CBIC Extends e-Invoicing to Rs 5 cr+ Turnover Businesses

Central Board of Indirect Taxes & Customs (CBIC) reduced the e-invoicing applicability limit to Rs 5 crore. The department released notification no 10/2023 – Central Tax in this regard based on the Council’s recommendation.

The 6th phase of e-invoicing will apply to taxpayers whose annual aggregate turnover is more than Rs.5 crore in any preceding financial year from FY 2017-18 w.e.f 1st August 2023. It means eligible businesses must report their invoices on the invoice registration portal, i.e. the IRP, w.e.f 1st August 2023.

Initially, e-invoicing was mandatory for 500 crore+ turnover businesses. Later the department reduced the e-invoicing threshold in a phased manner to Rs 100 crore, Rs 50 crore, Rs 20 crore and then Rs 10 crore.

The eligible SMEs shall start preparing for this e-invoicing amid the approaching timelines. Accordingly, they must:

  • Understand the changes in business processes
  • Modify their billing systems or accounting software
  • Perform frequent reconciliations, and 
  • Revisit the GST return filing process.

While GSTR-1 filing becomes easier with auto-population, complications arise in reconciliation. However, e-invoicing can benefit SMEs with easy access to formal credit channels, such as invoice discounting.

Also, the applicable businesses must choose the best-suited mode of e-invoice generation. While the government provides a free Excel-based tool to businesses for generating e-invoices, it involves a time-consuming and manual process. Hence, choosing an efficient and trusted GSP who can fulfil your e-invoicing requirements is recommended.

The department expects that this move of reducing the turnover limit of e-invoicing applicability aims at:

  • Resolving mismatch errors and checking tax evasion
  • Helps in better tax compliance
  • Analyse the trends better 
  • Track the Input Tax Credit (ITC) usage

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@clear.in

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