GST e-invoicing ambit to cover smaller firms from August 1

Mandatory e-invoice filing threshold lowered to ₹5 crore in annual turnover; move seen helping expand the tax net

Updated - May 11, 2023 09:55 pm IST

Published - May 11, 2023 07:45 pm IST - NEW DELHI 

In a move that would add to the compliance requirements for small and medium businesses under the GST regime while expanding the tax net, the Centre has made it mandatory for all businesses with an annual turnover of ₹5 crore to use e-invoices from August 1. 

The Central Board of Indirect Taxes and Customs (CBIC), which notified the reduction from the current ₹10-crore level stipulated for e-invoicing late Wednesday, also rolled out an ‘Automated Return Scrutiny Module’ for GST returns. The module’s implementation has already commenced with the scrutiny of GST returns for the financial year 2019-20.  

“This module will enable the officers to carry out scrutiny of GST returns of Centre-administered taxpayers selected on the basis of data analytics and risks identified by the system,” the Finance Ministry said in a statement on Thursday. The new module will display discrepancies on account of risks associated with a return to tax officers. 

Tax experts said both the moves were in line with the government’s continuing efforts to crack down on the menace of fake invoices and GST evasion, and would warrant greater attention to compliance from businesses with a turnover between ₹5 crore and ₹10 crore as well as the larger firms they supply to.   

“In case customers accept invoices from such vendors without e-invoice compliance, their input tax credit would be denied, resulting in GST loss for them to the extent of 18% generally, which could severely impact their bottom lines,” said Vivek Jalan, partner at Tax Connect Advisory. All GST-registered firms needed to gear up for the new system, he stressed. 

“The progressive reduction in the e-invoicing threshold has been one of the contributory factors in the increasing GST collections; however impacted businesses would need to modify their supply and distribution activities to ensure compliances from 1st August,” said M.S. Mani, partner at Deloitte India.

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