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Penalty for Non-generation of E-invoice

Errors in e-invoicing frequently result in your invoices being penalised by the e-invoice penalty notifications. Hence, you must understand the penalties for e-invoices. Read this blog to learn about the penalties for failing to comply with e-invoicing and how to avoid them.

Initially, you should learn the applicability of e-invoicing:

You must generate e-invoices if you are a registered taxpayer whose aggregate turnover exceeds Rs. 20 crores in any preceding fiscal year since 2017-18.

From October 1, 2022, this rule would apply to enterprises with a turnover exceeding Rs.10 crore.

What is an Invalid or Incorrect E-invoice?

Here are the reasons why your e-invoice becomes invalid or incorrect:

  1. The generated e-invoice is not by the standard e-invoice schema or format or lacks one or more mandatory fields required by the government-notified model.
  2. The created e-invoice is a copy of the previous invoice against which you generated the IRN.
  3. The GSTIN assigned to the supplier or recipient is inactive or invalid.
  4. In such instances, it is an offence if the supplier sends such an e-invoice to the recipient or uses it for goods transportation.

What Happens if You Do Not Issue an E-invoice?

Sub-rules (4), (5), and (6) of CGST Rule 48 specify the e-invoice requirements. However, it only applies to taxpayers who meet the annual aggregate turnover criteria and supply taxable products or services. As a result, the remaining taxpayers must adhere to the standard tax invoice rules.

You must report all B2B, B2G, and export supply transactions to the government via the Invoice Registration Portal (IRP). A taxpayer can begin by creating an invoice or a debit or credit note in his accounting software or ERP.

Following that, they must upload the invoice to the IRP. When you upload an invoice, your invoice is assigned a unique Invoice Reference Number (IRN).

The non-generation of e-invoices will imply the non-intimation of supply transactions to the government. Therefore, any invoice you submit becomes invalid without the IRN under GST law and a non-issue of the invoice under Rule 48 of the CGST Rules, sub-rule (5). As a result, it is subject to the penalty described in the next section for failing to generate an e-invoice.

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Penalty for Non-generation of E-invoice and Incorrectness

Non-issuance or inaccurate issuance of an e-invoice is a GST infringement that results in an e-invoice penalty. There are two penalties currently.

  1. You must pay 100% of the tax owed or Rs. 10,000, whichever is more, for each invoice as:
    1. Penalty for not generating an e-invoice
    2. Penalty for not issuing an e-invoice
    3. Penalty for late generation of e-invoice
  2. Penalty for generating an incorrect or invalid e-invoice is 25,000 USD per invoice.

Consequences of Non-compliance With E-invoicing

Apart from the penalty for e-invoice, the following are the implications of failing to generate IRN:

Holding Up of Goods in Transit

You cannot transport goods unless accompanied by an e-way bill and an e-invoice.

It may result in the conveyance, and the officials may impound your products under Section 129 of the CGST Act 2017.

Because an invoice without an IRN and a signed QR code is invalid in all jurisdictions, such transportation leads to the officials detaining your items and vehicle, and you end up paying a normal e-way bill penalty.

Denial to Claim ITC

You need a tax invoice under the GST statute to claim the Input Tax Credit (ITC). A registered buyer may not claim ITC unless he has a valid tax invoice or a debit note, according to Section 16 of the CGST Act 2017.

The buyer may refuse to take delivery of the products or release payment if they have an invalid invoice that lacks an IRN and a signed QR code. It impacts or delays the buyer’s ability to claim ITC. Finally, it harms taxpayers’ customer and company relationships.

Technically, data from an invoice without an IRN cannot be auto-populated into the supplier’s GSTR-1 and, as a result, may never be reflected in the buyer’s GSTR-2A and GSTR-2B. The buyer cannot claim an ITC if the provider does not deposit the tax with the government.

Delays in E-way Bill Creation

Non-compliance affects the generation of e-way bills and causes delays. You can auto-generate e-way bills and e-invoices. However, non-generation e-invoices or erroneous leads could impact e-way bills, disrupting logistics and causing delivery delays.

Excess Time for Troubleshooting

To correct problems in e-invoices and e-way bills, you must devote time and face complications. However, you can cancel and reissue an invoice against the IRN if you complete the rectification within 24 hours. Similarly, you can auto-generate a new e-way bill.

However, suppose the delay in rectification exceeds 24 hours. In that case, you must generate a credit or debit note to make corrections, increasing the reporting load.

How to Avoid Non-compliance With E-invoicing?

You can avoid non-compliance with e-invoicing by ensuring the following:

  1. Your e-invoicing system has pre-built validations.
  2. You update the system to accommodate the most recent e-invoicing schema or format.
  3. You invest in affordable and powerful e-invoicing software, such as myBillBook. Our e-invoicing system provides remote access, customisable formats, and 24/7 assistance, allowing you to serve your multi-business conveniently.

FAQs

What is the penalty for not issuing an e-invoice?

For each invoice, you must pay 100% of the tax owed or Rs. 10,000, whichever is more.

What is the penalty for generating an incorrect e-invoice?

For each invoice, you must pay25,000 USD per invoice.

Does my invalid e-invoice affect my ITC claims?

Yes. You need your tax invoice under the GST to claim the ITC. Otherwise, you may not be able to claim ITC if you have a valid tax invoice or a debit note, according to Section 16 of the CGST Act 2017.

How much time will you get to rectify the errors in my e-invoices?

You will receive a time of 24 hours for the rectification of the errors.

Read more about GST e-Invoicing