What is e-invoicing?

• ‘E-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal.
• An identification number will be issued against every invoice by the Invoice Registration Portal.
• All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time.
• Therefore, it will eliminate the need for manual data entry while filing GSTR-1 returns.

Applicability

• As per the Notification. No. 10/2023-Central Tax Dated 10th May,2023 Effective from 1st August 2023 Every GST Registered person whose Aggregate Annual Turnover exceeds Rs 5 Crore in any preceding Financial Year from 2017-18 onwards needs to be considered to ascertain the applicability of E-Invoicing.
• “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;
• As per the Notification. No. 10/2023 amended Notification.No.13/2020 vide Notification. No. 70/2020 and Notification. No. 88/2020, AATO in any preceding Financial Year from 2017-18 onwards needs to be considered to ascertain the applicability of E-Invoicing mandate. The AATO is as per GST Returns.

Who needs to generate an E-Invoice

GST E-invoice can be generated only by suppliers. The recipients and transporters cannot generate it. E-commerce operators can generate e-invoices under GST on behalf of the sellers on their platforms.

Type of documents to be reported

The taxpayers need to report the following documents to the e-invoice system.

• Invoice by Supplier
• Credit Note by Supplier
• Debit Note by Supplier

Supplies covered under E-invoicing

E-Invoicing currently applies to:

• Supplies to registered persons (i.e., B2B supplies)
• Supplies to SEZs (with/without payment of tax)
• Exports (with/without payment of tax)
• Deemed exports

E-Invoicing currently not applies to:

• nil-rated Supplies
• wholly-exempt Supplies

Non Applicability under E-invoicing

• An insurer or a banking company or a financial institution, including 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
• SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)
• A government department and Local authority (excluded via CBIC Notification No. 23/2021 – Central Tax)

Steps to generate e-invoice

1. Invoice Creation
   Invoice is created using an accounting or billing software as per the prescribed format for E-invoicing
2. Invoice Registration Number (IRN) Generation
   Supplier can generate a unique Invoice Reference Number (IRN)
3. Upload on Invoice Registration Portal (IRP)
   JSON file for each B2B invoice, along with the IRN to be uploaded.
4. IRP Validation of Invoice Information
   The IRP will authenticate the file against the central registry of GST for any duplication.
5. Digital Signature and QR Code Generation
   Upon successful verification, the invoice will be updated with IRP’s digital signature on the invoice data and a QR code will be added to the JSON file.
6. E-Invoice data transmission to E-Way Bill Portal and GST System
   The uploaded data will be shared with the E-way bill and GST system, which will be used for auto-population of GST Annexures
7. E-Invoice Receipt back to Supplier’s ERP
   The portal will send the digitally signed JSON along with IRN and QR code back to the seller.

E-invoicing applicability for RCM transactions

• SEZ units are exempted from E-invoicing however the SEZ developer needs to generate IRN as they fall under E-invoice mandate.
• E-invoicing is not required for B2C – Business to Consumer transactions. However, for taxpayers with AATO above Rs 500 Cr, the invoices need to have self-generated QR Code.

Generating E-Way Bill along with E-Invoice

Generation of E-way Bill is now inter-twined with E-Invoicing. IRP can be used to generate not only IRN but also E-way bills, for the documents that qualify.

Penalty

• Penalty for non-issuance of invoice: 100% of the tax due or Rs.10,000 (whichever is higher) will be imposed for each instance of non-compliance.
• Penalty for incorrect invoice: Rs.25,000 will be imposed as penalty in case the goods are transported without a valid invoice, the department may detain the goods and the vehicle.Penalty may be imposed here.