How does e-invoicing work under retail trade?

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Date: 23 Oct 2022


E-Invoicing in Retail Trade

According to the GST Act, any retailer in India with a turnover between Rs. 50 crores and 500 crores (or more) are required to comply with the following:

  1. Real-time E-invoice instead of a tax invoice (B2B, SEZ) 

  2. Real-time E-invoice – credit note/debit note (B2B, SEZ)

  3. Tax invoice (B2C)

  4. Bill of supply (B2B and B2C)

  5. Dynamic QR Code for entities more than Rs. 500 Crores

  6. E-way bill compliance against movement of goods

  7. Delivery Challan

  8. GST Returns (1, 3B, 9, 9C)

  9. ITC Reconciliation

Let’s discuss E-invoicing in retail trade and its impact on retailers. 

E-Invoicing under Retail Trade

Under Rule 48(4) of CGST Rules, patches of e-invoicing software is given to accounting software in which invoices are raised based on purchase or sale. In Retail trade, in contrast, invoices are to be generated and presented to customers immediately after the purchase, quick in compliance with e-invoicing and free from errors. 

Nevertheless, e-invoices are subjected only to B2B and B2C transactions to give access to the government for controlling and looking for bogus invoices and ITC claims. 

There wouldn't be an e-invoicing patch for the billing software that had any problems. Some business owners manually raise the e-invoicing after submitting the standard tax invoice following rule 46.  Then, e-invoices are requested. The B2B clients are not given access to these e-invoices. These e-invoices do not get generated, which contributes to total non-compliance. 

The crux of the issue is that billing software is used—possibly in an indigenous or legacy system—and that the entity's internal IT or software team may lack the technical know-how to automate e-invoicing using their current framework.

It is possible to customise the existing billing systems when the patch has been applied through suppliers. Separate e-invoicing tools, on the other hand, are created to act as a mediator between the billing software and the government portal and provide the e-invoice.

Significant points for E-Invoicing

  • The government portal for e-invoices would not save copies of the electronic invoices. Therefore, these copies should be kept up to date using internal software or outside tools to prevent loss.

  • E-invoices won't be changed after being raised. In 24 hours, the same would be rejected.

  • It is necessary to confirm the turnover cap using data from prior fiscal years. However, if the threshold is crossed, the topic is taken from the current fiscal year.

In addition to the previously specified part, 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 for the movement of the goods. The taxable value plus the taxes is referred to as the consignment's value, which excludes the exempted value of the supply.

The documents that must be carried in the movement are the valid EWB in physical form or the E-Way Bill in electronic form that is mapped to the RFID of the conveyance, as well as the invoice or delivery challan, depending on which is applicable.

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

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

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

The substitution of an older product with a more recent one

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

Supplier is required to 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 installment must include the original invoice.

Effect of Non-Compliance

  • Detention, Imprisonment, Penalty, Auction, Seizure, and Sale.

  • Where the owner of the goods is required to pay the applicable tax and the penalty: Taxable items or a fine equal to 200 per cent of the tax assessed.

  • chargeable goods penalty equal to more than 50% of the value of the items or 200 per cent of the tax imposed on these products in cases where the owner does not appear for the related tax and penalty payment.

  • Lowest of 2 per cent of the value of the products, or Rs. 25,000, applies to exemption-based goods.

  • If the e-way bill orders and the bank guarantee to release goods and conveyance are used, 25% of the pre-deposit under Section 107 of the CGST Act, 2017 will be applied to the appeal.

  • Rs. 1 lakh to get back conveyance

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.