The finance ministry through a notification dated May 10 has 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 the scope of MSMEs under e-invoicing will be expanded and they will need to implement e-invoicing with this announcement. 

"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," he added. 

Reacting to the announcement, AMRG & Associates Senior Partner Rajat Mohan said phased implementation of e-invoicing has resulted in reduced disruptions, improved compliance, and increased revenue.

"Inclusion of the MSME sector in the e-invoicing regime would benefit the overall business ecosystem by reducing costs, rationalizing errors, ensuring faster invoice processing, and also limiting commercial disputes in the long term," Mohan stated. 

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 with respect to availing of input tax credit (ITC).

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 ₹500 crore from October 1, 2020, which was then extended to those with a turnover of over ₹100 crore effective January 1, 2021, PTI reported. 

From April 1, 2021, companies with turnover of over ₹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 further lowered to ₹10 crore.