Practical Guide to E-Invoicing in India Introduction

E-invoicing is a significant initiative under India's GST framework, aimed at improving compliance, enhancing transparency, and reducing tax evasion. This article provides a practical guide on the applicability, issuance, and compliance requirements of e-invoicing, along with the latest updates and solutions for non-compliance.

Applicability of E-Invoicing

E-invoicing applies to registered taxpayers whose aggregate turnover exceeds specified thresholds. The thresholds and their effective dates are:

• Above ?500 crore: From October 1, 2020
• Above ?100 crore: From January 1, 2021
• Above ?50 crore: From April 1, 2021
• Above ?20 crore: From April 1, 2022
• Above ?10 crore: From October 1, 2022
• Above ?5 crore: From January 1, 2023

Businesses with turnover below ?5 crore are currently exempt from e-invoicing.

Issuance of E-Invoice

E-invoices must be generated and registered on the Invoice Registration Portal (IRP) for all B2B transactions, exports, and supplies to SEZ units. The e-invoice should be generated on or before the invoice date, and the IRP provides a unique Invoice Reference Number (IRN) and a QR code upon successful registration.

Process of E-Invoice Generation

1. Invoice Creation: Use your billing software to generate the invoice in JSON format.
2. Upload to IRP: Submit the JSON file to the IRP.
3. Validation: The IRP validates the details and generates the IRN.
4. Digital Signature and QR Code: The IRP digitally signs the e-invoice and generates a QR code.
5. Download E-Invoice: Retrieve the signed e-invoice with the QR code.

Consequences of Non-Compliance

Not Registering on the E-Invoice Portal

Failure to register on the e-invoice portal can lead to:

• Invalid Invoices: Invoices without IRN are invalid for GST purposes.
• ITC Denial: Recipients cannot claim Input Tax Credit (ITC) on such invoices.
• Penalties: Fines up to ?10,000 per invoice or 100% of the tax due may be imposed.

Registering but Not Issuing E-Invoice

If registered but not issuing e-invoices:

• Similar Consequences: Invoices without IRN remain invalid, leading to ITC denial and potential penalties.
• Operational Disruptions: Disputes with customers over ITC claims may arise.

Solutions for Non-Compliance

Corrective Measures

1. Immediate Compliance: Start issuing e-invoices without delay.
2. Rectify Past Invoices: Generate and register IRNs for past invoices if possible.
3. Communicate with Tax Authorities: Inform authorities about inadvertent non-compliance and seek rectification guidance.

Preventive Measures

1. Automate Billing Systems: Implement software integrated with the e-invoice portal.
2. Staff Training: Train staff on e-invoicing procedures.
3. Regular Audits: Conduct periodic audits to ensure compliance.

Turnover-Based Considerations

Turnover of ?5 Crore

For businesses with turnover of ?5 crore:

• Compliance Required: From January 1, 2023.
• Action Needed: Register on the e-invoice portal and issue e-invoices for all applicable transactions.
• Preparation: Upgrade systems and train staff.

Turnover Over ?10 Crore

For businesses with turnover over ?10 crore:

• Established Compliance: Should already be complying since October 1, 2022.
• Optimization: Optimize systems for higher volumes.
• Monitoring: Regularly monitor compliance.

Latest Updates

As of July 2024, several updates and enhancements have been introduced to the e-invoicing system:

• Enhanced Portal: The GSTN has launched an enhanced e-invoice portal with features like PAN-based search, automatic exemption lists, and improved UI/UX for better accessibility (Tax Guru) (SAG Infotech Official Blog).
• Reporting Accessibility: Taxpayers can now report e-invoices through any of the six IRP portals, with auto-population of e-invoices in GSTR-1 every hour (Tax Guru) (babatax.com).
• Compliance for Turnover Over ?5 Crore: Businesses with turnover exceeding ?5 crore must comply with e-invoicing requirements from January 1, 2023 (Tax Guru).

Conclusion

E-invoicing is crucial for compliance under GST. Businesses must ensure timely registration and adherence to e-invoicing requirements to avoid penalties and operational disruptions. Leveraging the latest updates and technology can streamline the invoicing process and ensure compliance.

For any assistance with e-invoicing, Vijay R Singh & Co. offers comprehensive support to ensure your business stays compliant and operates smoothly.