E-Invoicing under GST

Background

In 2017, India has experienced one of the major tax reforms in its history and it is named as Good and Service Tax Act. By launching this new tax, the government has merged major Indirect taxes into one tax and that is why Goods and Service Tax Act is being promoted as “ONE NATION ONE TAX”. There are many peculiarities and challenges in this act. One of them is to match Invoices for availing Input tax credit (ITC). This concept requires certain minimum details to be common on both supplier and recipient side. To ease out this difficulty, the government has introduced the concept of E-Invoicing.

What is E-Invoicing?

E-Invoicing is a process in which invoices will be authenticated electronically and a unique reference number will be provided for each invoice which will be used for all further purposes. But it doesn’t mean generation of invoices from a GSTN portal. The taxpayers would continue to use their own accounting and billing system for generation of invoices by re-aligning the data according to new standards and will get Invoice reference number by providing specific details on designated portals.

Introduction and journey of changes in E-Invoicing

E-Invoicing was introduced by the government in December 2019 via notification no 68/2019 dated 13th December 2019 and was proposed to be implemented from 1st April 2020 but due to global pandemic the same has been postponed from April 2020 to October 2020.

Let us go through brief details of important notifications.

Sr. No	Notification No & Date	Description
1	68/2019 CT dated 13^th December 2019	Obtain Invoice reference number (IRN) by providing required details on the common portal E-Invoice will be considered as valid invoice
2	69/2019 CT dated 13^th December 2019	10 common portals are defined for the purpose of generation of E-Invoice. (www.einvoice1.gst.gov.in) [einvoice1 to einvoice10]
3	70/2019 CT dated 13^th December 2019	E-invoice is applicable to registered persons whose aggregate turnover in a financial year exceeds Rs. 100 crore This provides application of E-Invoicing from 1st April 2020.
4	13/2020 CT dated 21^st March 2020	E-Invoicing will be applicable from 1^st October 2020 instead of 1st April 2020 It also exempts certain types of registered persons from application of E-Invoicing
5	61/2020 CT dated 30^th July 2020	Turnover limit has been increased to Rs. 500 crores from Rs. 100 crores to be applied from 1st October 2020.
6	70/2020 CT dated 30^th September 2020	Definition of Financial year has been changed and is defined to mean that the e-invoicing turnover limit is to be considered for any financial year starting from FY 2017-18.
7	88/2020 CT dated 10^th November 2020	Applicability of E-Invoicing is changed and w.e.f.1^st January 2021, any registered person having aggregate turnover in excess of Rs. 100 crore in any financial year from FY 2017-18 will be liable to e-invoicing
8	05/2021 CT dated 8^th March 2021	Applicability of e-invoicing extended to registered persons having turnover of more than Rs. 50 crore in any FY from FY 2017-18 onwards w.e.f. 01 April 2021.

To whom E-Invoicing is applicable?

E-Invoicing has been made applicable from 1^st October 2020 to all persons whose aggregate turnover has exceeded Rs. 500 crore limit in any of the preceding financial years from 2017-18 to 2019-20. Notification No.61/2020 – Central Tax prescribed the turnover limit for the implementation of e-Invoicing from 1st October 2020.

Further, from 1^st January 2021, e-Invoicing will be applicable to all persons whose turnover exceeds Rs. 100 in any of the financial years from 2017-18 to 2019-20, as provided in Notification No.88/2020 – Central Tax.

On 8^th March 2021, the CBIC notified that e-Invoicing will be applicable from 1^st April 2021 for all persons with a turnover of more than Rs. 50 crores (in any financial year from FY 2017-18 onwards, as intimated in Notification No. 5/2021 – Central Tax.

In nutshell, it is derived like this:

E-Invoicing has come into force from 1st October 2020 and it is to be determined based on aggregate turnover of any preceding financial years from 2017-18.
For the Financial year 2020-2021, it will be applicable based on turnover from financial year 2017-18 to 2019-20.
From October to December 2020, the threshold limit of turnover was Rs. 500 crores. That is to say if a registered person crosses the limit of Rs. 500 crores during any of the financial years from 2017-18 to 2019-20, he will be liable to e-invoicing.
From January 2021, the threshold limit of turnover is reduced to Rs. 100 crores.
So we can say for the financial year 2020-21, for part of the year limit of Rs. 500 crore is applicable and for some part of the year limit of Rs. 100 crores is applicable.
From April 2021, the threshold limit of turnover is reduced to Rs. 50 crores. That is to say if aggregate turnover exceeds Rs. 50 crores in any preceding financial year starting from 2017-18, registered persons will be liable to e-invoicing.
Once E-Invoicing becomes applicable, there is no need to check the turnover limit every year. As once is applicable, always it is applicable.

Let us understand by taking examples:

Scenario – 1

Financial Year	Turnover(Rs. crores)	Applicable from which year?	Justification
2017-18	550	No	As it is effective from 01.10.2020
2018-19	300	No
2019-20	200	No
2020-21	360	Yes [w.e.f.1.10.2020]	Turnover exceeds Rs. 500 crores in 2017-18 so e-invoicing becomes applicable
2021-22	225	Yes	Once applicable, always applicable

Scenario – 2

Financial Year	Turnover(Rs. crores)	Applicable from which year?	Justification
2017-18	50	No	As it is effective from 01.10.2020
2018-19	80	No
2019-20	90	No
2020-21	250	No	Turnover does not cross the limit of Rs. 500 crores (to consider for oct-dec’20)/ Rs. 100 crores (to consider for Jan-Mar’21) in any of the financial years from 2017-18 to 2019-20.
2021-22	225	Yes	Turnover exceeds Rs. 100 crores in 2020-21 so e-invoicing becomes applicable

Scenario – 3

Financial Year	Turnover(Rs. crores)	Applicable from which year?	Justification
2017-18	180	No	As it is effective from 01.10.2020
2018-19	225	No
2019-20	310	No
2020-21	400	Yes [w.e.f.1.10.2020]	Turnover exceeds Rs. 100 crores in 2017-18 so e-invoicing becomes applicable
2021-22	230	Yes	Once applicable, always applicable

Scenario – 4

Financial Year	Turnover(Rs. crores)	Applicable from which year?	Justification
2017-18	85	No	As it is effective from 01.10.2020
2018-19	70	No
2019-20	68	No
2020-21	110	No	Turnover does not cross the limit of Rs. 500 crores (to consider for oct-dec’20)/ Rs. 100 crores (to consider for Jan-Mar’21) in any of the financial years from 2017-18 to 2019-20.
2021-22	60	Yes [w.e.f.1.04.2021]	Turnover exceeds Rs. 50 crores in 2017-18 so e-invoicing becomes applicable

Who is exempt from the issue of E-Invoice?

Irrespective of the turnover, e-Invoicing shall not be applicable to the following categories of registered persons for now, as notified in CBIC Notification No.13/2020 – Central Tax:

An insurer or a banking company or a financial institution, including an NBFC
A Goods Transport Agency (GTA)
A registered person supplying passenger transportation services
A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services
An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)

Which kind of documents are covered under E-Invoicing?:-

Document wise applicability for E Invoicing is as under:

Rule	Type of documents	Applicability
46	Tax invoice-B2B &B2G( not applicable to self-invoice issued on the RCM basis)	Yes
	Export Invoice
	SEZ Developer invoice **
	Revised Tax Invoice
53	Debit Note/Credit Note
46(A)	Invoice cum bill of supply	Yes
49	Bill of supply
50	Receipt voucher
51	Refund voucher
52	Payment voucher
54(1)	ISD (input service distribution)invoice
55(1A)	Debit Note/Credit Note for transfer of ISD (input service distribution) credit

**SEZ Unit v/s SEZ Developer

As per the SPECIAL ECONOMIC ZONES ACT, 2005, SEZ Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority and a Co-Developer (the Developer or Co-Developer shall have at least twenty-six percent of the equity in the entity) to create business, residential or recreational facilities in a Special Economic Zone in case such development is proposed to be carried out through a separate entity or a special purpose vehicle being a company formed and registered under the Companies Act, 1956 (1 of 1956).

SEZ units are the units set up for the manufacture of goods or rendering of services in notified zones.

How to amend/cancel E-Invoice?

Correction or modification of any e-invoice is not allowed. However, if any taxpayer wishes to modify the data/figures already mentioned in the e-invoice, then he/she shall cancel the same and generate a new e-invoice.
Further, any e-invoice can be only cancelled within 24 hours of its generation.
Any cancellation done after 24 hours of an E-invoice generation cannot be reported to the IRN portal. In such cases, the taxpayer will have to manually update/cancel the invoice on the GST portal before the returns are filed.
E invoice cannot be cancelled partially.
It cannot be cancelled if a valid E-Way bill exists as it indicates goods are in movement.
Amended invoice cannot be cancelled.

What are the Benefits of E-Invoicing?

One of the major goals of E-Invoicing is to achieve seamless flow of Input tax credit. Apart from that there are many other benefits which are listed below:

E-Invoice resolves issues of data reconciliation and reduces issues of mismatch of data thereby it becomes easy to avail genuine credits on time.
Real time tracking of invoices generated by suppliers has become possible.
Integration of the e-invoicing system with the return filing process and E-way bill generation process has reduced duplication and errors which used to occur because of entering data on multiple times.
There will be less scope of malfunctioning as the data is available to tax authorities right from the beginning.

Frequently Asked Questions (FAQs)

Can a taxpayer opt for e-invoicing voluntarily?

Opting for E Invoicing voluntarily is not allowed to any taxpayer.

Who can generate E-Invoice?

E-Invoice can be generated by suppliers only. The Recipient and Transporter cannot generate E Invoice. Even in case of reverse charge mechanism (RCM) also, only the supplier has to generate an e- invoice.

Example: A taxpayer (say, a Firm of Advocates having aggregate turnover in a FY is more than Rs. 55 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 Invoice Registration Portal (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.

What supplies are presently covered under e-invoice?

Supplies to registered persons (B2B), Supplies to SEZs (with/without payment), Exports (with/without payment), Deemed Exports, by notified class of taxpayers are currently covered under e-invoicing.

Can B2C (Business to Consumer) supplies be reported by notified persons?

At present reporting of B2C invoices by notified persons is not applicable/allowed. However, they will be brought under e-invoice in the next phase.

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

In those cases, a bill of supply is issued and not a tax invoice. so e-invoicing is not applicable.

Whether the financial/commercial credit notes also need to be reported to IRP (Invoice registration portal)?

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?

E-invoicing by notified persons is mandated for supply of goods or services or both to a registered person. Thus, where the Government Department doesn’t have any registration under GST (i.e. not a ‘registered person’), e-invoicing doesn’t arise. However, where the Govt. department is having a GSTIN (as entity supplying goods/services/ deducting TDS), the same has to be mentioned as recipient GSTIN in the e-invoice.

Whether e-invoicing is applicable for invoices between two different GSTINs under the 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.”

Example: A registered person is having branches in two different states and by virtue of provisions of the act, he is supposed to take registration in both the states.in this case, PAN is single but GST registrations are multiple. If he satisfies conditions of e-invoicing and suppose he makes stock transfer from one state to another state then he is supposed to raise e-invoice.

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

These activities/transactions are neither supply of goods nor a supply of services as per Schedule III of CGST/SGST Act.so question of raising e-invoice does not apply.

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

E-invoicing 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 dated 30-7-2020, only SEZ Units are exempted from issuing e-invoices.

Do I need to print QR Code on the invoice? If so, what shall be its size and location on the invoice copy?

Yes. The QR code (quick response code) (containing, inter alia, the IRN [invoice reference number]) which comes as part of signed JSON from IRP [invoice registration portal], shall be extracted and printed on the invoice. This is one of the mandatory particulars of invoice under Rule 46 of CGST Rules. While the printed QR code shall be clear enough to be readable by a QR Code reader, the size and its placing on invoice is upto the preference of the businesses.

While returning IRN (invoice reference number), the IRP (invoice registration portal) is also adding its digital signature, “Acknowledgement No.” and “Date”. Whether these also need to be printed while issuing an invoice?

No. There is no mandate to print these particulars on invoice copy. Note that the “Acknowledgement No.” and “Date” given by IRP are only for reference. Being a 15-digit number, the acknowledgement number will also come handy for printing e-invoice or for generating e-way bill (instead of keying in the 64-character long IRN).

If e-invoice is applicable and issued, is it required to issue copies of invoice in triplicate/duplicate?

Where e-invoicing is applicable, there is no need of issuing invoice copies in triplicate/duplicate. This is clearly specified in Rule 48(6).

Where e-invoicing is applicable, is carrying e-invoice print during transportation of goods mandatory?

No. As per Rule 138A(2) of CGST Rules, where e-invoicing is applicable, “the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer, in lieu of the physical copy of such tax invoice.”

Author

CA Hiral Shah

Hiral Shah is an experienced chartered accountant and post graduate in commerce stream. She has worked in different areas for almost 10 years. She loves to write on various topics and enhance knowledge by reading a variety of subjects.