The Goods and Service Tax Council has made it mandatory for businesses with an annual turnover of over Rs 5 crore to move to e-invoicing from next year.
Such businesses will have to generate electronic invoices for business-to-business (B2B) transactions starting January 1, 2023, reported the Economic Times quoting a government official familiar with the matter.
Earlier, businesses having turnover of Rs 20 crore and above were required to generate e-invoices for all B2B transactions.
The Central Board of Indirect Taxes and Customs (CBIC) had reduced the e-invoice threshold to Rs 10 crore or more. Now, it has been further lowered to Rs 5 crore.
The GST Council had earlier decided to implement e-invoicing in a phased manner.
The recent move to lower the annual turnover limit for e-invoicing to Rs 5 crore is aimed at eventually bringing all businesses with over Rs 1 crore turnover under the framework.
This will help bring small businesses under the formal economy, plug revenue leakages, and ensure compliance, the government official told ET.
The government rolled out the e-invoicing system on October 1, 2020. Initially, companies with turnover of over Rs 500 crore were required to generate e-invoices as per the Goods and Services Tax (GST) guidelines.
It was then extended to include businesses with over Rs 100 crore annual turnover from January 1, 2021, and then to companies with more than Rs 50 crore turnover from April last year.
In the e-invoicing system, the Invoice Registration Portal (IRP) is issued an identification number for every invoice generated.
The invoices are authenticated electronically by GSTN, and the information is transferred to both the e-way bill portal and GST portal in real time. This eliminates the need to manually enter data while filing a GSTR-1 return and reduces mismatch errors.