What is e-invoicing under GST: Benefits, Limit & Applicability

Modern technology and digital transformation have evolved a new era of tax administration based on technologies like AI, Big Data etc. e-invoicing is also one such step towards digitizing the compliances under GST law. GST e-invoicing is a path-breaking initiative by the Government which will revolutionize the manner the businesses interact with each other. Presently, businesses are using various accounting or billing software according to their size or requirements. These softwares are based on different technology platforms and electronic formats. Thus, it is not possible for the business as well as Government to read and interpret the data in uniform manner. E-invoicing is a solution to this problem. Continue reading about e-invoicing…

What is e-invoicing under GST?

• ‘e-invoicing’ also known as ‘electronic invoicing’ is a mechanism of authenticating invoices by a notified class of registered persons by uploading particulars of invoice in FORM GST INV-01 on Invoice Generation Portal (IRP) and obtaining an Invoice Reference Number (IRN).
• Please note that e-invoicing doesn’t mean generating invoices through GST portal but it implies submitting the details/ particulars of invoice on IRP.
• Under e-invoicing, the businesses shall generate the GST invoices on their own billing/ accounting software. However, they are required to submit such details of invoices on Government portal (IRP).
• On submission of invoice on IRP, the IRP shall generate one unique registered IRN for each invoice which is digitally signed e-invoice with unique IRN along with a QR Code.
• Details from e-invoices gets transferred from IRP to GST portal and e-way bill portal in real-time. Therefore, Invoices related data shall get automatically pushed in GSTR-1 of the taxpayer and he shall not be required to upload the invoices manually while filing GSTR-1 return. Similarly, the taxpayer will not be required to fill part-A of e-way bill separately.

Benefits of e-invoicing system

Businesses have the following benefits by using e-invoice system initiated by GSTN:

• E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
• E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
• Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
• Backward integration and automation of the tax return filing process- the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
• Faster availability of genuine input tax credit.
• Lesser possibility of audits/ surveys by the tax authorities since the information they require is available at a transaction level.

Who shall generate e-invoice: Applicability

E-invoicing has been made mandatory with effect from 01^st October 2020 in a phased manner on the basis of turnover threshold. Initially, e-invoicing was made applicable on the registered taxpayers having an annual aggregate turnover more than Rs. 500 Crores.

However, such registered taxpayers were allowed relaxation from penal consequences in respect of invoices raised between 1^st October 2020 and 31^st October 2020 subject to the condition that they obtain an Invoice Reference Number (IRN) within 30 days of the date of invoice. Later, the turnover threshold has been reduced by the Government in a phased manner as below:

Note:

• E-invoicing provisions are applicable if the aggregate turnover of the taxpayer crosses the above thresholds in any of the financial year from 2017-18 and onwards.
• Aggregate Turnover shall include the turnover of all GSTINs under a single PAN across India.

How to check eligibility of taxpayer for e-invoicing?

A facility has been provided at E-invoicing Portal https://einvoice1.gst.gov.in/ to check eligibility of taxpayer for e-invoicing. You need to follows the following steps to check your eligibility:

• Go to “Search” Tab on the E-invoicing Portal
• Click on ‘e-invoice status of taxpayer’
• Enter GSTIN in the box
• Enter Captcha and click on ‘Go’

Who is exempted from e-invoicing requirements?

E-invoicing provisions shall not be applicable to the following categories of registered taxpayers even if their annual aggregate turnover is exceeding the turnover thresholds. You may also refer Notification No. 13/2020- Central Tax as amended vide Notification No. 61/2020 & Notification No. 23/2021- Central Tax:

• Special Economic Zone (SEZ) units [not SEZ developer]
• A Government Department & Local Authority
• An insurer or banking company or a financial institution, including a non-banking finance company (NBFC)
• A registered person supplying passenger transportation services
• Goods Transport Agency (GTA) supplying services in relation to transportation of goods by road in a goods carriage
• Supply of services by way of admission to exhibition of cinematograph films in multiplex screens.
• Persons registered in terms of rule 14 of CGST Rules (OIDAR)

Departments clarifications/ FAQs on applicability of e-invoicing to registered taxpayers

Whether the exemption from mandatory generation of e-invoices in terms of Notification No. 13/2020- Central Tax, dated 21^st March 2020, as amended, is available for the entity as a whole, or whether the same is available only in respect of certain supplies made by the said entity?

Clarification: In terms of the Notification No. 13/2020- Central Tax, certain entities/ sectors have been exempted from mandatory generation of e-invoices as per sub-rule (4) of Rule 48 of CGST Rules, 2017. It is hereby clarified that the said exemption from generation of e-invoices is for the entity as a whole and is not restricted by the nature of supply being made by the said entity.

Illustration: A Banking Company providing banking services, may also be involved in making supply of some goods, including bullion. The said banking company is exempted from mandatory issuance of e-invoice in terms of Notification No. 13/2020-Central Tax, dated 21st March, 2020, as amended, for all supplies of goods and services and thus, will not be required to issue e-invoice with respect to any supply made by it.

Whether e-invoicing is applicable for supplies made by a registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, 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?

Clarification:

• 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, the 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 the 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.

Do SEZ Developers required to issue e-invoices?

Yes, SEZ developers are mandated to issue e-invoices in case their annual aggregate turnover exceeds the threshold limit. Only SEZ units have been allowed exemption from generation of e-invoices.

Is e-invoicing applicable for supplies by notified persons to SEZ units/ developers?

Yes, e-invoicing provisions are applicable in this case where supplies are made by a notified person to a SEZ unit/ developer.

Are Free Trade & Warehousing Zones (FTWZ) exempt from e-invoicing?

Yes, as per the foreign trade policy, Free Trade & Warehousing Zones (FTWZ) are only a special category of SEZ, with a focus on trading and warehousing.

Is e-invoicing applicable for NIL-rated or wholly-exempt supplies?

No, e-invoicing is not required in the case of Nil-rated or wholly-exempt supplies as only a bill of supply is issued in this case. No tax invoice is issued in case of Nil-rated or wholly-exempt supplies.

Is e-invoicing applicable to invoices issued by Input Service Distributor (ISD)?

No, e-invoicing mandate is not applicable in this case.

Is it compulsory to generate e-invoice in case of export of goods or services?

Yes, in case of notified persons having annual aggregate turnover in excess of threshold limit, it is compulsory to generate e-invoices in case of export transactions of B2B nature.

Whether e-invoicing applicable for invoices between two different GSTINs under the same PAN?

Yes, e-invoicing applicable in case of supplies between two different GSTINs under the same PAN.

Applicability of e-invoicing for supplies under reverse charge

If the invoice is issued by a notified person (supplier) in respect of supplies made by him which attracts reverse charge under section 9(3) of the CGST Act/ section 5(3) of the IGST Act, e-invoicing is applicable and are to be reported by such notified person to IRP.

Where the supplies are received by notified person from:

• An unregistered person (attracting reverse charge u/s 9(4) of CGST Act/ 5(4) of IGST Act; or
• Import of services;

e-invoicing shall not be applicable.

Do you need to upload RCM invoices also?

Yes, if you are eligible for e-invoicing, all the invoices including RCM invoices issued by the supplier need to be registered.

What are the supplies covered under e-invoicing?

E-invoicing mandate is applicable for the following type of supplies by the notified taxpayers:

• Taxable supplies to registered persons [B2B taxable supplies]
• Supplies made to SEZ [with or without payment of tax]
• Exports [with or without payment of tax]
• Deemed Exports

It shall not cover Free Trade & Warehouse Zones, import transactions, input service distributors, high sea sales and bonded warehouse sales.

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