The way forward with e-invoicing
Written By ————
e-Invoice is a system in which B2B (Business to Business) invoices are electronically authenticated by GSTN for use on the common GST portal. The Invoice Registration Portal (IRP), managed by the GST Network, will issue an identification number against each invoice under the electronic invoicing system (GSTN).
To combat tax evasion and fraud caused by the issuance of fraudulent invoices, the government has endeavoured to authenticate transactions between the supplier and its recipient using the technology-driven project known as ‘e-invoicing.
Applicability
E-invoicing was implemented in stages beginning October 1, 2020, based on the aggregate turnover of the taxpayers. A summary of the turnover limit and the date of e-invoicing implementation is provided below:
Note : The above threshold aggregate turnover limit is to be verified beginning with the previous fiscal year, in 2017-18. The aggregate turnover will include all GSTINs under a single PAN.
According to Rule 48(4) of the CGST Rules, 2017, the notified class of taxpayers must prepare an e-invoice by uploading specified invoice particulars (in FORM GST INV-01) on the Invoice Registration Portal (IRP) and obtaining a QR (Quick Response) Code with an embedded Invoice Reference Number (IRN). As a result, e-invoices for tax invoices, debit notes and credit notes (excluding commercial/ financial and their respective credit/ debit notes) for supplies made to registered taxpayers, exports (with/ without payment of taxes), SEZ units (with/ without payment of taxes), and deemed exports are to be generated.
Pros/Cons of E-invoicing
Even if the turnover exceeds the prescribed limits, e-invoicing is inapplicable:
Regardless of total turnover, e-invoicing is not applicable to the following registered taxpayers:
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A government department (Central Tax Notification No. 23/2021, dated 01 June 2021)
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A local government (Notification No. 23/2021 - Central Tax, dated June 1, 2021)
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SEZ unit (Central Tax Notification No. 61/2020, dated 30 July 2020) and
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Taxpayers referred to in sub-rules (2), (3), (4), and (4A) of Rule 54 of the CGST Rules, 2017 i.e., an insurer/banking company/financial institu tion including a non-banking financial company, goods transport agency, taxpayer supplying passenger transportation service, registered tax payers supplying services by admission to cinematograph film exhibition in multiplex screens (Notification No.13/2020 - Central Tax dated 21 March 2020).
Our Comments
According to latest news, the government may soon mandate e-invoicing for taxpayers with aggregate turnover less than Rs. 10 crores, bringing more taxpayers into the e-invoicing fold.
The move to lower the turnover threshold and broaden the scope of e-invoicing is primarily intended to address mismatch errors and prevent tax evasion. Given the timelines, concerned businesses will need to upgrade their IT systems in order to comply with the e-invoicing standards. In addition, the gradual lowering of the electronic invoicing threshold suggests that eventually all GST taxpayer types will be required to use electronic invoicing.
