e-Invoicing Mandatory for Businesses with Turnover Above INR 5 Crore
All businesses with an aggregate annual turnover limit exceeding Rs.5 Crore in any fiscal year from 2017-18 require e-invoices from August 1, 2023. As a result, the turnover threshold for e-invoicing has been halved from Rs.10 Crore. And the aggregate turnover includes the turnovers of all the GSTINs under a single PAN across India.
The introduction of e-invoices does not change the existing invoicing system. However, the additional step added was to automate tax-related processes that replace manual form reporting, separate GST declarations, tax accounting, etc.
Latest Updates on E-invoice Submissions:
The centre has brought amendments in the submissions of e-invoices.
- Businesses with an aggregate turnover of more than Rs. 5 crores must submit e-invoices beginning August 1, 2023.
- The amendment aims to stop revenue leakage and ensure more business tax compliance. And the rule applied only to businesses with an aggregate turnover of more than Rs. 10 crores before the amendment.
Which Businesses Should Issue E-invoices?
The GST Council in 2019 approved the introduction of e-invoicing in GST for reporting B2B invoices in a phased manner. Accordingly, the system became active on January 1, 2020.
E-invoices are Mandatory for
All the registered B2B businesses whose aggregate turnover is more than Rs.5 Crore from the financial year 2017-18.
Furthermore, all businesses that supply to registered persons (B2B) supply SEZs, conduct exports, and the deemed exports are viable to produce e-invoices.
E-invoices are Not Mandatory for
Certain businesses are, however, exempt from issuing e-invoices on a compulsion, including
- Special economic zones (SEZ)
- Financial and non-financial institutions, including insurance companies and banks
- Transportation agencies supplying goods by road
- Suppliers of passenger transportation services
- Suppliers of services by way of admission to movies in multiplex theatres
The Impact of E-invoicing on Business Processes
According to the notification passed on e-invoicing,
- Businesses must interface their systems with the government’s Invoice Registration Portal (IRP) to ensure proper invoice reference numbers (IRNs) for every B2B bill.
- To comply with the e-invoice standard, they must convert their existing software to a complete e invoicing software, such as myBillBook, through which they can check the progress of their e-invoices via the government portal.
Examine how creating e-invoices will impact the business processes.
Reconfiguration of ERP
Businesses need to reconfigure their ERP systems to communicate with the IRP site to generate IRN or QR codes.
For compliance, the company must now identify and separate transactions based on attracting e-invoices from others. (exports and imports, cross-border levies, asset transfers, etc.)
Maintenance of Master Data
To ensure accuracy, organisations must keep supplier and customer master data, including extra information on the invoice like GSTIN, bank account, and payee details.
Changes to the Tax Return Filing
Businesses must modify their GST return filing process because B2B supplies will auto-populate and be manually modified.
Methods of Integration
Businesses must determine whether or not to implement e-invoicing,
- Using the API integration
- Utilising offline utilities such as the GePP and integrating them directly
- Or with GST Suvidha Provider (GSP)
The direct integration enables them to automatically submit e-invoice data to the portal and print the QR code on the e-invoices.
Invoice and IRN Generation
Retailers in this revenue range send out thousands of B2B invoices daily. However, they can’t keep customers waiting for e-invoices generation. Hence, for a smooth rollout, such organisations must use GSP services.
What are the Consequences of Failing to Generate E-invoices?
Not generating an e-invoice is regarded as an offence with penalties.
Penal Provisions-based Consequences
- Penalty for non-issuance of e-invoice: Non-compliant businesses must pay a heavy penalty of Rs. 10,000 per invoice.
- Penalty for improper e-invoice: Incorrect invoicing may result in a penalty of Rs. 25,000 for each invoice.
- The tax officer proceeds with confiscating commodities and vehicles while carrying products without a valid e-invoice.
- There will be no auto-filling of GST returns.
- Customers cannot claim valid ITC.
- Customers might refuse to accept non-compliant invoices.
How to Prepare for an E-invoicing Implementation?
To prepare for an e-invoicing implementation, keep note of the following:
- Determine the requirements to implement e-invoicing.
- Familiarise your organisation with the e-invoice schema.
- Find a suitable vendor to reorient your ERP systems.
- Complete the systems integration with the e-invoice standards.
- Prepare for the launch of e-invoicing.
Notifications for the E-invoicing Implementation
The notifications for e-invoicing imply details on mandatory e-invoice generation. Accordingly, businesses will be required to generate the whole GST e-invoice, including all sales value, in case of the following:
- Turnover exceeds Rs 500 crore in the previous fiscal year from March 21, 2020, onwards
- Turnover is equal to or exceeds Rs.100 Cr from January 01, 2021, to March 31, 2021, onwards
- Turnover is equal to or exceeds Rs.50 Cr from April 01, 2021, to March 31, 2022, onwards
- Turnover is equal to or exceeds Rs.20 Cr from April 01, 2022, onwards
- Turnover is equal to or exceeds Rs.10 Cr from October 01, 2022, onwards
- Turnover is equal to or exceeds Rs.5 Cr from August 01, 2023, onwards
Here is the complete guideline:
|Notification 13/2020, dated 21st March 2020.||It applies to businesses with turnover higher than Rs. 100 crore in a year from 01st October 2020.|
|Notification 60/2020, dated 30th July 2020.||It is the revised format for e-invoices and has 20 new fields and 13 fields removed.|
|Notification 61/2020, dated 30th July 2020||As per the notification, the e-invoice turnover limit was raised from Rs. 100 crore to Rs. 500 crore to limit its applicability.Notification 60/2020|
|Notification 70/2020, dated 30th September 2020||It is an update to the original notification to alter the turnover computation from the fiscal year turnover of the current to any previous year beginning in 2017-2018.|
|Notification 88/2020, dated 10th November 2020||It is a revision in the original notification to reinstate the turnover limit on e-invoices to Rs. 100 crore from Rs. 500 crore.|
|Notification 05/2021, dated 08th March 2021||It is an update to the original notification that reduces the e-invoicing limit on turnover from Rs. 100 crore to Rs. 50 crore to make it applicable to more taxpayers.|
|Notification 23/2021, dated 01st June 2021||It is an extension of the exemption to government departments and local authorities.|
|Notification 01/2022, dated 24th February 2022||It changed the original notification to reduce the e-invoice limit on turnover to Rs. 20 crore from Rs. 50 crore to extend the applicability to more taxpayers.|
|Notification 17/2022-CT dated 1st August 2022||It is an amendment to the previous notification reducing the turnover from Rs 20 crore to Rs 10 crore.|
|Notification 10/2023, dated 10th May 2023||It changed the original notification to reduce the e-invoice limit on turnover to Rs. 5 crore from Rs. 10 crore to extend the applicability to more taxpayers.|