E-Invoicing Under Goods and Services Tax (GST Act, 2017)

E-Invoicing Under Goods and Services Tax (GST Act, 2017)

The concept of e-invoicing under the Goods and Services Tax (GST) regime was introduced through sub-rule (4) to Rule 48, vide Notification No. 68/2019-CT dated 13.12.2019. This marked a significant step towards digitalizing the invoicing process for businesses in India. The system facilitates the generation of an Invoice Reference Number (IRN) by uploading invoice details on the GST e-invoice portal, making it easier for businesses to manage invoices while also helping the government track transactions effectively.

1. Key Provisions of Rule 48(4)

As per Rule 48(4):

• Registered persons as notified by the government, based on recommendations from the GST Council, are required to issue invoices by including the particulars specified in FORM GST INV-01.
• The invoice details must be uploaded to the Common GST Electronic Portal for the generation of an IRN, subject to conditions mentioned in the relevant notifications.
• The Commissioner, upon the Council’s recommendation, can exempt specific persons or classes of registered persons from the e-invoicing requirement for a specified period.

2. Turnover-Based Applicability of E-Invoicing

The government introduced e-invoicing in a phased manner by specifying turnover thresholds for businesses. The following notifications outline these thresholds:

3. Purpose of E-Invoicing

The primary objectives of introducing e-invoicing are:

• Ease of Doing Business: Simplifies the invoicing process for registered taxpayers.
• Curbing Tax Evasion: Enables real-time tracking of transactions and helps the government devise better tax policies.

4. Important Features of E-Invoicing

• Aggregate Turnover: The turnover limit includes the total turnover of all GSTINs registered under the same PAN across India.
• Applicability: E-invoicing is mandatory if a business’s aggregate turnover in any preceding financial year from 2017-18 onwards exceeds ?5 crores.
• Generation of IRN: Registered persons can generate the Invoice Reference Number (IRN) by logging into the e-invoice portal or automatically through most invoicing software.

5. Documents Covered and Not Covered under E-Invoicing

6. Exemptions from E-Invoicing

Certain classes of registered persons are exempt from e-invoicing requirements, including:

• Insurance companies, banks, and financial institutions, including NBFCs
• Goods transport agencies (GTA)
• Registered persons providing passenger transport services
• Registered persons offering services for the exhibition of cinematographic films
• Special Economic Zone (SEZ) units
• Government departments, local authorities, and Input Service Distributors (ISDs)
• Composition taxpayers

7. E-Invoicing for Distinct Persons

E-invoicing is also applicable to transactions between distinct persons, i.e., entities with multiple GSTINs under the same PAN. These transactions are treated as B2B transactions, and therefore, e-invoicing requirements apply.

8. Issuance of E-invoice and Penalty

Businesses have the flexibility to provide either a hard copy or a digitally signed soft copy of the invoice. The hard copy must include the Invoice Reference Number (IRN) and QR code. Alternatively, businesses can opt to send a digital version that is securely signed. For transporters, there is no requirement to carry a hard copy of the e-invoice. Instead, they are only required to have access to the QR code, which contains the embedded IRN. This can be kept in electronic form, ensuring convenience during the transport of goods.

Failing to issue an e-invoice, when mandated, can lead to serious consequences. According to Rule 48(5) of the CGST Act, if an e-invoice is not issued, the invoice is considered invalid. This can lead to challenges with the recipient’s Input Tax Credit (ITC) and may result in a penalty of ?25,000 under each act on the supplier, as outlined in Section 122(3) of the CGST Act.