In a significant move toward strengthening tax compliance and increasing transparency in business transactions, the GST Council has approved a proposal to lower the e-invoicing threshold from ₹5 crore to ₹2 crore, effective October 1, 2025. The decision is part of the government’s continued push toward digitization of the indirect tax system and is expected to bring a large number of medium-sized businesses into the e-invoicing framework.

What Has Changed?
Under the current regime, businesses with aggregate turnover exceeding ₹5 crore are required to generate e-invoices for B2B transactions. With the revised limit, all businesses with a turnover above ₹2 crore in any financial year from 2017–18 onwards will be mandated to comply.

The e-invoicing system enables real-time reporting of invoices to the GST portal and ensures that transactions are automatically reflected in GSTR-1, improving the accuracy of Input Tax Credit (ITC) claims.

Implications for Businesses
This move is expected to affect thousands of small and mid-sized enterprises (SMEs), many of whom may not have sophisticated billing systems in place. While the transition will demand adjustments, it also offers several benefits, including:

Improved Accuracy in Reporting

Reduction in Tax Evasion

Seamless ITC Flow

Reduced Chances of Audit and Litigation

However, businesses must ensure their accounting or ERP software is capable of integrating with the e-invoice system. Training of internal staff, validation of GSTINs, and reconciliation processes will also need to be updated accordingly.

CBB’s Recommendation
At C B Bhargava & Co., we advise all businesses approaching the ₹2 crore threshold to begin preparing immediately. Transitioning early allows time to test systems, avoid last-minute compliance errors, and ensure business continuity. Our team can assist in:

Assessing your readiness for e-invoicing

Implementing suitable software solutions

Training your accounting teams

Ensuring timely and accurate compliance