E-invoice and its applicability under GST

E-invoicing is shortly and more popularly known as e-invoice under GST. E-invoice is basically a system through which normally generated invoices are electronically authenticated by GSTN.

Mistakenly it is understood that e-invoice means the generation of invoice via GST portal. However, correctly, the same means submitting/ uploading of ERP/ accounting software generated invoice into Invoice Registration Portal (IRP) for electronic authentication.

The present article tries to clear the basics of e-invoice; covers various stages of implementation of e-invoice and briefly explains the applicability of the same under GST.

Basics of e-invoice under GST–

Basics of e-invoice are highlighted hereunder-

• E-invoice is a process through which a normally generated invoice is authenticated by GSTN. Post authentication, each invoice will be issued an IRN (i.e., Invoice Reference Number).
• E-invoice is applicable only to B2B transactions (i.e. supply of goods or services or both to registered person).
• E-invoicing basically aims reduction in evasion of tax; auto-population of various returns and also targets the reduction of reconciliations problem currently prevailing under GST.

Various stages of implementation of e-invoice under GST–

GST council, for the very first time, recommended the implementation of e-invoicing under GST during the 35^th GST Council meeting held on 21^st June 2019. Hierarchy of implementation of e-invoice is tabulated hereunder-

Applicability and non-applicability of e-invoice under GST–

Stage-wise applicability of e-invoice under GST based on aggregate turnover is explained hereunder-

However, e-invoice doesn’t apply to the following category of persons irrespective of their turnover-

1. Special Economic Zone units,

2. An insurer,

3. An NBFC,

4. A Goods Transport Agency,

5. A banking company,

6. A financial institution,

7. A person supplying passenger transportation services,

8. A person supplying services of admission to the exhibition of the cinematographic films in multiplex services.

Additionally, e-invoicing doesn’t apply to any person having an aggregate turnover of less than INR 100 Crores (INR 50 Crores from 1^st April 2021) in a financial year.

Further, e-invoicing doesn’t apply in B2C transactions (i.e. supply of goods or services or both to an unregistered person).