E-Invoicing Mandate for Businesses with Annual Turnover Over Rs.10 Crore

A Goods and Services Tax (GST) rule known as the “e-invoicing system” or “electronic invoicing system” applies to some taxpayers. According to the most recent e-invoice notification (17/2022) dated 1 August 2022, starting on October 1, 2022, enterprises with an e-invoice turnover limit of more than Rs. 10 crores in any previous financial year are required to create e-invoices for their B2B and B2G transactions.

BOOK A FREE DEMO

E-Invoice

Businesses that are covered under the fifth phase

The government mandated electronic invoicing as of October 1, 2022, for companies with a yearly turnover of more than Rs. 10 crores in any preceding financial year between 2017–18 to 2021–22.

The first phase previously applied to e-invoice turnover limits of more than Rs. 500 crores starting on October 1, 2020. Businesses with revenue above Rs. 100 crores started issuing e-invoices on or after January 1, 2021, as part of the second phase.

To ensure that business get enough time to be compliant with the new e-invoicing regulations, the GST council decided to implement e-invoicing in a staggered manner, as shown in the table below:

Annual turnover (in any previous financial year)	Date of Implementation
Exceeding 500 crore	1st October, 2020
Exceeding 100 crore	1st January,2021
Exceeding 50 crore	1st April,2021
Exceeding 20 crore	1st April,2022
Exceeding 10 crore	1st October, 2022

But the government has extended its application to.

The system supports transactions like:

Taxable sales of goods or services made between businesses (B2B),
Sales of products or services made by businesses to the government (B2G),
Exports
Materials produced using the Reverse Charge Mechanism (RCM)

What is exempted from e-invoice?

The e-invoicing scope does not cover the following types of documents, transactions, and enterprises:

Supplies that are exempt when the bill of supply is raised,
Imports,
Job works,
Delivery challans
Financial institutions, banks, and insurance companies
Presenting cinematographic films on multiplex screens
Non-banking financial businesses,
Goods and passenger transportation agencies,
Businesses operating in special economic zones (SEZs), and
Government departments.

Objective and impact of e-invoicing

Reducing the threshold turnover limit for e-invoicing aimed to reduce compliance while preventing fraud and GST evasion. Verified Input Tax Credit can be claimed by companies in the supply chain (ITC). As a result, it closes GST income gaps for the government. E-invoicing enables the capture of transactional information at the point of source, or the invoicing stage, and also strives to expand the GST digitisation net.

Adjusting the billing system or software, the GSTR-1 preparation, and the change in the business procedure affect the applicable businesses. While auto-population makes GSTR-1 filing simpler, reconciliations become more challenging. As these small businesses’ invoices are validated, easy access to official credit channels like invoice discounting is an essential advantage of the e-invoicing initiative.

However, to avoid losing tax credits or experiencing delays in claims, major corporations that source from these applicable organisations must ensure that their vendors follow the directive. Once streamlined, they can then claim genuine tax credits.

Changes in business operations and how to prepare

Businesses have until October 1, 2022, to get the new system ready, installed, and tested. In July 2022, the GST Network allowed such applicable enterprises to test the configuration for electronic invoicing in a sandbox setting.

The following outlines how firms must implement e-invoicing and how it will affect or alter their operational procedures:

Reporting of tax invoices

E-invoicing refers to reporting already generated invoices to the government for verification rather than generating invoices on the government portal.

Upgrading the ERP system, accounting system, or billing system

The e-invoice schema or format must be adhered to for accounting or billing software to function. Recognise when e-invoicing is applicable and separate such transactions and documents from the others for reporting to the Invoice Registration Portal (IRP), such as BUSY Accounting Software. Sort the documents appropriately so e-way bills can be automatically generated from the information submitted for e-invoices. Make the printing setup capture the e-invoice’s IRN and QR code. These require alterations to the current billing, ERP, accounting, or software systems.

Ensuring the accuracy of invoice details

Ensure accurate and verifiable records of the suppliers’ and clients’ master data are maintained. Additional invoice details, including a valid GSTIN, bank account information, and payee information, should be included for accuracy. Any IRP rejection causes the team issues with invoice cancellation and regeneration, which disappoints consumers with the delay since e-invoice amendments are impossible.

Selecting a method for generating e-invoices

Choose the most appropriate method for generating a signed QR code from the IRP and an invoice reference number (IRN). There are numerous possibilities, ranging from SMS, offline, and batch processing to online and real-time processing.

Creating an account on the IRP or e-invoice portal

The applicable business must register on the e-invoice portal or notify an IRP to comply for the first time.

GSTR-1 preparation and reconciliation

The procedure for preparing and filing GST returns has changed. Taxpayers must submit the non-taxable and B2C supplies later; the GSTR-1 will automatically populate with the information from the e-invoice. To verify the accuracy of the information reported and prevent notices, reconcile the books of accounts and the e-invoices that were automatically filled out in GSTR-1.

Avoiding delays in IRN generation

Businesses in this turnover range generate thousands of B2B invoices every day. Customers shouldn’t be kept waiting for so long before generating an e-invoice.

Effects of not generating e-invoices

If businesses fail to generate e-invoices as of October 1, 2022, they must pay Rs. 10,000 for each invoice that is not generated. Failure to generate IRN is regarded as inaccurate invoicing and is subject to a Rs. 25,000 fine.

GSTR-1 is not automatically filled in.
Buyers may delay payments and fail to timely claim eligible ITC. Eventually, it impacts the working capital of the applicable businesses.
Buyers reject invoices that are not consistent with e-invoicing and may have a negative impact on business contracts.

How can BUSY help you with e-Invoicing?

BUSY simplifies the e-invoicing process for businesses by integrating e-invoice generation directly into its software. With BUSY, users can automatically generate and upload e-invoices to the government portal without manually entering details. This integration saves time, reduces human errors, and ensures compliance with GST regulations.

BUSY e-invoicing module automatically captures transaction data, validates it, and prepares it for submission to the GST portal. The software then generates the Invoice Reference Number (IRN) and QR code required for compliant e-invoices. BUSY also maintains a record of generated e-invoices, making it easy to track, manage, and retrieve them as needed for audits or compliance checks.

For businesses with high transaction volumes, BUSY’s batch processing feature allows users to generate multiple e-invoices at once, further streamlining operations. Additionally, BUSY updates automatically to align with any new e-invoicing requirements or limits set by GST authorities, ensuring businesses always stay compliant.

Frequently Asked Questions

What is the turnover limit for an e-invoice?

The turnover limit for e-invoicing is ₹5 crore as of recent updates. Businesses meeting this threshold must generate e-invoices to comply with GST requirements. This limit applies to total turnover, including exports, across any financial year since 2017-18.
What is the time limit for e-invoice generation for 5 crore?

For businesses with a turnover of ₹5 crore is 30 days from the invoice date. However, e-invoices should be generated at the time of supply or shortly afterwards.
What if an e-invoice is generated late?

If an e-invoice is generated late, it may result in penalties or compliance issues, as GST rules require timely invoice generation. Late generation can disrupt accurate GST reporting and may cause delays in claiming Input Tax Credits (ITC), potentially impacting cash flow.
Can we generate an e-invoice after 30 days?

An e-invoice should ideally be generated on or close to the supply date. Generating it after 30 days may lead to non-compliance with GST regulations and penalties. Timely e-invoicing is crucial to avoid discrepancies and ensure accurate GST reporting.
What is the 7 day limit for an e-invoice?

The “7-day limit” refers to some cases where e-invoices must be generated within 7 days of the supply date, particularly for specific businesses. Timely e-invoicing helps avoid compliance issues, though general guidelines recommend creating e-invoices as close to the transaction date as possible.
For whom is an e-invoice mandatory?

E-invoicing is mandatory for businesses with an annual turnover of ₹5 crore in any financial year since 2017-18. This requirement helps streamline GST reporting and increases transparency, covering both goods and service providers above the specified turnover threshold.

View all FAQs