All About E-invoice

E-Invoicing Applicability Under GST

Electronic invoicing, commonly known as E-Invoicing or E-Invoice, is gaining prominence worldwide as governments take steps to combat tax evasion. This digital method of billing is being increasingly mandated by governments as a means to enhance tax compliance.

Meaning

E-Invoice also known as E-invoicing is a system in which all Business-to-Business (B2B) invoices and other documents are uploaded and authenticated electronically on the government's GST Invoice Registration Portal (IRP). After the successful verification of the invoice, a unique Invoice Reference Number (IRN) is generated by the IRP portal. Additionally, the applicable businesses must generate a QR code for the e-invoice. Further, together with the IRN and QR code, a digitally signed invoice would be available for the supplier. This is issued to the product's recipient and is known as the e-invoice or electronic invoice.

E-invoicing statutory provisions:

According to Rule 48(4) of the CGST Rules, 2017, taxpayers are obligated to create an electronic invoice by inputting the designated details into FORM GST INV-01 on the Invoice Registration Portal (IRP) and acquire the Invoice Reference Number (IRN).

Registered individuals, except specified groups, whose aggregate turnover in any previous financial year from 2017-18 onward surpasses Rs. 5 crores, have been designated as the category of individuals obligated to create E-invoices for B2B supplies (supply of goods or services or both to a registered person) or for exports. At present, such designated individuals are not obliged to report B2C (business-to-consumer) invoices on the Invoice Registration Portal (IRP). However, the inclusion of B2C invoice reporting into e-invoicing will be implemented in a subsequent phase. Additionally, it's important to note that e-invoicing does not apply to invoices issued by Input Service Distributors (ISD).

In cases where e-invoicing is mandatory, invoices issued by the mentioned individuals in any manner other than that specified in rule 48(4) will not be considered valid invoices. Additionally, when e-invoicing is in effect, there is no requirement to provide invoice duplicates or triplicates.

E-invoicing is mandatory even if a notified individual issues an invoice for supplies made by them, for which the tax is payable under the reverse charge mechanism as per Section 9(3).

Phase-wise summary of E-invoicing applicability as per aggregate turnover of a taxpayer:

What is the turnover limit for issuing E-Invoicing?

According to Notification No. 10/2023 Central Tax dated 10-05-2023, if the turnover of any taxpayer in any one year from FY 2017-18 to FY 2022-23 is Rs.5 Crore or more then from 01.08.2023 all B2B invoices will now compulsorily be created as E-invoice.

How to check the requirement of E-invoice applicability for FY 2022-23

Who is exempt from E-Invoicing?

The Registered person who is exempt from e-invoicing irrespective of the annual turnover as per the CBIC Notification No.13/2020.

Businesses exempt from e-invoicing:

• SEZ units. (CBIC Notification No. 61/2020)
• An insurer or a banking company or a financial institution, including a non-banking financial company.
• Goods transport agency supplying services for transportation of goods by road in a goods carriage.
• Suppliers of passenger transportation services.
• Suppliers of services by way of admission to an exhibition of cinematograph films on multiplex screens.
• A government department and Local authority. (CBIC Notification No. 23/2021)
• Persons registered in terms of Rule 14 of CGST Rules (OIDAR)

Documents exempt from e-invoicing

• Delivery challans
• Bill of supply
• Bill of entry
• ISD invoices

Transactions exempt from e-invoicing

• Any Business-to-Consumers (B2C) sales
• Nil-rated or non-taxable or exempt B2B sale of goods or services
• Nil-rated or non-taxable or exempt B2C sale of goods or services
• Imports, high sea sales, and bonded warehouse sales
• Free Trade & Warehousing Zones (FTWZ)

What will happen if Invoices have not been created?

According to section-122 of CGST Act’2017, there are broadly 2 penalties that are applicable in case of non-compliance with e-invoicing norms.

• Penalty for non-issuance of e-invoice: 100% of the tax due or Rs.10,000 whichever is higher.
• Penalty for incorrect or erroneous e-invoice: up to Rs.25,000.

Cancellation of reported E-invoice

The IRN reported on the Invoice Registration Portal (IRP) by the seller will be canceled by submitting a cancel request within 24 hours from the time of generation.

• Each invoice will be canceled individually.
• There is no provision to modify, alter or partially cancel an already generated E-invoice.
• Once the IRN has been canceled, the same invoice number cannot be used when generating another invoice.
• If an E-invoice has been cancelled, then reporting the IRN number must be done within 24 hours of canceling.

FAQ’s on E-Invoicing

Q-1 What is E-invoicing?
Ans- As per Rule 48(4) of CGST Rules, the notified class of registered persons has to prepare an invoice by uploading specified particulars of the invoice (in FORM GST INV-01) on the Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).

After following the above ‘e-invoicing’ process, the invoice copy containing inter alia, the IRN (with QR Code) issued by the notified supplier to the buyer is commonly referred to as an ‘e-invoice’ in GST.

Because of the standard e-invoice schema (INV-01), ‘e-invoicing’ facilitates the exchange of the invoice document (structured invoice data) between a supplier and a buyer in an integrated electronic format.

Please note that ‘e-invoice’ in ‘e-invoicing’ doesn’t mean generation of invoice by a Government portal.

Q-2 What documents are presently covered under E-invoicing?
Ans- Invoices, Credit Notes & Debit Notes when issued by a notified class of taxpayers (to registered persons (B2B) or for the purpose of Exports) are currently covered under e-invoice.

Though different documents are covered, for ease of reference and understanding, the system is referred to as ‘e-invoicing’.

Q-3 What supplies are presently covered under E-invoice?
Ans- Supplies to registered persons (B2B), Supplies to SEZs (with/without payment), Exports (with/without payment), and Deemed Exports, by notified class of taxpayers are currently covered under e-invoice.

Q-4 B2C (Business to Consumer) supplies can also be reported by notified persons?
Ans- No. Reporting B2C invoices by notified persons is not applicable/allowed currently.

Q-5 Is E-invoicing applicable for NIL-rated or wholly-exempt supplies?
Ans- No. In those cases, a bill of supply is issued and not a tax invoice.

Q-6 Do SEZ Developers need to issue e-invoices?
Ans- Yes, if they have the specified turnover and fulfill other conditions of the notification.

In terms of Notification (Central Tax) 61/2020 dt. 30-7-2020, only SEZ Units are exempted from issuing e-invoices.

Q-7 Whether E-invoicing is applicable for supplies involving Reverse Charge?
Ans- If the invoice issued by the notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.

For example, a taxpayer (say Goods Transport Agency or a Firm of Advocates having aggregate turnover in an FY is more than Rs. 500 Cr.) is supplying services to a company (who will be discharging tax liability as recipient under RCM), such invoices have to be reported by the notified person to IRP.

On the other hand, where supplies are received by a notified person from (i) an unregistered person (attracting reverse charge under Section 9(4)) or (ii) through import of services, e-invoicing doesn’t arise / not applicable.

Q-8 If E-invoice is applicable and issued, am I supposed to issue copies of invoice in triplicate/duplicate?
Ans- Where e-invoicing is applicable, there is no need of issuing invoice copies in triplicate/duplicate. This is clearly specified in Rule 48(6).

Q-9 For generating IRN, whether the GSTINs of supplier and recipient should be active on the GST system?
Ans- Yes, as e-invoicing is mandated for specified registered persons to other ‘registered persons’, both the GSTINs of supplier and recipient shall be active in the GST System, as on the date of the document being reported.

Q-10 Taxpayers (for whom e-invoicing is compulsory) will be making supplies to small businesses (for whom e-invoicing is not mandatory). How these small businesses will get the invoice from those big suppliers?
Ans- In the same way, as it is being done now. For example, the large taxpayers can convert the signed e-invoice JSON into PDF and share the copy by e-mail or send printed copies by post, courier etc.

However, a mechanism to enable system-to-system exchange of e-invoices will be made available in due course.

Q-11 Can I amend the details of a reported invoice for which IRN has already been generated?
Ans- Amendments are not possible on IRP. Any changes in the invoice details reported to IRP can be carried out on the GST portal (while filing GSTR-1). In case GSTR1 has already been filed, then use the mechanism of amendment as provided under GST. However, these changes will be flagged to the proper officer for information.

Q-12 Can an IRN/invoice reported to IRP be cancelled?
Ans- Yes, the cancellation request can be triggered through ‘Cancel API’ within 24 hours from the time of reporting the invoice to IRP.

However, if the connected e-way bill is active or verified by the officer during transit, cancellation of IRN will not be permitted. In case of cancellation of IRN, GSTR-1 be updated with such ‘cancelled’ status.

Q-13 What is E-invoicing applicability from 1^st April 2021?
Ans- As per Notification No. 5/2021- Central Tax, from 1.04.2021 E-invoice is applicable to taxpayers having an aggregate turnover of more than Rs. 50 Crore.

Q-14 What is the E-invoice turnover limit from 1^st April 2022?
Ans- As per Notification No. 1/2022- Central Tax, from 1.04.2022 E-invoice is applicable to taxpayers having an aggregate turnover of more than Rs. 20 Crore.

Q-15 From which date E-invoice turnover limit of Rs. 10 Crore is applicable?
Ans- As per Notification No. 17/2022- Central Tax, from 1.10.2022 E-invoice is applicable to taxpayers having an aggregate turnover of more than Rs. 10 Crore.

Q-16 What is the time limit to generate E-invoicing?
Ans- E-invoice must be generated within 30 days from the date of Invoice, debit-credit note as the case may be. However, this rule of E-invoicing is applicable only to businesses with an Annual aggregate turnover of Rs.100 Crore & more.

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