• Notification Date: 29-12-2023
• Notification No: N/A

Significant Changes related to GST for MSMEs in 2023

The Economic Survey of 2022-23 highlighted the recovery of Micro, Small, and Medium Enterprises (MSMEs) after the pandemic. In FY21, GST paid by MSMEs had declined, but by FY22, it surpassed the pre-pandemic levels of FY20. This resurgence, reaching around Rs 5.5 lakh crore in FY22, showcases the financial resilience of small businesses, attributed to government interventions targeted at MSMEs. The MSME sector’s recovery from the pandemic-induced shock is evident in the rising trend of GST payments, as reported in the survey. 

Jocata, a financial advisory and technology company, recently announced a partnership with SIDBI to introduce the MSME Economic Activity Index – Sumpoorn. This index is a relative amplitude-adjusted composite diffusion index developed using consent-led and anonymized monthly sales data from over 50,000 MSMEs seeking credit. Instead of relying on survey data, it analyzes the official GSTN returns from October 2019 to the present date.  

Formalization of Non-GST Units  

The Udyam certificate registration for informal micro units (IMEs), not covered by the GST regime or exempted from the CGST Act, 2017, has exceeded one crore. As per data from the Udyam portal, 1.10 crore IMEs are now Udyam-registered. Launched in January, the Udyam Assist Platform (UAP) aids in bringing such units into the formal economic fold. 

Reduced Turnover Threshold for E-Invoicing  

In May, the Central Board of Indirect Taxes and Customs (CBIC) announced a reduction in the turnover threshold for e-invoicing, effective from August 1, 2023. Enterprises with a turnover exceeding Rs 5 crore (reduced from Rs 10 crore) in any financial year will need to generate e-invoices for business-to-business transactions. This change aims to include more small enterprises with turnovers between Rs 5 crore and Rs 10 crore, while micro-enterprises (with a turnover less than Rs 5 crore) currently remain outside the e-invoicing purview.  

Intra-State Supply for Unregistered E-commerce Sellers 

Starting from October 1, 2023, e-commerce sellers with turnovers up to Rs 40 lakh for goods and up to Rs 20 lakh for services, unregistered under the CGST Act, are allowed to make intra-state supplies. The GST Council had granted approval for this during its 47th meeting in June of the previous year, facilitating e-commerce for micro-enterprises through platforms like Amazon and Flipkart, subject to specific conditions.