The Upcoming Mandate on E-Invoicing for B2C Transactions: What Businesses Should Expect

The Goods and Services Tax (GST) Council is preparing to extend the e-invoicing mandate to include business-to-consumer (B2C) transactions. This move could mark a significant shift in how businesses issue invoices and maintain compliance under GST law. Currently, e-invoicing is mandatory only for business-to-business (B2B) transactions for companies with a turnover of ₹5 crore and above.

What to Expect from the GST Council Meeting

In an upcoming meeting, the GST Council will discuss the possibility of introducing voluntary e-invoicing for B2C transactions. According to a government official, this would begin as a pilot project in selected sectors, with participation from states that choose to collaborate. The goal of this project is to curb tax evasion and increase compliance in consumer transactions.

The pilot program aims to assess the feasibility of extending e-invoicing to B2C transactions. Should the proposal be approved, the GST Network (GSTN) will need to be upgraded to facilitate this change, and a commercial model will have to be developed.

Benefits of E-Invoicing for B2C Transactions

Extending e-invoicing to B2C transactions offers several advantages:

1. Improved Transparency: Consumers will be able to verify the authenticity of their invoices more easily.

2. Cost Efficiency: The shift to e-invoicing will reduce transaction costs for businesses.

3. Environmental Impact: E-invoicing reduces paper usage, contributing to sustainability efforts.

4. GST Refunds for Foreign Tourists: This initiative could pave the way for tourists to claim GST refunds.

A Look at the Existing E-Invoicing Mandate

E-invoicing was first introduced in October 2020 for businesses with turnovers exceeding ₹500 crore. Since then, the turnover threshold has progressively reduced:

• January 2021: Businesses with ₹100 crore and above were required to issue e-invoices.

• April 2021: The threshold was reduced to ₹50 crore.

• October 2022: Businesses with turnover above ₹10 crore were brought under the regime.

• August 2023: The threshold was lowered to ₹5 crore

  
  

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However, compliance challenges persist, particularly for businesses with turnovers between ₹5-10 crore.

The Road Ahead

While the initial phase of e-invoicing for B2C transactions will be voluntary, further mandates may follow if the pilot proves successful. The GST Council will likely review the thresholds for mandatory implementation, potentially aligning it with B2B transaction criteria at a later stage.

The introduction of e-invoicing for B2C transactions is expected to foster better tax compliance and streamline the consumer experience, while also benefiting businesses through cost reduction and enhanced transparency.