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.
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:
The e-Invoicing scope does not cover the following types of documents, transactions, and enterprises:
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.
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:
E-invoicing refers to reporting already generated invoices to the government for verification rather than generating invoices on the government portal.
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.
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.
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.
The applicable business must register on the e-invoice portal or notify an IRP to comply for the first time.
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.
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.
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.
Small enterprises may have the following consequences in addition to the penal provisions: