Currently, companies with revenues of Rs 10 crore and above are required to generate an e-invoice
New Delhi:
Businesses with a turnover of more than Rs 5 crore are required to generate an electronic or e-invoice for B2B transactions from August 1.
Currently, companies with revenues of Rs 10 crore and above are required to generate an e-invoice for all B2B transactions.
The Ministry of Finance announced a reduction in the threshold for e-invoicing via a May 10 notice. As of August 1, every taxpayer with a turnover of more than Rs 5 crore is required to request e-invoices for B2B supplies.
Deloitte India Partner Leader Indirect Tax Mahesh Jaising said that with this announcement, the reach of MSMEs under e-invoicing will be expanded and they will need to implement e-invoicing.
“For businesses, e-invoicing is a blessing rather than a curse as e-invoicing compliant suppliers result in a good flow of pretax credits and reduce churn around credit issues,” added Mr. Jaising.
AMRG & Associates Senior Partner Rajat Mohan said the phased implementation of e-invoicing has led to fewer disruptions, improved compliance and increased revenue.
E-invoicing was initially implemented for large companies with a turnover of more than Rs 500 crore, and within 3 years the threshold has now been lowered to Rs 5 crore.
“Inclusion of MSME sector in the e-invoicing regime would benefit the overall business ecosystem by reducing costs, rationalizing errors, ensuring faster invoice processing and also mitigating commercial disputes in the long run,” Mohan added.
Under the Goods and Services Tax (GST) Act, e-invoicing for business-to-business (B2B) transactions was made mandatory from October 1, 2020 for companies with a turnover of more than Rs 500 crore, which was subsequently extended to companies with a turnover of more than Rs 100 crore as of January 1, 2021.
From April 1, 2021, companies with revenues above Rs 50 crore generated B2B e-invoices, and the threshold was lowered to Rs 20 crore from April 1, 2022. From October 1, 2022, the threshold was further lowered to Rs 10 crore.
EY Tax Partner Saurabh Agarwal said the industry should review their vendor masters and ensure that any supplier who supplies goods or services and exceeds the threshold turnover of Rs 5 crore necessarily issues an e-invoice from August 2023 to resolve any dispute related to availability of input tax credit (ITC).
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