GST e-invoicing will likely become mandatory on January 1, 2023 for businesses with a turnover of over Rs 5 crore, a reduction from the current threshold of Rs 20 crore, in order to further plug leakages, ensure better compliance, and improve policy formulation.
Increasing the coverage to above 5 crore would provide with excellent data for policymaking. Data can be analyzed at the four-digit Harmonised System (HS) level to determine which industries contribute more to the GST and which have greater potential but are not contributing enough.
In addition, the tax authorities would be able to better analyse the trends and use of input tax credit across industries and eliminate fraudulent ITC claims, which had been a significant government concern. In the previous and a half years, fake ITC worth over Rs 50,000 crore had been uncovered.
The reduction of the barrier for e-invoicing would also greatly increase the number of GST registrants, as the number of businesses with annual revenues between Rs 5 crore and Rs 20 crore would be extremely large.