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Updated on: May 15th, 2023
13 min read
The e-invoicing system applies to more businesses via the CBIC’s CGST notification 01/2022 dated 24th February 2022. Indian businesses with an annual aggregate turnover of more than Rs.20 crore up to Rs.50 crore, as calculated in any preceding financial year from 2017-18 up to 2021-22, are generating e-invoices from 1st April 2022. Currently, it applies to businesses with a turnover of more than Rs.10 crore from 1st October 2022. Soon, it will apply to those with turnover over Rs.5 crore from 1st August 2023.
The article deep-dives into the details of the notification, preparedness, options, challenges and tested solutions such as Clear e-Invoicing to aid such businesses.
More than 3,000 large enterprises trust Clear e-Invoicing for their unified e-invoicing, e-way bill and Business-to-Consumer (B2C) QR code compliance.
10th May 2023
CBIC extended e-invoicing to taxpayers whose turnover is more than Rs 5 cr in any financial year from 2017-18. Hence, these taxpayers shall issue e-invoices w.e.f 1st August 2023.
06th May 2023
The GST department has deferred the time limit of 7 days to report the old e-invoices on the e-invoice IRP portals by three months. Also, the department is yet to announce the new implementation date.
13th April 2023
The GSTN released an advisory on 12th and 13th April 2023 stating that taxpayers with an annual turnover of Rs.100 crore and more must report tax invoices and credit-debit notes to the IRP within 7 days from the date of issue of the invoice/CDN from 1st May 2023.
The government has made e-invoicing compulsory to curb GST evasion. Its first Committee was established in May 2019 to deliberate on e-invoicing uses and the implementation in India, following the global developments.
Thereafter, the panel tabled many drafts before the final e-invoice schema could be issued in January 2020. The e-Invoicing system was supposed to become compulsory from 1st April 2020 but was pushed by the GST Council. Finally, it went live from 1st October 2020 in phases.
During the first phase, Indian enterprises with a turnover of more than Rs.500 crore had to generate e-invoices from 1st October 2020. In the next phase, businesses with a turnover exceeding Rs.100 crore began issuing e-invoices from 1st January 2021. In the third phase, enterprises with turnover higher than Rs.50 crore had to generate e-invoices from 1st April 2021. There were a total of 2,40,567 business firms coming in this turnover bracket.
After a year, the government extended the massive system to around 1,80,000 more Indian firms from 1st April 2022. These mid-sized firms fall within a turnover range of Rs.20 crore to Rs.50 crore in any financial year between 2017-18 to 2021-22. Currently, it applies to those with turnover over Rs.10 crore from 1st October 2022 and sooner will apply to those with turnover more than Rs.5 crore from 1st August 2023. An official commented that the government predicts an increase in GST registration by 75% due to this move.
The e-invoicing system will apply to only Business-to-Business (B2B) transactions. All the financial institutions in the insurance and banking business are kept out of the scope. The system also does not apply to non-banking financial companies, goods and passenger transportation agencies, business units operating in special economic zones, and government departments.
Here are the notifications for the e-invoicing implementation to date-
Notification 13/2020 on 21st Mar 2020
|e-Invoicing applied to businesses with turnover higher than Rs.100 crore in a year from 1st October 2020.|
Notification 60/2020 on 30th Jul 2020
|A revised e-invoice format was issued with 20 new fields and 13 fields removed.|
Notification 61/2020 on 30th Jul 2020
|The turnover limit was raised from Rs.100 crore to Rs.500 crore to limit its applicability.|
Notification 70/2020 on 30th Sep 2020
|Original notification 13/2020 is amended to change the turnover computation from the current FY to the turnover of any preceding FY from 2017-2018.|
Notification 88/2020 on 10th Nov 2020
|Revision in the original notification 13/2020 to reinstate the turnover limit to Rs.100 crore from Rs.500 crore.|
Notification 05/2021 on 08th Mar 2021
|Change in original notification 13/2020 to reduce the turnover limit to Rs.50 crore from Rs.100 crore to extend the applicability to more taxpayers.|
Notification 23/2021 on 1st June 2021
|Extension of exemption to government departments and local authorities.|
Notification 01/2022 on 24th February 2022
|Change in original notification 13/2020 to further reduce the turnover limit to Rs.20 crore from Rs.50 crore to extend the applicability to more taxpayers.|
|Notification 17/2022 on 1st August 2022||The e-Invoicing system further got extended to those annual aggregate turnover ranging from Rs.10 crore up to Rs.20 crore from 1st October 2022.|
|Notification 10/2023 on 10th May 2023||The e-Invoicing system further got extended to those annual aggregate turnover ranging from Rs.5 crore up to Rs.10 crore from 1st August 2023.|
There is only a month available since the notification was passed for applicable businesses to prepare for the system. Businesses must now integrate their systems with the government’s Invoice Registration Portal (IRP) for a smooth generation of Invoice Reference Number (IRN) for every B2B bill. They must get their accounting software to accommodate changes for complying with the e-invoice schema.
Generating e-invoices will impact the business processes as follows-
If an e-invoice is not generated, it is considered an offence and attracts penalties. Non-compliant businesses must pay heavy penal provisions fixed at Rs.10,000 for every invoice. Moreover, inaccurate invoicing may lead to a penalty of Rs.25,000 for every invoice.
Apart from the penal provisions, if a taxpayer delays the generation of e-invoice, it may lead to-
Businesses notified during the fourth phase of e-invoicing in India must take certain steps to implement e-invoicing by their organisations smoothly. In the process of change management, they are likely to face challenges.
There are many ways through which the ERP system of a business can interact with the IRP for generating IRN-
Following are some of the popular modes available for mid-sized businesses with more than Rs.20 crore turnover to comply with e-invoicing-