The mandatory e-Invoicing under Goods and Service Tax (GST) will be extended to all businesses with an aggregate turnover limit of Rs.10 crore above from 1st October 2022.
Central Board of Indirect Tax & Customs (CBIC) issued a Gazette notification no 17/2022- Central Tax in this regard on 1st August 2022 based on the GST Council's recommendation.
As mentioned in the CBIC notification,
"In the said notification, in the first paragraph, with effect from the 1st day of October 2022, for the words "twenty crore rupees," the words "ten crore rupees" shall be substituted."
So, the GST e-invoice annual turnover threshold limit has been reduced from Rs.20 crore to 10 crores. The government has informed that the revised turnover limit will widen the ambit of e-invoicing to plug the existing revenue leakage and also ensure better business tax compliances.
The GST e-invoicing, also known as electronic invoicing, was approved for implementation by the 37th GST council on 20th September 2019. The e-invoicing system is directed upon all Business-to-Business (B2B) and exporting business invoices.
Since then, the GST council has progressively reduced the turnover threshold limit at different points in time.
If you are a business owner looking for the best-in-class GST e-invoicing solution and assistance for your business, eAuditor Office tax experts will help you.
MISCONCEPTION about GST E-Invoice:
Mistakenly, many consider GST e-invoicing as generating an e-invoice on the GST portal. Still, GST e-invoice is not about creating an invoice in a soft copy, PDF, etc.
It is a wrong assumption.
All the applicable GST taxpayers can continue to generate invoices from their ERP/ billing portal. The only requirement is to upload your already generated invoice to the Invoice Registration Portal (IRP) in a standard format and get it validated by the GST network.
What is E-invoicing under GST?
As per the GST council direction, every notified taxpayer has to upload all their invoice document in the IRP in a standard format published under the GST portal after the due validation of data.
The IRP will provide the taxpayer with an Invoice Reference Number (IRN) with a signed invoice and QR code. Once your invoice is validated with the generation of IRN, all your business invoice information is automatically transferred from IRP to the GST portal and e-way bill system in real-time. It provides ease of filing GSTR-1 and Part-A components of the E-way bill.
The e-invoicing system is developed by National Informatics Centre (NIC) in a particular schema, otherwise known as a standard format, as per the direction of the GST council.
The IRN can be generated only by the B2B supplier, not the buyer or transporter.
Why do we need an e-invoicing system?
In India, with the introduction of the Goods and Service Tax (GST), the government has scaled up technology in taxpayers' data administration. E-invoicing under GST is a step further into the country's real-time indirect tax administration.
Currently, businesses generate invoices through different ERP software as per their convenient format. While filing GSTR-1 returns, the taxpayer has to upload the invoice details manually to get the GSTR-2A for the recipients/buyer.
This system doesn't provide space for inter-operability and machine-to-machine electronic exchange of taxpayers' information between the portal like e-way bills and GST portal.
It makes the entire process of GSTR filing quite tedious and time-consuming. To eliminate the redundancy in the system, the GST council decided to introduce a standard format in the e-invoice system. It is called a Schema.
It is notified as INV-01.
Introducing an e-invoice system aims to improve machine readability and bring a uniform structure for better interpretation across the country.
Bringing a standard format in e-invoice tax reporting ensures inter-operability. Invoice generated from one software can be read by another software and eliminates the fresh addition of data in the other process. In addition, we can eradicate data-entry errors while GSTR-1 return filing.
Evolution of e-Invoicing under GST
From 2020 to date, GST e-invoicing has undergone several revisions from time to time, and it's been implemented in a phased manner.
Let's understand how it has evolved.
As per CBIC notification no. 61/2020 and 70/2020, the e-invoicing limit of annual aggregate turnover has been increased from INR 100 crores to INR 500 crores in any preceding financial year from 2017-18. This provision came into application on 1st October 2020 effectively.
As per CBIC notification no. 88/2020, e-invoicing has been made mandatory for businesses having an aggregate turnover of more than INR 100 crores in a financial year. It was made applicable from 1st January 2021.
As per CBIC notification 05/2021, e-invoicing was made compulsory for all GST registered persons having an aggregate turnover of more than INR 50 crores in a financial year. It came to applicability on 1st April 2021.
According to notification no. 1/2022, e-invoicing was made compulsory for all GST-registered persons having an aggregate turnover of more than INR 20 crores in a financial year. It will come to applicability from 1st April 2022.
According to notification no. 17/2022, e-invoicing was made compulsory for all GST registered persons having an aggregate turnover of INR 10 crores and above in a financial year. It will come to applicability from 01st October 2022.
Who is eligible for GST e-invoicing?
As per the recent notification No. 17/2022, issued by the Central Board of Indirect taxes and Customs (CBIC), e-invoicing is mandatory for taxpayers with an annual aggregate turnover of more than INR 10 crore with effect from 1st October 2022.
It is important to note that the turnover threshold is defined w.r.t aggregate turnover as defined in section 2(6) of the CGST/SGST act.
It is applicable for a taxpayer that exceeds the specified turnover limit mentioned above in any financial year from 2017-18.
Consider an organization XYZ with an aggregate turnover of
Business In Operation - Years
Annual Aggregate Turnover
Rs 7 crore
Rs 9 crore
Rs 12 crore
Rs 15 crore (Till Date)
In the example mentioned above, for FY 2020-21, the organization has crossed the turnover limit of INR 10 crore. So it is mandatory to upload their invoice in IRP and generate IRN from 1st October 2022.
Who is exempted from the GST e-invoicing system?
Some taxpayers are exempted from issuing e-invoices under GST regardless of the aggregate turnover.
List of exempted classes from e-invoicing under GST:
- Special Economic Zone (SEZ) Units
- Banks, insurers, and other financial institutions. It includes Non-banking Financial Company (NBFC)
- Provider of passenger transportation services
- Any goods transportation agency that provides supplying services via roadways.
- Any government department and the local authority is exempted from e-invoicing as per CBIC notification no 23/2021
- Any business service includes admission to an exhibition of cinematography films in multiplex cine halls.
How do businesses benefit from the GST e-invoicing?
- e-Invoice plugs the meaningful data reconciliation under GST.
- Quicker availability of input tax credit (ITC).
- E-invoice enables near real-time tracking of invoices prepared by the suppliers/sellers.
- Eliminates redundancy in the existing system and reduces data-entry errors by allowing interoperability between the different designed systems.
- Introducing standard format for B2B invoices for enabling machine readability.
- Tax authorities have quicker and lesser auditing since the required information is available at the transaction level.
- Automation of GST returns filing with the help of backward system integration for auto-populating the information established during generation IRN with QR code. It is especially beneficial when filing PART-A of e-way bills and GSTR-1 returns.
- Reduction in the overall compliance burden of the taxpayers.
How do government benefit from GST e-invoicing?
Here is the list of beneficial outcomes of B2B e-invoicing for the govt.:
- Uploading invoices to generate IRN will eliminate multiple reporting in various forms like GSTR-1 and e-way bills.
- Significant reduction in data-entry errors.
- This new system of e-invoicing aims to make it an integral part of the business process and remove the unnecessary task of invoice compilation at the end of the return period.
- Tax authorities made it tough to raise fake invoices for claiming Input Tax-credit (ITC).
- With real-time access to taxpayers' transaction information, tax authorities can reduce the no. of fraud cases and curb tax evasions.
How to verify the signed e-Invoice under GST?
Once you have successfully generated IRN signed with the QR code, upload your invoice to the IRP. You can verify the GST signature authenticity of the e-invoice and the content of the invoice by uploading the JSON signed file.
Let's check how to do that.
Visit : https://einvoice1.gst.gov.in/
Hover on the Search tab and select the "Verify Signed Invoice" from the drop-down menu.
You will be redirected to the Verify Signed Invoice screen, where you need to upload the Signed JSON file and click Submit.
Once you submit the verification request, the system will validate your request and show up the appropriate error message on the screen, if there is any.
If not, the system will show the verified invoice with the green checkmark, "This message is Digitally Signed Invoice."
SAMPLE E-invoice under GST:
Now that you have reached here, we are hopeful that the descriptive information given above has provided you with further clarity into the topic to ease your transition into it.
We provide fast, simple, and secure e-invoicing solutions for your business with 24x7 support.
Author : Dharani
Date : 03-Aug-2022