The main aim of the government behind such a move is to expand the scope of e-invoicing. Earlier companies with a revenue of Rs 500 crore annually were required to generate e-invoices. Now the government and the GST council have narrowed down this criteria to the companies doing businesses with 20 crore revenue.
The government has earlier benefitted from the burgeoning tax structure because of enforcement and compliance measures, the government is now pondering over the idea of expanding the e-invoices infrastructure to broaden the higher volumes of invoices transactions and also to widen its scope.
According to the last year’s official data, only half of eligible GST Identification numbers (GSTINs) were generating e-invoices. The single e-invoice portal is generally run and managed by the National Informatics Centre, which is also known as (NIC). It’s a state-owned authority. The National Informatics Centre, NIC now wants to set up one more portal.
The GSTN has recently empanelled four more companies for setting up of IRN also known as Invoice Registration Portal. These companies are Cygnet Infopath, IRIS Business Services, Defmacro Software (Clear Tax) and Ernest and Young LLP. The proposed second NIC portal will be taken for approval by the GST council in its next meeting.
There are the following reasons why the government wants to increase the Invoice Registration Portal. These are given below:-
Private e-invoicing portals have to provide free-of-cost e-invoice registration, they may be allowed to provide additional services to clients for a charge.
According to Prateek Jain, partner of Pricewaterhouse & Co LLP, setting up additional e-invoicing portals will further help the government to manage the data traffic particularly as the ambit of e-invoicing will increase. After some time, the mechanism will replace the existing e-way bill system, eventually, the government is hoping to dispense with the present system of filing GST returns for micro, small and medium enterprises, also known as MSMEs.
According to MS Mani, partner of Deloitte India, the success of e-invoicing in curbing tax evasion and inhibiting the development of a strong database of sales/purchases would encourage the government to expand it to all the supplies even at the retail level. This will require significant investments in the technology level as it will be a real-time online portal.
Sectors like transportation, insurance and banking companies, financial and non-banking financial companies, passenger transportation services, goods transportation services and special economic zones are exempted from the scope of e-invoicing registration.