Exempt from E-invoicing? Please declare

One of the latest GST notifications states that businesses above the threshold specified for e-invoicing (i.e?? 20 cr) but fall under the exempt category, need to put a declaration on the invoice indicating they are exempt.?

Excerpt from the notification.

Full notification is available here

Let's analyse the notification and its impact

1. In India, the e-invoicing mandate is applicable to all businesses having aggregate turnover above?? 20 cr in any of the FY from 2017-18. However certain industries such as banking, insurance, GTA and certain document types such as Bill of Supply (which for exempt goods) are not covered under e-invoice

2. Exemptions are at the industry level or for specific activities. This level of information is not available in the Government system. Hence it is the (prudent) call of business to determine whether or not they are exempt.

3. As a result, which businesses are 'supposed' to generate e-invoices is not readily available. The government does publish businesses that are currently generating e-invoices. This list gets updated from time to time. As of 22-Jun-22, there are about 2.9 lac GST registrations (1.8 lac businesses at PAN level) that are generating e-invoicing

4. Where applicable, an invoice is considered valid only if it has a unique Invoice reference number (IRN). An invoice with IRN is nothing but an E-invoice.?IRN can be generated by an authorised Registrar referred to as Invoice Registration Portal (IRP). Currently, there is one Government IRP and the recent 47th GST council has approved the setting up of new IRPs. IRIS is one of the new Private IRPs.?

5. For a recipient, ITC can be claimed only on valid invoices. Hence businesses have been checking with their vendors and taking declarations in case e-invoice is not applicable to them. This vendor's due diligence is necessary to safeguard ITC claim.?

7. With the new notification, this declaration will become part of the invoice itself. So businesses have option whether to check out vendors or rely on the declaration given in invoice.?

This does solve the business problem, however, could it have been done in a different way, I wonder.??

What if?

• E-invoice applicability is a one-way entry. Once applicable, it will not change. Hence giving this declaration on the GST system could be one-time activity and not a periodic reporting task.?
• Instead of OR along with declaration on the invoice, businesses need to update their e-invoice status on the common system - GST system
• Status can cover different scenarios such as e-invoice is applicable, a threshold crossed but exempt, turnover below the threshold
• this information should be made available as public information and also in public API so that apps like IRIS Peridot can be used to verify OR businesses who wish to automate can directly integrate APIs via a GSP

As of now, businesses have been given the option to update certain information elements such as turnover, and nature of activity. E-invoices can be one more item. What say?