E-Invoice Mandatory for GST Registered Persons on Supply to Government Departments Solely Registered for TDS purpose: CBIC [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) issued vide circular no. 198/10/2023-GST on July 17th 2023 clarifying the mandatory e-invoice for the GST registered persons on Supply to Government departments in conformity with the recommendations of the 50th GST Council.

According to the board, Clarification has been requested regarding the application of e-invoicing under rule 48(4) of the Central Goods and Services Tax Rules, 2017 (referred to as the “CGST Rules”) in relation to supplies made by a registered person.

These supplies are made to Government Departments, establishments, government agencies, local authorities, or Public Sector Undertakings (PSUs) that are registered solely for the purpose of tax deduction at source as per the provisions of Section 51 of the Central Goods and Services Tax Act, 2017 (CGST Act).

In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the issue as under:

1. Whether e-invoicing is applicable for supplies made by a registered person, whose turnover exceeds the prescribed threshold for generation of einvoicing, to Government Departments or establishments/ Government agencies/ local authorities/ PSUs which are registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the CGST Act?

The CBIC clarified that the Government Departments or establishments/ Government agencies/ local authorities/ PSUs, which are required to deduct tax at source as per provisions of section 51 of the CGST/SGST Act, are liable for compulsory registration in accordance with section 24(vi) of the CGST Act. Therefore, Government Departments or establishments/ Government agencies/ local authorities/ PSUs, registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the CGST Act, are to be treated as registered persons under the GST law as per provisions of clause (94) of section 2 of CGST Act. Accordingly, the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, is required to issue e-invoices for the supplies made to such Government Departments or establishments/ Government agencies/ local authorities/ PSUs, etc under rule 48(4) of CGST Rules.

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