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Consequences of non-generation of IRN or e-invoice

Updated on :  

08 min read.

All registered taxpayers whose aggregate value of all taxable supplies exceeds Rs.500 crore in a financial year is required to generate an e-invoice from 1st October 2020.

It became applicable to all taxpayers having a turnover of more than Rs 100 crore from 1 January 2021 onwards. Later on, it was notified that it shall also apply to taxpayers with a turnover of more than Rs 50 crore from 1st April 2021. The government recently extended the e-invoicing applicability to businesses with more than Rs 20 crore turnover w.e.f 1st April 2022.

Taxpayers should consider the turnover of any financial year from 2017-18 while checking the e-invoicing applicability.

What happens if you fail to issue an e-invoice?

The GST rules provide the e-invoice requirement under sub-rule (4), (5) and (6) of rule 48. It applies to individual taxpayers only. So, the rest of the taxpayers must follow standard invoicing provisions.

The e-invoice system requires intimation of all the B2B supply transactions to the government by way of uploading invoices on the IRP (invoice registration portal). A taxpayer can first generate an invoice or the debit or credit note on his accounting software/ERP.

Thereafter, he/she must upload the invoice on the IRP. On uploading the invoice, a unique Invoice Reference Number (IRN) will be issued against each invoice. Non-generation of e-invoices will imply non-intimation of supply transactions to the government. Any invoice issued by the applicable taxpayer without the IRN is considered an invalid invoice under the GST law. In other words, it is regarded as a non-issue of invoice and thus attracts various penalties as listed in the next section.

What happens if you miss generating the IRN?

Failure to generate IRN is considered as a failure of issuance of invoice. This is laid down in sub-rule (5) of rule 48 of the CGST Rules. Penalties under various sections of GST will be levied as listed in the next section.

List of penalties for the improper issue of invoice

Non-issuance of e-invoice is an offence under GST and thus attracts penal provisions. Below are some of the penalties for non-issuance of invoice or issuance of incorrect invoice:

  1. Penalty for non-issuance of invoice- 100% of the tax due or Rs.10,000, whichever is higher.
  2. Penalty for incorrect invoicing is Rs.25,000.
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