Starting May 1, 2023, businessmen and companies in India will have to comply with a new Goods and Services Tax (GST) rule regarding transactions on the GST Network (GSTN). The new rule will require businesses to upload receipts of any transaction on the Invoice Registration Portal (IRP) within seven days of the transaction. The change is expected to impact input tax credit (ITC) and compliance for businesses across the country.
What are the New GSTN rule say?
Under the new rule, all businesses including the startups with a turnover of over Rs 100 crores will have to comply with the seven-day upload requirement. Businesses with turnovers exceeding Rs 100 crores will not be able to upload invoices older than seven days, meaning that transactions older than seven days cannot be uploaded on the GSTN and cannot be claimed on returns. However, the rule does not apply to debit and credit notes, which can still be uploaded beyond the seven-day period.
How will it Impact the Input Tax Credit?
As per GST rules, if an invoice is not uploaded on the IRP, businesses will not be able to take advantage of Input Tax Credit (ITC) on it. ITC is used to claim back the difference between the raw material and the final product of a product. Presently, businesses can upload their e-invoices at any time. However, with the new rule coming into force, they will only have seven days to upload the receipts.
What is an Input Tax Credit?
Input Tax Credit (ITC) is a credit for the tax already paid on inputs used in the production of goods or services, which can be used to offset the tax liability on the final output. ITC is intended to eliminate double taxation effect, where taxes are levied on top of taxes, resulting in increased costs for businesses and consumers.
What are the benefits of the New GST Rule?
Experts believe that the new rule will be beneficial in increasing GST collections and timely ITC benefits for businesses. It is expected to strengthen the process of digitization, and the government hopes to generate higher GST revenues. The government had previously mandated businesses with turnovers of over 100 crores to generate a GST invoice for every transaction. The new rule will be initially implemented for businesses with turnovers exceeding 100 crores, but experts believe it will soon be made mandatory for all businessmen.
Which are the Startups with more than Rs 100 cr turnover in India?
India has seen a surge in the number of startups in recent years, and many have achieved remarkable success, with turnovers exceeding Rs 100 crore. These companies have emerged as key players in various sectors of the Indian economy, and their success has attracted significant investment and attention from both domestic and international investors.
Some of the most prominent startups in India with turnovers exceeding Rs 100 crore include Paytm, Ola, Flipkart, Zomato, Swiggy, Byju's, Delhivery, PolicyBazaar, BigBasket, and Udaan. These companies operate in sectors such as e-commerce, fintech, food delivery, edtech, logistics, and insurance, among others.
The new GSTN rule is expected to streamline the process of GST compliance for businesses and improve the overall collection of GST revenues. As businesses adjust to the new requirements, it is important for them to stay aware of the changes and ensure that they upload receipts on the IRP within the seven-day period to avoid any loss of ITC benefits.