Understanding the Electronic Invoicing (e-Invoicing) in GST
Understanding the concept of electronic invoice (e-invoicing) in GST and changes to be effective from 01st April 2025.
Electronic Invoicing, commonly known as e-Invoicing, is a mechanism where business invoices are authenticated digitally by the Goods and Services Tax Network (GSTN) and submitted to a centralized GST portal. Initially introduced for large enterprises, the GST Council has progressively extended e-Invoicing to encompass medium and small businesses.
In this system, businesses generate invoices using their internal software and upload them to the Invoice Registration Portal (IRP). The IRP assigns a unique Invoice Reference Number (IRN) to each invoice, ensuring its validity. This data is then automatically transmitted to both the GST portal and the e-way bill portal in real-time, reducing the need for manual data entry during GST return filings.
Who is Required to Implement E-Invoicing or What is the Timeline for E-invoicing?
The requirement for e-Invoicing is primarily based on a taxpayer’s Annual Aggregate Turnover (AATO).
₹500 Crore and above October 1, 2020
₹100 Crore and above January 1, 2021
₹50 Crore and above April 1, 2021
₹20 Crore and above April 1, 2022
₹10 Crore and above October 1, 2022
₹5 Crore and above August 1, 2023*
*All taxpayers with an AATO of ₹5 Crore or more are mandated to generate e-Invoices for specified transactions. Starting April 1, 2025, businesses with an AATO of ₹10 Crore or more must adhere to a 30-day reporting timeframe for e-Invoices.
Exemptions and Applicability
e-Invoicing under GST aims to streamline and standardize the invoicing process. The following outlines the applicable documents and transactions:
Exempted Documents and Transactions:
• Delivery Challans, Bill of Supply, Bill of Entry, Financial or Commercial Credit and Debit Notes, and Input Service Distributor (ISD) Invoices
• Business-to-Consumer (B2C) Sales: Direct sales to consumers.
• Nil-Rated, Non-Taxable, or Exempt B2B and B2G Sales: Transactions involving goods or services exempt from GST.
• Imports: Inward supplies from outside India.
• High Sea Sales and Bonded Warehouse Sales: Transactions involving goods sold at high sea or stored in bonded warehouses.
• Free Trade & Warehousing Zones (FTWZ): Supplies made within FTWZs.
• Supplies Under Reverse Charge Mechanism (RCM): Transactions where the recipient is liable to pay GST, as covered under Section 9(4) of the CGST Act.
Exemptions from e-Invoicing Compliance
Certain categories of registered entities are exempt from e-Invoicing requirements, regardless of their turnover, as specified in CBIC Notification No. 13/2020 – Central Tax and its subsequent amendments.
Exempted Entities:
• Financial Institutions: Including insurers, banking companies, and non-banking financial companies (NBFCs).
• Goods Transport Agencies (GTAs): Entities involved in the transportation of goods.
• Passenger Transportation Service Providers: Entities offering passenger transport services.
• Cinematographic Film Exhibitors: Entities providing services for film exhibitions in multiplexes.
• Special Economic Zone (SEZ) Units: As exempted under CBIC Notification No. 61/2020 – Central Tax.
• Government Departments and Local Authorities: As exempted under CBIC Notification No. 23/2021 – Central Tax.
• Online Information and Database Access or Retrieval (OIDAR) Service Providers: Entities registered under Rule 14 of CGST Rules.
Applicable Documents:
• Tax Invoices: Invoices issued for the sale of taxable goods or services.
• Credit Notes: Documents issued to reduce the payable amount, often due to returns or discounts.
• Debit Notes: Documents issued to increase the payable amount, typically for additional charges or corrections.
• Invoice-cum-Bill of Supply: Combined invoices used in specific scenarios, such as supplying both taxable and exempt goods to the same recipient.
Applicable Transactions:
• Business-to-Business (B2B) Sales: Transactions involving the sale of goods or services to other registered businesses.
• Business-to-Government (B2G) Sales: Transactions involving the sale of goods or services to government entities.
• Exports and Deemed Exports: Transactions involving the sale of goods or services to buyers outside India or transactions classified as deemed exports.
• Supplies to Special Economic Zones (SEZs): Including both taxable and non-taxable supplies, stock transfers, and services provided within SEZs.
• Supplies Under Reverse Charge Mechanism (RCM): Transactions where the recipient is liable to pay GST, as specified under Section 9(3) of the CGST Act.
Consequences of Late Reporting
• IRN Rejection – Late invoices will be rejected by the IRP, making them non-compliant.
• Invoice Re-issuance – Businesses may need to regenerate invoices, causing administrative burdens.
• Cash Flow & ITC Delays – Late submissions disrupt the Input Tax Credit (ITC) process.
• Penalties & Legal Risks – A fine of ₹25,000 per invoice (missing IRN & QR code) and up to 100% of tax due or ₹10,000 (whichever is higher) for every unreported invoices.
Key Takeaways
• Mandatory e-Invoicing applies to businesses with an AATO of ₹5 Crore and above (as of August 2023).
• From April 2025, businesses with an AATO of ₹10 Crore or more must report invoices within 30 days of issuance.
• Delayed reporting leads to rejection of invoices by the IRP, affecting compliance and ITC claims.
• SMEs benefit from extended timelines, reduced penalties, and smoother GST return filing.
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