Recent Update
The government has decided to impose a time limit for reporting old invoices on the e-invoice IRP portals for taxpayers with an annual aggregate turnover (AATO) greater than or equal to 100 crores. Taxpayers in this category will not be allowed to report invoices older than 7 days on the date of reporting. This restriction will apply to all document types for which an invoice reference number (IRN) is to be generated, including credit and debit notes. The validation system on the invoice registration portal will disallow the user from reporting the invoice after the 7-day window. Taxpayers with AATO less than 100 crores are exempt from this restriction for now. The implementation of this requirement will begin from May 1, 2023, to allow taxpayers sufficient time to comply with the new time limit, which may require changes to their systems.
FAQ on E Invoicing
Q1. What is GST E-Invoice System?
Ans1. The GST e-invoice system in India is a digital invoicing system that was introduced by the Indian government in 2020 to help streamline the invoicing process for businesses and reduce tax evasion. Under this system, certain categories of taxpayers are required to generate invoices in an electronic and standardized format on the Invoice Registration Portal (IRP). The IRP generates a unique Invoice Reference Number (IRN) and QR Code for each e-invoice, which is then transferred electronically to the GST and e-way bill portals, eliminating the need for repeated data entry. The system is designed to make the invoicing process more efficient, accurate, and transparent, and to reduce the likelihood of errors and fraudulent activity.
Q2. Physical GST invoices are not necessary if e-invoices have been provided?
Ans2. According to Rule 138A(2) of CGST Rules, if e-invoicing is mandatory, you don't need to carry a physical copy of the tax invoice. Instead, you can show the QR code containing the Invoice Reference Number (IRN) electronically to the tax officer for verification.
Q3. Who is required to generate e-invoices under the GST system?
Ans3. Starting from 1st October 2022, the government has made it mandatory for businesses with an annual turnover of more than Rs.10 crore in any year between 2017-18 to 2021-22 to use e-invoicing. Earlier, this requirement was applicable only to businesses with a turnover of more than Rs.500 crore from 1st October 2020. Please Note this turnover reduced gradually over the period of time from Rs.500 crore to Rs. 10 crore.
Q4. Is e-invoicing mandatory for all types of invoices?
Ans4. No, e-invoicing is mandatory only for B2B (business-to-business) invoices. However, taxpayers have the option to generate e-invoices for other types of invoices as well.
Q5. What is the process for generating an e-invoice?
Ans5. To generate an e-invoice, the taxpayer must create the invoice on their own accounting or ERP system and then upload it to the IRP for authentication. The IRP generates a unique Invoice Reference Number (IRN) and QR Code for each e-invoice.
Q6. What are the benefits of e-invoicing under the GST system?
Ans6. E-invoicing eliminates the need for repeated data entry, reduces the risk of errors, and ensures timely compliance. It also improves transparency and efficiency in the tax system.
Q7. What are the consequences of non-compliance with the e-invoice system?
Ans7. Non-compliance with the e-invoice system can lead to penalties and fines, as well as legal action by the tax authorities. Further your counterparty will not be able to claim ITC on such invalid invoices. And due to your non-compliance, you may lose your customers. Since e-invoicing is now linked with e-way billing, the e-way bill will be considered invalid without a valid invoice.
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Q8. Are there any exemptions or exceptions to the e-invoice system?
Ans8. Yes, there are certain exemptions and exceptions to the e-invoice system, such as for SEZ units, insurance companies, and banking companies. It is advisable to consult with a tax expert to determine whether your business is exempt or not.
Q9. How can businesses ensure compliance with the e-invoice system?
Ans9. Businesses can ensure compliance with the e-invoice system by using automated e-invoicing solutions, conducting regular audits, and keeping track of their invoices and tax returns. It is also important to stay up-to-date with the latest regulations and guidelines issued by the tax authorities.
Conclusion
The Indian government introduced e-invoicing in 2020, which mandated certain taxpayers to generate invoices in an electronic and standardized format on the Invoice Registration Portal (IRP). Until now, there was no time limit for e-invoice generation, but a new restriction has been introduced. Taxpayers with an annual aggregate turnover (AATO) of Rs.100 crore and above must report invoices within a seven-day time limit from May 1st, 2023. This was introduced to ensure timely compliance and prevent the backdating of e-invoices. Failure to comply within the seven-day window could lead to issues with input tax credit and GSTR-2B statement. Large enterprises with multiple branches will be impacted by this change, and they will need to install an e-invoicing solution at every branch location or ensure they adhere to the seven-day deadline for sharing invoice data with the head office. To ensure compliance, taxpayers should look at integrated and automated e-invoicing solutions that generate e-invoices in real-time. Integrated solutions also offer advantages, such as 100% accuracy, reduced effort in reconciling and filing GST returns and e-way bills, real-time tracking of invoices, and seamless flow of input tax credit to the recipient business.
The author is a Chartered Accountant with 2 decades of experience into Accounting, Taxation, Auditing, Risk & Compliance, Credit Controls, Due diligence. Currently, the author is the founder and managing partner at RRL Global services.
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