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GST: All you need know about Newly notified E-Invoicing threshold

By Team Taxscan - On March 9, 2021 11:56 am

The Government had made e-invoice mandatory for businesses with annual revenue of over Rs. 50 crore from April 1, 2021.

What is E-Invoicing under GST?

The electronic invoicing (e-Invoicing) is the exchange of the invoice document between a supplier and a buyer in an integrated electronic format. It is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.

Chronological Development in the e-invoicing under GST

The GST Council has approved introduction of ‘E-invoicing’ or ‘electronic invoicing’ in a phased manner for reporting of business to business (B2B) invoices to GST System, starting from 1st January 2020 on voluntary basis. Since there was no standard for e-invoice existing in the country, standard for the same has been finalized after consultation with trade/industry bodies as well as ICAI after keeping the draft in public place.

E-invoicing is mandatory from 1st October 2020 to all businesses whose aggregate turnover has exceeded the Rs.500 crore limit in any of the previous financial years from 2017-18 to 2019-20.

From 1st January 2021, e-invoicing will be applicable to businesses exceeding the Rs.100 crore turnover limit in any of the financial years between 2017-18 to 2019-20.

E-invoicing under the GST regime will become mandatory for entities with a turnover of Rs50 crore and more from April 1, 2021 for business to business transactions. This will be the third phase of e-invoicing roll out, which was rolled out for entities with Rs.500 crore and more turnover from October 1 last year and later extended to entities with Rs 100 crore and above from January 1 this year. The government had earlier planned to extend e-invoicing to all entities from April 1, 2021, but has refrained, taking care of interest of small entities.

Who is not required to generate E-invoice?

The persons who are excluded from issuing e-invoice vide notification No. 13/2020-CT dated 21st Mar’ 2020 areInsurance company, Banking company, Financial Institution, NBFCs, GTA, Supplier of passenger transportation services, Supplier of services by way of admission to the exhibition of cinematograph films in multiplex screens and Special Economic Zones (SEZs) (Notified vide Notification No. 61/2020- CT)

This could have been done with a view to exempt those categories of suppliers where the quantum of transactions is huge or unorganized sectors, which could pose practical difficulty in issuing e-invoices.

IRPs’ Role Under GST E-invoicing

After arrays of discussions, E-invoicing has finally been implemented from 1st January on a voluntary basis for GST registered businesses in India. E-invoicing API developers are introduced basically to report B2B invoices to the GST system in an organized manner. Apart from that, the real-time reporting of transaction invoices will eliminate the chances of last moment hassles due to pendency.

1. IRP means  the first Invoice Registration Portal allows invoice registration on the GST system through API mode in addition to other modes
2. IRP helps to integrate its e-invoicing system to the taxpayer’s business invoicing system.
3. The portal even helps the taxpayer to get the credentials through which he can access APIs. Registration for API access is complete once the OTP sent on the verified mobile number and email id is entered.
4. RP provides details related to integrating the business systems to their e-invoice systems through APIs
5. Code extracts and master data are provided to have proper knowledge of logic and concepts.
6. With the help of the portal, developers can improve the performance of APIs by understanding and testing the API methods.

Major Challenges of E-invoicing Under GST

• Consequence of Invoice not registered on IPR: If the invoice is found not registered on the IRP, such invoice will not be considered as a valid tax invoice for all GST related matters and hence a penalty of Rs.10,000 will be incurred for each instance of non-compliance.
• Transportation of Goods without a valid tax invoice: Transportation of goods without a valid tax invoice can be a reason for the detention of goods and vehicles and fines will be also imposed.
• Difficulty in claiming ITC: Customers may deny accepting and/or pay goods if a valid tax invoice is not available as this would affect the receiver’s eligibility to receive ITC benefits.
• Government Plans to implant Check: In addition, the government plans to implant a check that will prohibit the generation of an e-way bill if the IRN is absent.

What are the benefits of e-Invoicing?

• Ease, speed, and accuracy in the return filing process: The system will boost the automation of the GST return filing process. E-invoicing can bring ease, speed, and accuracy in the return filing process.
• Saves a lot of time, human errors: Updating GST Returns also saves a lot of time, human errors for data entry and also avoids major reconciliation issues.
• Elimination of data entry errors: This will also ensure the elimination of data entry errors when data is fed from invoice to e-way bill and GSTR-1.
• Provide data to the department: E-invoicing will provide data to the department in cases where invoices are issued and subsequently canceled or amendments made in the return forms or invoice canceled or credit notes issued, etc. to identify the genuineness and also to avoid fake invoicing.
• Reduction of frauds and fake GST invoices: With the real-time tracking of invoices by the vendors and the government, it will result in a reduction of frauds and fake GST invoices.
• Input credit can be matched with output tax details: Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.
•  Switch to desk audits: It will help in the department to switch to desk audits as compared to physical audits. Thereby, saving a lot of time and pain for assesses.

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