Introduction
E-invoicing has become a crucial aspect of GST compliance in India, streamlining the way businesses generate and report invoices. With a recent notification, the new rule for E-invoicing threshold limit of 5 crore came into effect from August 1, 2023. On 11th September 2023, an advisory of GST department also came in National Informatics Centre regarding a change in time line for e-invoice reporting. In this article, we will explore such key aspects of this e-invoicing system, including relevant provisions, important timelines, and threshold limits, to ensure seamless compliance and avoid potential legal issues.
What is E-Invoicing?
E-Invoicing, introduced during the 35th meeting of the GST Council, is an electronic system that authenticates B2B invoices electronically through the GSTN (Goods and Services Tax Network). It doesn’t involve generating invoices on the GST portal but rather submitting already generated invoices to a common e-invoice portal. This portal automates multi-purpose reporting with a one-time input of invoice details. The CBIC (Central Board of Indirect Taxes and Customs) specified a set of common portals for e-invoicing through Notification No.69/2019 – Central Tax.
Under this system, each invoice receives an identification number when uploaded to the Invoice Registration Portal (IRP), managed by GSTN. This information is seamlessly transferred to both the GST portal and the e-way bill portal in real-time, eliminating the need for manual data entry when filing GSTR-1 returns and generating e-way bills.
Benefits of E-Invoicing System
(i) Reduced Mismatch Errors: E-invoicing addresses data reconciliation gaps in GST, reducing mismatch errors.
(ii) Interoperability: Invoices created on one software can be read by another, reducing data entry errors.
(iii) Real-time Tracking: Suppliers can track invoices in real-time.
(iv) Automated Tax Return Filing: Relevant invoice details are auto-populated in various returns, simplifying the tax return filing process.
(v) Faster Input Tax Credit: E-invoicing enables quicker availability of genuine input tax credit.
(vi) Reduced Audits: With transaction-level information readily available, the likelihood of tax authority audits/surveys is reduced.
E-Invoicing Effective from August 1, 2023
According to Notification No 10/2023 dated May 10, 2023, the threshold turnover for e-invoicing has been reduced to 5 crores from August 1, 2023. This means that businesses with an Aggregate Annual Turnover (AATO) exceeding 5 crores in any preceding financial year starting from 2017-18 onwards must comply with e-invoicing from August 1, 2023.
Example:
| Financial Year | Example-A
AATO in Crore |
Example-B
AATO in Crore |
Example-C
AATO in Crore |
| 2017-18 | 2.5 | 2.2 | 2.4 |
| 2018-19 | 1.8 | 1.8 | 3.1 |
| 2019-20 | 3.6 | 4.2 | 1.7 |
| 2020-21 | 5.4 | 3.1 | 4.5 |
| 2021-22 | 3.8 | 4.9 | 3.9 |
| 2022-23 | 3.0 | 3.8 | 6.2 |
| 2023-24 | 4.2 | 5.5 | 4.6 |
| Applicability of e-invoicing from 1 August 2023 | Applicable | Not Applicable | Applicable |
| Reason | In the year 2020-21 the Aggregate turnover exceeded 5crores. So, E-invoicing is applicable from 1 Aug 2023 | Aggregate turnover did not exceed 5 crores in any of the preceding years and so e-invoicing is not applicable from 1 August 2023. But E-invoicing would be applicable from April 2024 onwards, as the Aggregate turnover exceeds 5 Cr in the year 2023-24. | In the preceding year 2022-23 the Aggregate turnover exceeded 5crores.So, E-invoicing is applicable from 1 Aug 2023 |
Definition of Aggregate Turnover
The definition of Aggregate Turnover as per Section 2(6) of the CGST Act includes the aggregate value of taxable supplies, exempt supplies, export supplies, and inter-state supplies of a person with the same PAN. Therefore, registered persons with multiple GSTINs under the same PAN must include all these supplies in their Aggregate Turnover calculation.
The following supplies are excluded from Aggregate Turnover for determining e-invoicing applicability:
(i) Reverse Charge Mechanism (RCM): The value of inward supplies on which tax is levied under RCM is not included.
(ii) Job Work: The value of goods after completion of job work is not included; it is treated as the principal’s turnover.
It’s important to note that although exempt supplies are considered for calculating Aggregate Turnover, e-invoicing is not required for exempt supplies. Nil-rated and wholly exempt supplies are covered by a bill of supply rather than an invoice.
Documents & Supplies Covered under E-Invoicing
E-invoicing applies to the following documents and supplies if a registered person’s Aggregate Turnover based on PAN for any preceding financial year from 2017-18 onwards exceeds 5 crores:
(i) Documents: Invoices, Debit Notes, and Credit Notes.
(ii) Supplies:
B2B Supplies: Supplies to registered persons with GSTIN, including those under the same PAN with different GSTINs. B2C supplies (unregistered persons) are not covered.
SEZ Supplies: Supplies to SEZ units with or without GST Payment.
Export Supplies: Export supplies with or without IGST Payment.
Deemed Exports.
Supplies to Government Departments: As per Circular No 198/10/2023, supplies to Government Departments, establishments, agencies, local authorities, and PSUs are covered if their turnover exceeds the e-invoicing threshold.
Supplies under RCM: E-Invoicing is mandatory for all outward supplies under RCM.
Registered Persons Exempted from E-Invoicing System
Certain registered persons are exempted from E-invoicing requirements as per Notification No 13/2020 dated March 21, 2020. This includes:
(i) Banking or Insurance Companies (Rule 54(2)): E-invoicing is not mandatory for insurers, banking companies, or financial institutions, including NBFCs.
(ii) Goods Transport Agencies (Rule 54(3)): E-invoicing is not mandatory for goods transport agencies providing road transportation services.
(iii) Passenger Transport Service Suppliers (Rule 54(4)): Suppliers of passenger transportation services are exempt.
(iv) Admission of Cinematograph Films in Multiplex (Rule 54(4A)): Registered persons supplying admission to the exhibition of cinematograph films in multiplex screens are exempt.
(v) SEZ Units: Only SEZ Units are exempt from E-invoicing, not SEZ Developers.
Time Limit for Reporting Invoices in IRP Portal
Previously, there was no time limit for generating e-invoices until April 30, 2023. However, from May 1, 2023, taxpayers with an Annual Aggregate Turnover (AATO) exceeding Rs.100 crores in any preceding financial year starting from 2017-18 were required to generate e-invoices within 7 days of the invoice date. Failure to do so would result in non-compliance.
On May 6, 2023, the department extended the time limit for reporting invoices in the IRP portal by three months. On 11th September 2023, as per an advisory issued in the National Informatics Centre, it has been decided by the GST Authority to impose a time limit of 30 days for reporting of invoices from date of invoice, on e-invoice portals. This time limit is applicable for taxpayers with AATO greater than or equal to 100 crores. Hence, the taxpayers in this category will not be allowed to report invoices older than 30 days on the date of reporting.
Conclusion
The new E-invoicing applicability starting from August 1, 2023, brings important changes for registered persons with an aggregate turnover exceeding 5 crores in any preceding financial year. Understanding the revised threshold limits and regulations is crucial for businesses and consultants to ensure timely compliance with E-invoicing requirements and avoid potential litigation with the GST department. Given the evolving nature of the system, staying updated with departmental amendments is advisable for seamless compliance.
For more details about the e-invoicing process, please go through the PDF from GST council by clicking on this Link–https://gstcouncil.gov.in/sites/default/files/E-invoice%20in%20India_01-01-2021.pdf
To know all about the detail process of e-invoicing, you can watch the webinar of GSTN in this Link–https://www.youtube.com/watch?v=Tqdpma_xikA
You can also Like–https://anptaxcorp.com/scope-of-supply-under-gst/
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