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India GST e-invoicing: Third phase to take effect

Businesses in India with an annual turnover of over Rs 50 crore must issue e-invoices for B2B transactions from 1 April 2021.

The requirement marks the third phase of India’s e-invoicing regulations, which lowers the threshold for mandatory GST e-invoices in India. The first and second phases set the threshold at Rs 500 crore and Rs 100 crore respectively. 

Penalties for incorrect e-invoices

Companies previously periodically submitted a consolidated invoice of supplies. 

Under the new system, e-invoices are submitted (manually or via an API) via India’s online e-invoice portal.

Businesses must submit invoices  in the correct format, or risk penalties for failing to comply with invoicing requirements. 

Preventing invoice fraud

India’s GST E-invoicing enables real-time tracking of invoices by tax authorities. The regulations also aim to prevent invoice fraud.

The system incorporates an Invoice Registration Portal that assigns Invoice References Numbers to each invoice. The system thus ensures invoices are genuine and prevent duplication of invoices. 

How does e-invoicing help businesses?

Authorities designed India’s GST e-invoicing system to reduce duplication and help ensure invoices are accurate and complete.  

Furthermore, by requiring businesses to keep complete electronic records of all transactions, GST returns become faster and simpler.

Has e-invoicing been successful?

From a business perspective, e-invoicing in India seems to have proceeded generally smoothly, without major problems.

At the same time, reports suggest that the system has helped increase GST revenue collection. Authorities have enhanced GST collection in two ways. Firstly, compliance has become easier. And secondly, systematic GST evasion has become considerably more difficult. 

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