GST e-invoicing threshold halved to Rs 10-crore from October

0.36 million more firms brought under digital reporting framework.

GST e-invoicing threshold halved to Rs 10-crore from October
This phased move to bring more taxpayers under e-invoicing may deter the generation of fake invoices, thereby leading to better tax compliance and collections.

To further tighten anti-evasion measures, the government has made goods and services tax (GST) e-invoicing mandatory for firms with a turnover of over Rs 10 crore from October 1 compared with Rs 20 crore now, bringing in 0.36 million additional firms under the digital reporting framework.

A notification in this regard was issued by the Central Board of Indirect Taxes and Customs (CBIC).

“This means any registered person with aggregate turnover exceeding Rs 10 crore in any FY18 onwards has to issue e-invoice from October 1. This has been done by the government to widen the net of GST digitisation and capture transaction details at the invoicing stage itself, which will help further prevent GST evasion,” said Abhishek Jain, partner, Indirect Tax, KPMG in India.

For the business getting covered from October 2022, requisite ERP (enterprise resource planning) changes should be looked into along with timely testing so as to ensure smooth transition, Jain said.

E-invoicing for business-to-business (B2B) transactions started with a very high threshold from October 1, 2020, when firms with a turnover of over Rs 500 crore came under its ambit. In the second phase, businesses with a turnover exceeding Rs 100 crore were mandated to issue e-invoices from January 1, 2021. In the third phase, firms with a turnover of over Rs 50 crore had to generate e-invoices from April 1, 2021. It has been extended to firms with a turnover between Rs 20 crore to Rs 50 crore from April 1, 2022.

The e-invoice has resulted in bringing in more taxpayers into the net which rose from about 12.5 million in October 2020 to about 13.8 million at present.

These system reforms have played a big role in the recent surge in GST collections from an average of Rs 0.9 trillion in FY18 to Rs 1.23 trillion in FY22 and Rs 1.5 trillion in the first four months of FY23, giving some relief to states as a five-year guaranteed GST compensation for shortfall has ended on June 30.

One of the criticisms of GST after it was rolled out on July 1, 2017 was that the tax authorities have not been able to streamline the return filing process and were not able to do invoice matching between the buyer and supplier because of which there was a fear that there may be revenue leakages and non- compliance was going undetected.

This phased move to bring more taxpayers under e-invoicing may deter the generation of fake invoices, thereby leading to better tax compliance and collections.

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