GST Council likely to exempt govt depts, local authorities from e-invoicing | Business Standard News

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The Council is meeting today to discuss issues such as rates on Covid-related supplies

The e-invoicing system, aimed to plug revenue leakages and ease compliance, was launched in October 2020

The GST Council on Friday is expected to exempt government departments and local authorities from e-invoicing even as the government is planning to expand its scope to all entities.

This follows representation from the government of West Bengal, which pitched for the exemption. It has been approved by the law committee, comprising officers from the Centre and some states.

The e-invoicing system, aimed to plug revenue leakages and ease compliance, was launched in October 2020 and made mandatory for entities with a turnover of Rs 500 crore and above and was extended to businesses with a turnover of Rs 100 crore or more from January 1 and later to Rs 50 crore and above from April 1 this year for business-to-business transactions.

“The law committee has recommended exempting government departments and local authorities from the requirement of issuance of e-invoices. They account for a minuscule portion of the B2B supplies and a statistically insignificant portion of input tax credit. It will be placed before the Council,” said a government official.

According to the assessment by the law committee, government entities and departments account for only 0.3 per cent of the GST Identification Numbers (GSTINS) and the value of business-to-business supplies by them is 1.2 per cent of all. Besides, input tax credit is a minuscule flow of 0.59 per cent of the total.


The GST Council is meeting on Friday after seven months over video-conferencing to discuss a host of issues including rates on Covid-19 related supplies, the compensation shortfall, extending compensation to the states for five years, correcting the inverted duty structure on textiles and footwear, etc.

The e-invoicing mechanism is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance.

In the next phase, the government plans to extend it to entities with a turnover of Rs 25-50 crore, and finally to those below Rs 1.5 crore.

Sectors like transportation, insurance and banking, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempt from e-invoicing. So too are units in special economic zones.

Archit Gupta, founder and chief executive officer, ClearTax, said e-invoicing might be relevant from the perspective of the government being an influencer when it came to implementing invoicing digitisation full-scale, even though the percentage of such transactions might remain low.

However, the performance of the e-invoice mechanism has been unsatisfactory so far, with only about half the eligible GST identification numbers (GSTINs) generating these invoices, the government data show.

In a bid to bridge this gap, the GST Council on Friday will discuss bringing in private financial technology companies into the fray to set up four more invoice generation portals, in addition to the existing one being operated by the government’s National Informatics Centre (NIC).

While the private e-invoice portals will have to provide free e-invoice registration services to businesses, they may be allowed to provide over-the-top (OTT) services to clients for a fee.

“This model was adopted for GST Suvidha providers too,” said another official.

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