E-Invoicing in Retail Trade
E-invoicing is a growing trend in the retail trade industry, where it is used to streamline invoicing and payment processes, reduce errors, and increase efficiency. With the increasing adoption of digital payments and e-commerce in retail, e-invoicing has become necessary for businesses to stay competitive and meet customer expectations.
Implementing e-invoicing in the retail trade industry can also help businesses comply with regulatory requirements and reduce compliance burden. In this context, it is important for businesses in the retail trade industry to understand the benefits of e-invoicing and explore its implementation to stay ahead in the market.
BOOK A FREE DEMO
Compliance of E-Invoicing in Retail Trade
According to the GST Act, any retailer in India with a turnover between Rs. 50 crores and Rs. 500 crores (or more) are required to comply with the following:
- Real-time E-invoice instead of a tax invoice (B2B, SEZ)
- Real-time E-invoice – credit note/debit note (B2B, SEZ)
- Tax invoice (B2C)
- Bill of supply (B2B and B2C)
- Dynamic QR Code for entities more than Rs. 500 Crores
- E-way bill compliance against the transportation of goods
- Delivery Challan
- GST Returns (1, 3B, 9, 9C)
- ITC Reconciliation
E-Invoicing Under Retail Trade
According to Rule 48(4) of the CGST Rules, accounting software used to raise invoices based on purchases or sales is provided with e-invoicing software patches. In retail trade, invoices must be generated and presented to customers immediately after purchase, ensuring compliance with e-invoicing regulations and minimising errors. However, e-invoicing only applies to B2B and B2C transactions, allowing the government to monitor and prevent fraudulent invoices and ITC claims.
An e-invoicing patch will be unavailable if the billing software has any issues. Some business owners manually create e-invoices after submitting standard tax invoices according to Rule 46. These e-invoices are not accessible to B2B clients, resulting in significant non-compliance.
The main issue is that billing software, possibly a legacy or indigenous system, is used, and the entity’s internal IT or software team may lack the technical expertise to automate e-invoicing within their current framework.
When suppliers apply the patch, existing billing systems can be customised. Alternatively, separate e-invoicing tools are developed to act as an intermediary between the billing software and the government portal and provide e-invoicing services.
Significant Points for E-Invoicing
- The government portal for e-invoices would not save copies of the electronic invoices. Therefore, these copies should be updated using internal software or outside tools to prevent loss.
- E-invoices won’t be changed after being raised and will be rejected within 24 hours.
- It is necessary to confirm the turnover cap using data from prior fiscal years. However, if the threshold is crossed, the data is taken from the current fiscal year.
In addition, the software should be able to distinguish between the following:
- GST E-invoice for B2B transactions only (including SEZ).
- Transactions that are both exempt and taxable must use a GST E-invoice to make a taxable supply.
- B2B supply that is both exempt and taxable is not in compliance. It requires specialised invoicing.
- HSN availability with at least six digits – GST E-invoice with six digits or fewer.
E-way Bill Retailers
If the value of the consignment is more than Rs. 50,000, an E-Way Bill is required to transport the goods. The taxable value plus the taxes is referred to as the consignment’s value, which excludes the exempted value of the supply.
Documents to be carried for the transportation of goods are e-way bills mapped to the RFID of the conveyance or delivery challan, depending on which is applicable.
Also Know About – E-way Bills as an End-Consumer
Problems and their Solution under E-way bills
| Problems | Solutions |
|---|---|
| Taken by a B2C customer after being purchased at retail | Since the enrolled supplier would not certify the delivery’s termination, EWB is not required.The tax would be applied based on the registered address. |
| Taken by a consumer who is doing business with you from the store | To expand EWB with regard to the e-invoice, either the supplier or the consumer. The application in SL No. 1 is disputed, making it impossible to claim that personal effects were utilised. |
| Purchased at a store and shipped to a business serving consumers. | Against the tax invoice/invoice-cum-bill of the supply, the supplier must raise EWB. |
| Purchased from the shop and delivered to a business client | The supplier will file an EWB for the e-invoice. |
| Purchased at the store and shipped to a different address. | To raise an EWB against an e-invoice, the supplier should view the transaction type as “Bill to Ship To.” |
| Delivery from location 2 after purchasing location 1’s store | The supplier is required to issue an electronic work order for the e-invoice and recognise the transaction as a bill from the ship from |
| Purchase made at location 1 store, delivered from location 2, plus separate billing and shipping address | In relation to the e-invoice, the supplier is to raise an EWB and recognise the transaction type as a mixture of 2 and 3 |
| PThe substitution of an older product with a more recent one | The supplier will raise an EWB for a new product’s electronic invoicing. If the “used personal/household effect” is less than 50,000, an old product EWB may not be required. |
| Purchased and asked to deliver after a specific deadline | Supplier to raise EWB concerning the initial delivery’s e-invoice. |
| Purchased and requested for the delivery of various goods in three instalments | The supplier must provide EWB pertaining to the delivery challans. There must be an e-invoice link on the delivery challan. The first two movements must include a copy of the invoice, and the last instalment must include the original invoice. |
Effect of Non-Compliance
The following actions may be taken if the owner of goods fails to pay the applicable tax and penalty:
- Detention, imprisonment, penalty, auction, seizure, and sale.
- For taxable items, the penalty is a fine equal to 20% of the assessed tax.
- For chargeable goods, the penalty is equal to more than 50% of the value of the items or 20% of the imposed tax if the owner does not appear for tax and penalty payment.
- For exemption-based goods, the penalty is the lowest of 2% of the product value or Rs. 25,000.
- If e-way bill orders and a bank guarantee are used to release goods and conveyance, 25% of the pre-deposit under Section 107 of the CGST Act 2017 will apply to the appeal.
- A payment of Rs. 1 lakh is required to retrieve the conveyance.
Also Get Familiar With – Golden Rules of Accounting
Conclusion
Such compliances under GST are highly crucial in light of the strict penalties for non-compliance, the chance that customers won’t pay, and the effect on reputation and confidence. Because of the nature of retail trade activity, compliance and future growth will depend on instant preparedness and easy connection with their numerous software systems.
As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.
Frequently Asked Questions
- What are the eligibility criteria for retail businesses to implement e-invoicing?Retail businesses with an annual turnover exceeding ₹10 crore in the previous financial year are required to implement e-invoicing. They must generate e-invoices for B2B transactions and upload them to the GST portal for real-time validation and generation of IRN (Invoice Reference Number) before issuing invoices.
- Are small retail traders exempt from e-invoicing requirements?Yes, small retail traders with a turnover below ₹10 crore in the previous financial year are exempt from e-invoicing requirements. They can continue using traditional methods for generating invoices. However, they may voluntarily adopt e-invoicing to streamline processes and improve compliance.
- How does e-invoicing streamline the invoicing process in retail trade?E-invoicing automates the process by generating invoices in a standardized digital format validated by the GST portal. This reduces manual errors, ensures real-time reporting, and eliminates discrepancies, making invoicing faster, more accurate, and compliant with GST regulations.
- What are the technological requirements for adopting e-invoicing in retail?Retail businesses need access to GST-compliant accounting software that supports e-invoice generation and integration with the GST portal to adopt e-invoicing. A stable internet connection, digital signatures, and a secure system for data transmission are also essential to ensure compliance.
- Is e-invoicing mandatory for B2C transactions in the retail sector?No, e-invoicing is not mandatory for B2C transactions in the retail sector. It only applies to B2B transactions where both the buyer and seller are registered under GST. Retailers can continue using traditional invoicing methods for sales to consumers (B2C).
- How does e-invoicing benefit retail businesses in terms of compliance and efficiency?E-invoicing ensures accurate, real-time reporting of transactions, minimizing tax fraud risks and improving compliance. It eliminates manual entry errors, accelerates the invoicing process, enhances transparency, and ensures faster input tax credit (ITC) claims, thus improving operational efficiency.
- What are the key components of an e-invoice for retail transactions?An e-invoice includes critical details such as the seller’s and buyer’s GSTIN, invoice number, date, HSN code, item description, quantity, value, tax rates, and total tax payable. It also includes a unique Invoice Reference Number (IRN) generated by the GST portal for validation.
