E-Invoice Limit Reduced to 20 Cr and Its Impact on MSME

Prakash Matre
Prakash Matre at March 16, 2023

E-Invoice Limit

The Central Board of Indirect Taxes & Customs made e-invoicing under GST compulsory for registered men having a total turnover of above Rs 20 crore in any of the last years 2017-18 to 2021-2022. Indian businesses with yearly turnovers of greater than Rs. 20 crore to Rs. 50 crore, as evaluated in any previous financial year from 2017-18 till 2021-22, have to generate e-invoices from April 1st, 2022.

In this article, you will get detailed information on e-invoicing limits under GST challenges, options, impact on MSME, e-invoicing time limit, and tested results of e-invoicing systems to help businesses.

E-Invoicing And MSME’s

The main aim of a reduced e-invoicing limit is to decrease fraudulent invoicing and reduce tax evasions. Now, businesses must align their units with the e invoicing portal IRP (Invoice Registration Portal) for an easy generation of IRN (Invoice Reference Number) for all B2B bills. They need to get their accounting systems to adapt changes for obeying the e-invoice structural outline. The e-invoice generation will impact the MSME processes in the following ways: 

  • Faster Loan Approvals: Receiving a business loan is quite a task for MSMEs due to too much paperwork. Luckily, with the latest e-invoicing system, lenders can rate MSMEs as per their e-invoices, making it better and quicker for enterprises to get loans. 
  • Recording The Details: Relevant businesses must keep customer and supplier data to cover additional invoice details like GSTIN, payee details, and bank accounts for precision.
  • Improved Business Performance: The major problem that the MSMEs may face is to engage in real-time creation and IRN capture. Retailers coming under this turnover range make thousands of B2B invoices on a daily basis. Moreover, they may not keep the clients on hold for such a long time until the e-invoice is generated. Such MSMEs must use the GSP services for easy implementation.   
  • Easy Invoice Tracking: The business unit must now check transactions that are disposed of by e-invoice and separate them from the remaining agreement. 

Development of the E-Invoicing System

E-invoices have been made compulsory by the government to curb GST evasion. During the 1st Committee in May 2019 to calculate the implementation and e-invoicing use in India, following the globe-wide developments. Afterward, the panel listed several drafts before the final e-invoice scheme could be made in January 2020. The e-invoicing software was made compulsory from April 1st, 2020 but was delayed by the Council of GST. 

Lastly, it went active from October 1st, 2020. During phase 1, Indian businesses with more than Rs500 crore turnover have to issue e-invoices from October 1st, 2020. In the second phase, enterprises with more than Rs100 crore turnover start issuing e-invoices from January 1st, 2021. 

Then, in phase three, businesses having turnover greater than Rs50 crore need to generate e-invoices from April 1st, 2021. Around 2,40,567 MSME firms were in this turnover bracket. After a year, the government wished to increase the huge system to about 1,80,000 more Indian firms from April 1st, 2020. These MSMEs fall within Rs20 crore and Rs5o crore turnover in the fiscal years between 2017-18 and 2021-22. Moreover, an official said that the government forecasted a rise in GST registration by 75% after this move. 


IRN Generation via ERP And IPR

There are several ways by which the ERP software of any business interacts with the IPR for IRN generation: 

  • Businesses taking aid of GSPs: Businesses can generate passwords and usernames using the GSPs and get in arrangement to use the API with GSP’s Customer Secret and Customer ID. 
  • Businesses have direct API access: In this situation, the taxpayer can form a password and username to access the API via client secret and ID. 
  • Enterprises Using ERPs: The business can make a password and username and tie it up with the ERPs to access the APIs with the ERP offerer’s Client Secret and ID. 
  • The business has access to the electric-way bill APIs: If the business has access already to the e-way API bills, they can utilize the same information to access the e-invoice system. 


From 1st April the previous year, businesses with a turnover of greater than Rs50 crore were doing B2B e-invoice generation. However, this is now extended to businesses with Rs 20 crore or more turnovers. With this, many suppliers will be needed to raise e-invoices from 1st April 2022. If an invoice is invalid, the tax credit on it will not be availed by the taxpayer along with relevant penalties.

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