Gearing up for E-invoicing in the 7th year of GST regime

Explore the evolving landscape of e-invoicing under the GST regime in its 7th year. Learn about recent amendments, the reduction in the threshold limit, proposed changes, exceptions, and new functionalities on the GST portal. Stay informed and prepare your business for the technological compliance required for seamless integration with the e-invoicing system.

In the realm of taxation, the concept of e-invoicing has emerged as a revolutionary step towards simplifying processes and ensuring compliance with tax regulations. Under the GST regime, the introduction of e-invoicing has brought about significant changes, transforming the way businesses generate and manage their invoices. In this article, we delve into the world of e-invoicing, exploring the recent developments and amendments made by the Central Board of Indirect Taxes and Customs (CBIC) and the Goods and Services Tax Network (GSTN). These changes have necessitated a greater technological compliance from taxpayers, emphasizing the need to adapt to evolving practices and stay ahead of regulatory transformations.

Concept of E-Invoicing under GST

The concept of E-invoicing was introduced under GST vide Notification No. 13/2020–Central Tax dated 21st March 2020 (“Base Notification”) issued under Rule 48(4) of the CGST Rules, 2017. Recent changes brought by CBIC and GSTN in the era of E-invoicing are analyzed in detail in this article. Taxpayers now need to gear up and become more technologically compliant to ensure timely compliance with the e-invoicing mechanism. Embracing technology-compliant practices will be crucial for staying ahead of regulatory changes and ensuring seamless integration with the evolving tax landscape.

Reduction in Threshold Limit for E-Invoicing to Rs. 5 crores w.e.f. 1st August 2023

Initially, the threshold limit was Rs. 500 crores, i.e. e-invoicing was applicable for registered persons having an aggregate turnover in any preceding financial year from 2017-18 onwards exceeding Rs. 500 crores.

Since then, this threshold limit has been reduced from time to time by amending the Base Notification.

At present, the threshold limit is Rs. 10 crores [Notification No. 17/2022- Central Tax dated 1st August 2022].

W.e.f. next month, i.e. 1st August 2023, the threshold limit for e-invoicing is reduced to Rs. 5 crores vide Notification No. 10/2023 – Central Tax dated 10th May 2023.

Hence, starting from August 01, 2023, a registered person whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 5 crores has to generate e-invoice, i.e. IRN from IRP Portal.

Key Points:

• The threshold limit of Rs. 5 crores applies only for preceding FYs starting from 2017-18 onwards. If the aggregate turnover has not crossed Rs. 5 crores in any of the preceding years but crosses in the current year, e-invoicing is not required for the current year.
• As per Rule 48(5) of the CGST Rules 2017, 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.

GSTN Advisory on Enablement Status

On 16th June 2023, GSTN issued an advisory to inform that GSTN has ENABLED all eligible taxpayers with an Aggregate Annual Turnover (AATO) of 5 crores and above as per GSTN records in any preceding financial year for e-invoicing.

You can check your enablement status on the e-Invoice portal at https://einvoice.gst.gov.in.

Note: The enablement status indicated on the e-Invoice portal does not indicate a legal obligation on taxpayers to use e-Invoicing.

However, the actual liability to generate IRN shall be checked by taxpayers with respect to the applicable notification in the light of facts pertaining to them.

While the listing of enabled GSTINs is purely based on the turnover criteria reported in GSTR-3B, it is essential for taxpayers to confirm whether they fulfill the conditions outlined in the notification/rules.

In case a taxpayer who is otherwise eligible but not auto-enabled on the e-Invoice portal, they can self-enable for e-Invoicing using the functionality provided on the portal.

Detailed Advisory can be accessed at: GST e-Invoicing Enablement Status: Lowered Threshold & Compliance Guidelines

Proposed Reduction in Threshold Limit for E-Invoicing to Rs. 1.5 crores

As per recent news, the Government is considering broadening the scope of e-invoicing by further reducing the threshold to Rs. 1.5 crores w.e.f. next year. The GST Council is expected to discuss this reduction in the threshold limit in its ensuing 50th meeting to be held on 11th July 2023.

There is no doubt that these small taxpayers need to be more tech-savvy to avoid non-compliances.

To comply with this reduction in threshold limits, it becomes crucial for businesses to stay informed and prepared for any changes or requirements that may arise as a result. Adapting to technology-driven compliance measures will not only ensure adherence to the law but also provide businesses with opportunities to optimize their processes, reduce manual efforts, and enhance overall efficiency.

Exceptions to the Provisions of E-Invoicing

As per the Base Notification, e-invoicing provisions are applicable only for B2B Supplies, supplies to SEZs, Exports, and Deemed exports.

It is to be noted that taxpayers making exempt supplies are not required to generate e-invoices as e-invoicing is not applicable to the Bill of Supplies.

Furthermore, taxpayers making B2C supplies are not required to generate e-invoices as it is not applicable to B2C supplies.

Additionally, certain categories of persons are specifically exempted from e-invoicing provisions, namely Government, SEZ units (not developers), insurers, banking companies or financial institutions, GTA, passenger transport service providers, cinema halls, and local authorities.

Exemption from e-invoicing is available for the entity as a whole:

CBIC vide Circular No. 186/18/2022-GST dated 27th December 2022 clarified that the above category of persons specifically exempted from the 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.

The Circular reads as follows:

“It is hereby clarified that the said exemption from the 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 the supply of some goods, including bullion. The said banking company is exempted from the 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 an e-invoice with respect to any supply made by it.”

New Functionalities on the GST Portal

E-Invoice Verifier App:

On 8th June 2023, GSTN launched an E-Invoice Verifier App named “E-Invoice QR Code Verifier”.

Taxpayers can utilize the App to scan the QR codes on the e-Invoices. The App will authenticate the information embedded in the code, and one can compare it with the information printed on the invoice.

An important feature of this App is that it is Non-Login Based, i.e. users are not required to create an account or provide sensitive personal information to access its functionalities.

Detailed Advisory can be accessed at: Simplify E-Invoice Verification with E-Invoice Verifier App by GSTN

Deferment of Mandatory 7 Days Time Limit

GSTN vide Advisory dated 6th May 2023 informed that it has been decided by the competent authority to defer the imposition of a time limit of 7 days on reporting Tax invoices, Debit Notes, Credit Notes on the e-invoice IRP portals for taxpayers with an aggregate turnover greater than or equal to 100 crores by three months.

Earlier, vide Advisory dated 12th April 2023, read with the updated advisory dated 13th April 2023, GSTN had introduced a mandatory 7-day time limit on reporting Tax invoices, Debit Notes, Credit Notes on the e-invoice IRP portals for taxpayers with AATO greater than or equal to 100 crores. In simple words, taxpayers in this category would not be allowed to report tax invoices, Debit Notes, Credit Notes older than 7 days on the date of reporting.

Had this limit not been deferred, then tomorrow, i.e. 8th August 2023, would have been the last date for reporting the tax invoices, Debit Notes, Credit Notes issued on 1st August 2023, on the e-invoice IRP portals for taxpayers with AATO greater than or equal to 100 crores.

Detailed Advisory can be accessed at: https://www.gst.gov.in/newsandupdates/read/582

As per the Author’s view, this may possibly be effectively rolled out along with the reduction in the threshold limit to Rs. 5 crores w.e.f. 1st August 2023. Hence taxpayers need to get ready with their systems till that time to adhere with the maximum time limit of 7 days.

Concluding Remarks

The expansion of the e-invoicing ambit aligns with the government’s broader digitalization efforts and its vision to create a technology-compliant tax ecosystem. It is a positive step towards harnessing the power of technology to simplify processes, improve accuracy, and ensure greater compliance with tax regulations. With more taxpayers coming under the purview of e-invoicing, the government aims to create a level playing field and reduce the scope for tax evasion, ultimately promoting fair and transparent business practices.

As the government moves forward with its plans to widen the ambit of e-invoicing, it is advisable for businesses to closely monitor updates, engage with relevant authorities, and proactively embrace digital solutions that enable seamless integration with the e-invoicing system. This will not only facilitate compliance but also enable businesses to leverage the benefits of automation, data analytics, and improved business insights.