Reports suggest that mandatory electronic invoicing of business-to-business (B2B) transactions for companies with annual turnover above Rs.20 crore will increase goods and services tax (GST) registrations by 75 percent.

The new system, which is effective from April 1, will increase 180,000 GST Identification Numbers (GSTINs) from the current 240,000 to about 420,000 as per the reports.

According to the reports, under the GST law, e-invoicing for B2B transactions was first made mandatory for companies with a turnover of over Rs.500 crore on 1 October 2020. It was then extended to entities with a turnover of over Rs.100 crore from 1 January 2021, and then for those with a turnover of over Rs.50 crore from 1 April 2021.

While 53,523 companies came under the GSTIN ambit October 2020, 91,583 GSTINs were added in January 2021, and 95,461 in April 2021, taking the total number to 240,567. GST collections breached the Rs.1.3 trillion mark for the fourth time during 2021-22 in January.

Widening the scope to cover small and medium entities will not only help expand GST coverage, but plug the leakages. This will further bolster GST collections. Currently, there are about 240,000 eligible GSTINs for over Rs.50 crore annual revenue thresholds. E-invoicing has helped improve compliance, which is visible in robust GST collections. It also helps prevents tax evasion.

The company can have more than one GSTIN, if it runs a business in two or more states, or Union territories, or the registration process involves multiple business verticals in a single state. E-invoicing allows real time tracking of invoices prepared by a supplier, reducing scope of frauds. The practice of evasion by small and medium enterprises will stop now. It will reduce the manual reporting process, thereby the scope of manipulation of invoices, and will ensures only genuine input tax credit can be claimed, according to the reports.

Archit Gupta, founder and chief executive, Clear, “E-invoicing is the ultimate digital leapfrog for Indian businesses that have embraced digital payments so well. This will also help them comply digitally and will be a key driver for their growth."