GST e-invoicing threshold lowered to ₹5 crore

The Ministry of Finance has reduced the turnover limit for Goods and Services Tax (GST) e-invoicing to ₹5 crore from August 1, 2023. The earlier threshold was ₹10 crore.

With this move, businesses with a turnover of ₹5 crore or more will be required to switch to e-invoicing.

"In exercise of the powers conferred by sub-rule (4) of rule 48 of the Central Goods and Services Tax Rules, 2017, the Government, on the recommendations of the Council, hereby makes the following further amendment...With effect from the 1st day of August, 2023, for the words 'ten crore rupees', the words 'five crore rupees' shall be substituted," says a notification issued by the Central Board of Indirect Taxes and Customs (CBIC).

E-invoicing or 'electronic invoicing' is a system in which business-to-business (B2B) invoices and a few other documents are authenticated electronically by the GST Network (GSTN) for further use on the common GST portal.

Under the electronic invoicing system, an identification number is issued against every invoice by the Invoice Registration Portal (IRP) to be managed by GSTN.

The government has been reducing the threshold and bringing more and more taxpayers in the fold of e-invoicing' in order to bring in transparency and gathering data for comparison with the returns filed by taxpayers, says Mahesh Jaising, partner, leader - Indirect Tax, Deloitte India.

For companies, e-invoicing is a boon rather than a bane as suppliers who are e-invoicing compliant result in proper flow of input tax credit and reduce the churn around credit issues, he says.

With this announcement, the scope of micro, small and medium enterprises (MSMEs) under 'e-invoicing' will be expanded and they will need to implement e-invoicing, says Jaisingh, adding that the 'agility of the government systems' and awareness sessions that have been done indicate that this compliance being met should not be an onerous one.

"The government is expanding technology usage under GST and, as the Finance Minister had stated, automated GST return scrutiny should be implemented along with an action plan to increase the taxpayer base through enhanced usage of technology," Jaising notes.

On May 1, Prime Minister Narendra Modi applauded the record GST collection of ₹1.87 lakh crore in April, saying rising tax collection despite lower tax rates indicates the 'success' of GST. GST collection for April rose to a record level of ₹1,87,035 crore, up 12% from ₹1,67,540 collected in the same month last year.

"The record GST collection relates to the transactions during March 23, the closing month of FY23, where all organisations would have been keen to close the fiscal year on a high note," MS Mani, partner, Deloitte India, said.