With effect from August 1, 2023, the GST Council has just announced a 5 crore e-Invoice limit. The Goods and Services Tax (GST) law created the e-Invoicing or electronic invoicing system, which gradually applies to some taxpayers registered under the GST statute.

On May 10, 2023, the e-Invoice 5 crore notice 10/2023 was released, revising the prior Central Tax notification No. 13/2020 that had been released on March 21, 2020. As a result, starting on August 1, 2023, there will be a GST e-invoice restriction for financial years with a revenue of more than Rs. 5 crore.

Businesses with a yearly aggregate turnover of exceeding ₹. 5 crore in any prior financial year from 2017–18 are required to use electronic invoicing as of August 1, 2023. Prior to this, phase I was applicable to e-invoice turnover limits of greater than Rs. 500 crore starting on October 1, 2020. Phase II began with the issuance of e-invoices on January 1, 2021, by companies with a yearly revenue of over Rs. 100 crore. Beginning on April 1, 2021. Phase III was opened to companies with a yearly revenue of more than Rs. 50 crore. A year later, as phase IV, the government lowered the threshold for electronic invoices to greater than Rs. 20 crore. For companies with a yearly turnover of more than Rs. 10 crore, Phase V will be in effect starting on October 1, 2022. E-billing is therefore applicable.

Applicability of E-invoicing – E-invoicing is applicable to tax invoices, debit notes, credit notes, and invoice-cumulative supply bills. The e-invoicing system includes transactions for taxable business-to-business (B2B), business-to-government (B2G), export sales, and sales that fall under the Reverse Charge Mechanism (RCM) agreements.

Non- Applicability of E-invoicing – The following documents, transactions, and enterprises are not included in the scope of e-invoicing: Exempted sales for which a bill of supply is issued; imports; job works; and delivery challans. Financial entities including banks and insurance firms, putting on multiplex screenings of motion pictures, Non-banking financial institutions, enterprises that handle both passenger and freight transportation, businesses located in special economic zones, and government entities.

Is electronic billing required? – Repercussions of e-invoices not being generated :

Newly added enterprises will face severe fines if they fail to produce electronic invoices by the specified deadline. Businesses who do not comply must pay Rs. 10,000 for each invoice that is not produced. Furthermore, failure to generate an IRN is regarded as incomplete invoicing, and failure to do so might result in a Rs. 25,000 fine each wrong invoice.

Additionally, small firms may have the following extra negative effects:

GSTR-1 information on B2B sales may not be automatically filled in. The GST component of payments, in particular, may eventually be delayed or held up by buyers who are unable to claim any qualifying ITCs. Such firms’ working capital is significantly impacted. Non-compliant e-invoices may be denied or rejected by buyers, which might disrupt ongoing business agreements.

To Download official notification, click here.

“The site is for information purposes only and does not provide legal advice of any sort. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute an attorney-client relationship.

The information on this site is not intended to be a substitute for professional advice.”