The government has decided to make GST e-invoicing mandatory for firms whose turnover is exceeding Rs. 5 crores via central tax notification number 10/2023. As the GST council has recommended the GST e-invoice limit and the new rule will come effective from 1st August 2023 as per official notification.
The central government has recommended a reduction of the e-invoice threshold to more than Rs.5 crore starting on 01st August 2023.
The same action has the motive to digitize the higher volume of the transactions, effective clarity in the sales reporting, lower errors, and mismatches, automate the data entry work and rectify compliance.
GST Network (GSTN) renders the invoices, which seem to be ready for the subsequent phase in the 3 to 4 months, the council notified that.
In Oct 2020,GST E-invoicing has initiated and was made essential for companies that have a turnover of Rs 500 crores or exceeds, the same limit was drawn down lower to Rs 100 crores and then after that, it gets Rs 50 crores in 2021 for the business-to-business (B2B) transactions.
The assessee should generate the invoices on their internal system or billing software and then notify the same to the invoice registration portal (IRP) — a requirement to get an input tax credit.
An official mentioned that “Increasing portals will provide adequate IT infrastructure and an eco-system to ensure uninterrupted invoice registration services to businesses. It also provides taxpayers with an option to choose between the services of different portals. In addition, it helps the GST system to balance the load in case anyone IRP portal faces any challenge due to a long queue,”
“The GST Council had last week been apprised about the development of the empanelment to increase the portals and it has given its nod for it,” another official expressed.
As per the official data, of the 219,000 eligible, GSTIN's with a turnover lying between Rs 20 crore and Rs 50 crore; 153,000 would generate the invoices. Likewise, those who have a turnover of Rs 50-100 crore generate 48,217 invoices among the 86,963 GSTINs.
“Lowering the threshold will help in plugging revenue leakage and provide a better reconciliation of credits at the buyer’s end. Physical invoices have problems of matching data and human errors. This will be mitigated and more credit will be available all around,”
Beneath the e-invoicing, the firms that used to generate an IRP via a government portal and the same must be shown to the council at the time of goods movement.
From e-invoicing, the sectors such as transportation, insurance, banking, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempted.
Source: https://taxinformation.cbic.gov.in/view-pdf/1009732/ENG/Notifications
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