Introduction:- Starting from August 01, 2023, a registered person whose aggregate turnover in any preceding financial year starting from 2017-18 onwards exceeds Rs. 5 crores has to generate e-invoice, i.e. IRN from IRP Portal. At present, this limit is Rs. 10 crores.
However, certain taxpayers are specifically exempted from e-invoicing even if their aggregate turnover crosses the above-mentioned threshold limits.
In this regard, the Central Board of Indirect Taxes and Customs (CBIC) and the Goods and Services Tax Network (GSTN) have prescribed certain declarations to be submitted so that the recipient do not insist the supplier to provide an e-invoice for correct availment of ITC.
List of taxpayers specifically exempted from e-invoicing:
- Government
- SEZ units (not developers)
- Insurers
- Banking companies or financial institutions
- Goods Transport Agencies
- Passenger transport service providers
- Cinema halls
- Local authorities.
Nevertheless, it is worth noting that e-invoicing provisions are not applicable for exempt supplies and B2C supplies.
GSTN launched e-Invoice Exemption Declaration Functionality:
This new feature, launched vide Advisory dated 24th July 2023, is designed specifically for taxpayers who are exempted from implementing e-invoicing under the CGST Rules, but are by default enabled for it.
Link for the Advisory- New Functionality for e-Invoice Exemption Declaration Now Live on GSTN
This functionality is introduced in line with GSTN’s earlier Advisory dated 16th June 2023, where GSTN had enabled, all eligible taxpayers with an Aggregate Annual Turnover (AATO) 5 crores and above as per GSTN records (GSTR-3B) in any preceding financial year, for e-Invoicing. These taxpayers were enabled on all six IRP portals including NIC-IRP for e-Invoice reporting.
Now for streamlining the process for specifically exempted taxpayers and making their compliance journey more seamless, separate functionality is provided to them to get rid of auto-enablement.
It is important to note that any declaration made using this functionality will not change the e-Invoice enablement status of the taxpayer.
Hence, on safer side, recipient needs to obtain such electronic declaration from the supplier to avoid inadmisibility of its ITC in future.
Further, as per the Advisory, the compliance of this functionality is voluntary.
Declaration on Tax Invoices: Apart from declaration submitted on GST portal, as per Rule 46(s) of the CGST Rules, following declaration is also to be given on each tax invoice issued by persons specifically exempted from e-invoicing-
“I/We hereby declare that though our aggregate turnover in any preceding financial year from 2017-18 onwards is more than the aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.”
Responsibility of the recipient: As per Rule 48(5) of the CGST Rules, if e-invoicing provisions are applicable to a registered person but they do not issue an e-invoice to the recipient, it shall not be treated as an invoice for the purpose of availment of ITC and the ITC will become inadmissible in the hands of recipient.
Hence recipient needs to cross verify from these declarations that his supplier is not liable to generate e-invoice as it is specifically exempted from doing so even if the aggregate turnover crosses the threshold limit. Otherwise, ITC will become inadmissible.
Concluding Remarks These declarations aim to substantiate the supplier’s burden of proving that even if its aggregate turnover in any preceding financial year from 2017-18 onwards is more than the threshold limit(Rs. 5 crores w.e.f. 1st August 2023), it is not required to prepare e-invoice as it is specifically exempted.
On the other hand, the recipient needs to obtain such declarations from the supplier to avoid inadmisibility of its ITC in future.
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