E invoice from 01.04.2024

What is ‘e-invoicing’?

As per Rule 48(4) of CGST Rules, notified class of registered persons have to prepare invoice by uploading specified particulars of invoice (in FORM GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).

Registered persons will continue to create their GST invoices on their own Accounting/Billing/ERP Systems. These invoices will now be reported to ‘Invoice Registration Portal (IRP)’. On reporting, IRP returns the e-invoice with a unique ‘Invoice Reference Number (IRN)’ after digitally signing the e-invoice and adding a QR Code. Then, the invoice can be issued to the receiver (along with QR Code).

Upon successful registration of invoice on IRP, it will return a signed e-invoice JSON to the supplier with IRN and QR Code

What are the advantages of e -invoice for businesses?

e-invoice has many advantages for businesses such as Auto-reporting of invoices into GST return, auto-generation of e-way bill (where required).

E-invoicing will also facilitate standardisation and inter-operability leading to reduction of disputes among transacting parties, improve payment cycles, reduction of processing costs and thereby greatly improving overall business efficiency.

E-Invoicing applicable to notified persons, and notified person is:

Registered persons whose aggregate turnover (Taxable Supply + Exempt Supply +Export)(based on PAN) in any preceding financial year from 2017-18 onwards, is more than prescribed limit (Rs. 5 crore or more from 1st August 2023), e-invoicing is mandatory.

Sample E- Invoice:

Recent Updates:

• Atleast 6 digit HSN will be mandatory in e-Invoices, for taxpayers whose AATO is 5Cr and above, from 15th of December 2023

• 2-Factor Authentication for all taxpayers with AATO above Rs 20 Cr is mandatory from 20th November 2023.

• As per directions by GST Authority, a time limit of 30 days for reporting of invoices from date of invoice is imposed on e-invoice portals, and is applicable for taxpayers with AATO greater than or equal to 100 crores from 1st November 2023.
  

What documents are presently covered under e -invoicing?

• Invoices

• Credit Notes

• Debit Notes,

when issued by notified class of taxpayers (to registered persons (B2B) or for the purpose of Exports) are currently covered under e-invoice.

Though different documents are covered, for ease of reference and understanding, the system is referred as ‘e-invoicing’.

What supplies are presently covered under e -invoice?

Supplies to registered persons (B2B), Not B2C

Supplies to SEZs (with/without payment),

Exports (with/without payment),

Deemed Exports,

by notified class of taxpayers are currently covered under e-invoice.

Supply to B2G

Recently Government Clarified that E-invoice is mandatory if supply is made to Government Departments or establishments/ Government agencies/ local authorities/ PSUs, registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the CGST Act, are to be treated as registered persons under the GST law as per provisions of clause (94) of section 2 of CGST Act, and it is mandatory to make e invoice in this case also.

Refer Circular no.198/10/2023

For which entities/sectors, e-invoicing is not applicable / exempt?

• Special Economic Zone Units

• Insurers

• Banking companies or financial institutions, including a non-banking financial company (NBFC)

• Goods Transport Agency (GTA) supplying services in relation to transportation of goods by road in a goods carriage

• Suppliers of passenger transportation service

• Suppliers of services by way of admission to exhibition of cinematograph films in multiplex screens

• Persons registered in terms of Rule 14 of CGST Rules (OIDAR)

Can an IRN/invoice reported to IRP be Amended OR Cancelled?

Amendment of E-Invoice is not possible.

The cancellation request can be triggered through ‘Cancel API’ within 24 hours from the time of reporting invoice to IRP.

However, if the connected e-way bill is active or verified by officer during transit, cancellation of IRN will not be permitted.

In case of cancellation of IRN, GSTR-1 be updated with such ‘cancelled’ status.

When E-Invoicing is Applicable to you?

Starting from 2017-18, In any of the FY if Aggregate TO exceed 5Cr, E-Invoicing is applicable.

Example:

Financial Year	Turnover (in crores)
2017-18	1
2018-19	2
2019-20	4
2020-21	6
2021-22	3
2022-23	2
2023-24	3

In above situation e invoice is mandatory from 1 August 2023 as aggregate turnover is exceeded from 5 crore in year 2019-20.

If Aggregate TO Exceeds 5Cr. in FY 2023-24, E-Invoicing is applicable from 01 April, 2024.

How to Calculate Aggregate Turnover:

Section 2(6) of CGST Act “Aggregate turnover” means the aggregate value of :

• All taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis),

• exempt supplies,

• exports of goods or services or both and

• inter-State supplies of persons having the same Permanent Account Number,

• to be computed on all India basis

• but excludes central tax, State tax, Union territory tax, integrated tax and cess;

Consequences for non issuance of E-Invoice:

If any Taxpayer is liable to make E-Invoice, but not issued E-invoice it will not be considered a valid tax invoice.

Penalty (If E-invoice not issued): A penalty of 100% of the tax due or Rs.10000 whichever is higher will be imposed for non compliance.

Penalty (Incorrect Invoice): a penalty of Rs.25000 will be imposed.

If Goods transported without a valid invoice: Department may detain the goods and the vehicle and penalty may be imposed

FAQs:

Is e-invoicing applicable for NIL-rated or wholly-exempt supplies?

No. In those cases, a bill of supply is issued and not a tax invoice.

Whether the financial/commercial credit notes also need to be reported to IRP?

No, only the credit and debit notes issued under Section 34 of CGST/SGST Act have to be reported.

Whether e-invoicing is applicable for supplies by notified persons to Government Departments?

Government Departments or establishments/ Government agencies/ local authorities/ PSUs, which are required to deduct tax at source as per provisions of section 51 of the CGST/SGST Act, are liable for compulsory registration in accordance with section 24(vi) of the CGST Act.

Therefore, Government Departments or establishments/ Government agencies/ local authorities/ PSUs, registered solely for the purpose of deduction of tax at source as per provisions of section 51 of the CGST Act, are to be treated as registered persons under the GST law as per provisions of clause (94) of section 2 of CGST Act. Accordingly, the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, is required to issue e-invoices for the supplies made to such Government Departments or establishments/ Government agencies/ local authorities/ PSUs, etc under rule 48(4) of CGST Rules.

Whether e-invoicing is applicable for invoices between two different GSTINs under same PAN?

Yes. e-invoicing by notified persons is mandated for supply of goods or services or both to a registered person.

As per Section 25(4) of CGST/SGST Act, “A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.”

For high sea sales and bonded warehouse sales, whether e-invoicing is applicable?

No. These activities/transactions are neither supply of goods nor a supply of services, as per Schedule III of CGST/SGST Act.

What is the applicability of e-invoice for import transactions?

e-invoice is not applicable for import Bills of Entry.

Do SEZ Developers need to issue e-invoices?

Yes, if they have the specified turnover and fulfilling other conditions of the notification.

In terms of Notification (Central Tax) 61/2020 dt. 30-7-2020, only SEZ Units are exempted from issuing e-invoices.

Is e-invoicing applicable for supplies by notified persons to SEZs?

Yes, e-invoicing is applicable for supplies by notified persons to SEZs.

In terms of Notification (Central Tax) 61/2020 dt. 30-7-2020, only SEZ Units are exempt from issuing e-invoices.

Whether e-invoicing is applicable for supplies involving Reverse Charge?

If the invoice issued by notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.

For example, a taxpayer (say Goods Transport Agency or a Firm of Advocates having aggregate turnover in a FY is more than Rs. 500 Cr.) is supplying services to a company (who will be discharging tax liability as recipient under RCM), such invoices have to be reported by the notified person to IRP.

On the other hand, where supplies are received by notified person from (i) an unregistered person (attracting reverse charge under Section 9(4)) or (ii) through import of services, e-invoicing doesn’t arise / not applicable.

Is e-invoicing voluntary, i.e. can entities with aggregate turnover < Rs. 5 Cr. also report invoices to IRP, if they wish to do so?

No, presently, only the notified class of persons will be allowed/enabled to report invoices to IRP.

Can I amend details of a reported invoice for which IRN has already been generated?

Amendments are not possible on IRP. Any changes in the invoice details reported to IRP can be carried out on GST portal (while filing GSTR-1). In case GSTR1 has already been filed, then using the mechanism of amendment as provided under GST.

However, these changes will be flagged to proper officer for information.

Can an invoice number of a cancelled IRN be used again?

No. Once an IRN is cancelled, the concerned invoice number cannot be used again to generate another e-invoice/IRN (even within the permitted cancellation window). If it is used again, then the same will be rejected when it is uploaded on IRP.

This is because IRN is a unique string based on Supplier’s GSTIN, Document Number, Type of Document & Financial Year.

I have generated IRN for an invoice. There is a discrepancy in the invoice and supply also didn’t materialise, so, I had to cancel it in my system. However, I could not cancel the IRN on IRP as the cancellation window (24 hours) has expired. What to do?

Obtaining IRN by notified taxpayers is a legal requirement before issue of specified documents to recipients. Upon generation of IRN, amendments are not possible on IRP and cancellation of IRN only is permitted within a time window. So, the details of invoices actually issued during the tax period have to be reported in GSTR-1.

GSTR-1 is the final and self-assessed statutory statement of outward supplies by taxpayer, at the end of tax period. In the e-invoices auto-populated in GSTR-1 tables, taxpayers shall delete the details, wherever required, as per the documents actually cancelled during the tax period.