Govt may drop the idea of e-invoicing for retail businesses

The government may not extend e-invoicing to retailers as it is of the view that a further expansion of compliance requirement needs careful evaluation, said a person familiar with the development.

Currently, e-invoicing, or real-time reporting of sales by businesses on the goods and services tax (GST) portal, is mandatory for business-to-business (B2B) transactions of companies with a turnover of at least ₹50 crore. It will be extended to those with sales of ₹20 crore or more from 1 April, bringing a big chunk of economic activity under the regulatory ambit of GST authorities.

The original plan was to make e-invoicing mandatory for all B2B transactions and eventually for retail sales, in order to improve tax compliance. However, policymakers are now of the view that the ₹20 crore sales threshold is comprehensive.

“Further lowering of the turnover threshold for e-invoicing needs careful assessment of its benefits. E-invoicing of business-to-consumer transactions could add to the volumes of reporting, but without actual benefits,” the person cited above said requesting anonymity.

While GST is collected at every stage based on the extent of value addition, at the retail level, the transaction volume will be huge but the tax amount would be small on individual invoices. Tracking retail transactions may not yield much results and may not be useful for tax enforcement, the person said. An email query to the finance ministry on Tuesday remained unanswered till press time.

Experts said the policy choice makes perfect sense. “The ₹20 crore turnover threshold for B2B transactions appears sufficient for meaningful oversight of economic activity for tax enforcement. Not bringing retail sales under e-invoicing is a good policy choice given that the final retail consumer is not eligible for any input tax credit in the indirect tax system,” said Rajat Mohan, senior partner, AMRG and Associates, an accounting firm.

Mint reported on 28 February that the ₹20 crore threshold will add close to 180,000 GST identification numbers (GSTINs) under the real-time e-invoicing system. One business can have more than one GSTIN depending on the number of states it operates in.