shared in the 43rd GST Council agenda document shows.

A business entity can have multiple GSTINs if it does business in two or more areas or carries the registration process as multiple business verticals in a single state. In the ₹50-100-crore turnover bracket, only 40 percent of the eligible 95,461 GSTINs generated e-invoices in April 2021. In the ₹100-500-crore bracket, 50 percent of the eligible 91,583 GSTINs generated e-invoices in March. In the ₹500 crore and above category, made mandatory in October, only 62 percent of the eligible 53,523 GSTINs generated e-invoices in March. The e-invoicing mechanism is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance.

It will help prevent tax evasion once it is made mandatory for small and medium firms in phases. In the next phase, the government is planning to extend it to entities with a turnover of ₹25-50 crore, then finally to below ₹1.5 crore. Sectors like transportation, insurance and banking companies, nonbanking financial companies and other financial institutions, goods transportation agencies, and passenger transportation services are exempt from e-invoicing.

Source from: https://www.business-standard.com/article/economy-policy/gst-council-meet-on-friday-pvt-fintech-firms-set-to-enter-e-invoicing-zone-121052401577_1.html

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