GST e-invoicing must for businesses with turnover of Rs 5 crore or more

Lowering of e-invoicing threshold will extend the digital application to the MSME sector and benefit the business ecosystem by reducing costs, rationalising errors, and processing invoices quicker

Businesses with a turnover of Rs 5 crore and above are obligated to generate e-invoicing for business-to-business (B2B) transactions with effect from August 1. Presently, e-invoice is compulsory for companies with a turnover of Rs 10 crore or above.

The Ministry of Finance late on Wednesday notified a new mandate lowering the threshold for e-invoicing.

“Effective from August 1, any taxpayer with a turnover exceeding Rs 5 crore should raise an e-invoice for B2B supplies,” read the notification.

The move is aimed at digitising higher volumes of transactions, greater transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance.

Under the goods and services tax, e-invoicing (electronic billing) for B2B transactions was made mandatory for companies with turnover of over Rs 500 crore from October 1, 2020. It was then extended to those with turnover of over Rs 100 crore, effective January 1, 2021.

From April 1, 2021, companies with turnover of over Rs 50 crore were generating B2B e-invoices, and the threshold was brought down to Rs 20 crore, beginning April 1, 2022. From October 1, 2022, the threshold was further lowered to Rs 10 crore.

Taxpayers must generate invoices on their internal systems or billing software and then report them to the invoice registration portal (IRP) — a requirement to avail of input tax credit.

“The industry needs to review its vendor masters and ensure any vendor supplying goods or services and breaching the threshold turnover of Rs 5 crore is necessarily issuing an e-invoice from August 2023 to avoid any dispute concerning availing of input tax credit,” said Saurabh Agarwal, partner, EY.