India lowers turnover threshold for applicability of e-invoicing from INR 100 million to INR 50 million effective from August 1, 2023.
The Indian Central Board of Indirect Taxes and Customs (“CBIC”) has lowered the aggregate turnover threshold for applicability of e-invoicing provisions under the Goods and Services Tax (“GST”) for all Business-to-Business (“B2B”) supplies, from INR 100 million to INR 50 million effective August 1, 2023. The CBIC issued Notification No. 10/2023-Central Tax on May 10, 2023 lowering the threshold.
Accordingly, all businesses (other than those located in Special Economic Zone (“SEZ”), banking companies, financial institutions, certain travel agencies, etc.) whose aggregate turnover in any preceding financial year from 2017-18 onwards is more than INR 50 million, will have to comply with e-invoicing provisions for their B2B supplies to registered persons or for exports, beginning August 1, 2023. E-invoicing provisions require registered persons to prepare invoices by uploading certain particulars of invoice (in Form GST INV-01) on invoice registration portal (IRP) and obtain the invoice reference number (IRN).
The e-invoicing provisions were first implemented on January 1, 2020, on a voluntary basis. Later, they were made mandatory for entities having a turnover of INR 5 billion w.e.f. October 1, 2020 (Phase 1).
Aggregate turnover threshold for applicability of e-invoicing was reduced in phased manner as under:
- from INR 5 billion to INR 1 billion w.e.f. January 1, 2021 (Phase 2);
- from INR 1 billion to INR 500 million w.e.f. April 1, 2021 (Phase 3);
- from INR 500 million to INR 200 million w.e.f. April 1, 2022 (Phase 4);
- from INR 200 million to INR 100 million w.e.f. October 1, 2022 (Phase 5);
- from INR 100 million to INR 50 million w.e.f. August 1, 2023 (Phase 6).
The term ‘aggregate turnover’ includes all taxable supplies (excluding inward supplies on which tax is payable on ‘reverse charge’ basis), exempt supplies, export of goods/ services as well as interstate supplies made under the same Permanent Account Number but excludes central/state/ union territory GST or cess.
Implication
GST registered entities whose turnover exceeds INR 50 million (in financial year 2017-18 or onwards) would be required to comply with e-invoicing provisions w.e.f. August 1, 2023. E-invoicing provisions are applicable to export transactions, but provisions do not apply to units in Special Economic Zones.