• Notification Date: 26-02-2022
  • Notification No: N/A

Rs.20 Crores is the Base for GST Invoice

The base limit of mandatory invoices that are required to be issued under the Goods and Services Tax (GST) has been reduced from Rs.50 crores to Rs.20 crores. The decision taken by the Central Board of Indirect Taxes and Compliance will be effective from 1 April.

The new decision is expected to increase tax compliance and reduce evasion of tax. But this will result in spending a greater time on reporting by a section of businesses. According to the taxpayers, the lower limit of threshold would help encourage small businesses to invest in technology.

The companies will find it difficult to under-report their final sales. The business-to-business transactions of the companies are being captured on these invoicing portals which are being run by the National Informatics Centre.

The new rule of lowering the threshold base for GST invoices is expected to reduce the businesses to issue informal sales invoices which are also known as “Kacha bills”. This is highly practiced among the sectors which offer high margins of profits.

The new regulation as declared by the finance ministry ensures the implementation of all kinds of technology-enabled self-policing features of the new indirect tax system to improve tax compliance. The decision has been taken on the recommendation of the GST Council.

According to the new regulation, many suppliers will have to generate e-invoices from April. In case, the invoice raised by the supplier is not a valid one, the recipients will not receive Input Tax Credit (ITC) and they will have to pay penalty charges as reported by an analysis conducted by EY.  

The initiative taken to enhance the economy of the country through taking necessary measures in the GST framework is reaching the final stage gradually. Earlier, there have been several setbacks and backlashes in the process. The new rule of technology-enabled tax compliance method has started contributing to a higher rate of GST return filings. There has been a considerable improvement in the revenue buoyancy after the enforcement of the new rule.