Businesses with turnover of over ₹5 crore will have to generate electronic or e-invoice for B2B transactions with effect from August 1. Image for representational purposes only.
| Photo Credit: iStock
Businesses with turnover of over ₹5 crore will have to generate electronic or e-invoice for B2B transactions with effect from August 1.
Businesses with a turnover of ₹10 crore and above must generate e-invoices for all B2B transactions.
Through a notification dated May 10, the finance ministry notified a reduction in the threshold for e-invoicing. Effective August 1, any taxpayer with a turnover exceeding ₹5 crore should raise e-invoices for B2B supplies.
Deloitte India Partner Leader Indirect Tax Mahesh Jaising said with this announcement, the scope of MSMEs under e-invoicing will be expanded, and they will need to implement e-invoicing.
“For companies, e-invoicing is a boon rather than a bane as suppliers who are e-invoicing compliant result in proper flow of input tax credit and reduce the churn around credit issues,” Jaising added.
AMRG & Associates Senior Partner Rajat Mohan said phased implementation of e-invoicing had reduced disruptions, improved compliance, and increased revenue.
E-invoicing was initially implemented for large companies with turnover of more than ₹500 crore, and within 3 years, the threshold has now been lowered to ₹5 crore.
“Inclusion of MSME sector in the e-invoicing regime would benefit the overall business ecosystem by reducing costs, rationalising errors, ensuring faster invoice processing, and limiting commercial disputes in the long term,” Mohan added.
Under Goods and Services Tax (GST) law, e-invoicing for business-to-business (B2B) transactions was made mandatory for companies with a turnover of over Rs. 500 crore from October 1, 2020, which was then extended to those with a turnover of over ₹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 ₹20 crore beginning April 1, 2022. From October 1, 2022, the threshold was lowered to ₹10 crore.
EY Tax Partner Saurabh Agarwal said the industry needs to review their vendor masters and ensure that any vendor supplying goods or services and crossing the threshold turnover of ₹5 crore is necessarily issuing an e-invoice from August 2023 to avoid any dispute concerning availment of input tax credit (ITC).
For all the latest business News Click Here
