e-Invoicing for businesses above Rs.20 crore turnover

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.

Latest Update

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.

Who must comply with the e-Invoicing as per the roadmap?

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-

e-Invoicing impact and changes in business processes

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-

• The business must now identify transactions that are subject to e-invoicing and segregate them from the rest for compliance.
• Applicable businesses must maintain supplier and customer master data to include additional invoice information such as GSTIN, bank account and payee details for accuracy.
• Businesses must change the GST returns filing process as the B2B supplies will be auto-populated in the returns, and B2C supplies will be manually updated.
• Businesses must decide if they want to comply with e-invoicing through the API integration or use offline utilities such as the GePP and directly integrate or via GST Suvidha Provider (GSP).
• The biggest issue that the businesses may face is to engage themselves in real-time generation and IRN capture. Retailers of this turnover range issue thousands of B2B invoices daily. They cannot keep the customers waiting for such time until e-invoice generation. Such businesses must utilise the GSP services for smooth implementation.

What are the consequences of not generating e-invoices?

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-

• GST returns not getting auto-filled.
• Customers are unable to claim eligible ITC.
• Customers refuse to accept invoice that is not compliant with the e-invoicing provisions.

How to prepare for e-invoicing implementation with the Clear solution?

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.

1. Arranging awareness sessions for the staff- Prior to e-invoicing implementation, businesses had to issue invoices applying the common GST formats. However, e-invoicing rules require organisations to use the standard notified formats. The format consists of three parts such as the e-invoice schema, the masters and the e-invoice template. Therefore, the tax or Finance Head of the organisation must create enough awareness among its staff and provide training facilities before the system goes live. Team Clear has collated insightful resources in videos, articles and whitepapers. The team also has a talented managed service team that provides round-the-clock technical support in the implementation.
2. Choose the most suitable ERP integration mode- The most popular integration modes for e-invoice generation are the API based and the SFTP based integration modes. An organisation may select the integration mode based on its available budget and particular business requirements. It is advisable to go for a solution that provides IRN backup and retrieval service, which is currently absent on the IRP. Further, beat all the reconciliation complications by managing IRN generation using advanced tools, insightful dashboards and reports on the Clear e-Invoicing solution. It is unified e-invoicing, e-way bill and B2C QR code management software. Clear e-Invoicing can also handle invoices of large scale.
3. Test and implement changes in the accounting software as per the law- Businesses must get their service providers to re-configure the ERP/accounting system to smoothly communicate with the IRP for IRN generation. Further, the printing capabilities must be modified to include any additionally mandated fields such as the signed QR code. These changes need significant time and some investment. With the fourth phase of e-invoicing given one month, it becomes challenging for businesses to ensure these changes have the least impact on their daily operations. The clear e-Invoicing solution has the state-of-the-art technology and capabilities to smoothly set up e-invoicing for your organisation within the least amount of time.
4. Ensure data security while choosing your e-invoicing solution- Data security is crucial as the e-invoices will usually be directly obtained from the ERP or the accounting software. The accounting software consists of critical information about the business and its customers. Further, suppose a business plan to use the ASP/GSP services. In that case, one must enable two-factor authentication and choose the ISO 27001 certified software service provider, such as the Clear e-Invoicing solution.  

All about the e-Invoice API access routes

There are many ways through which the ERP system of a business can interact with the IRP for generating IRN-

• Enterprises have direct access to APIs- In such a case, the taxpayers can generate username and password to access API through client ID and client secret.
• Enterprises have access to the e-way bill APIs- If the enterprise already has access to the e-way bills API, they can use the same credentials to access the e-invoicing system.
• Enterprises taking help of GSPs- The enterprises can generate username and passwords using GSPs and get into arrangements to access API with the GSP’s Client ID and Client Secret.
• Enterprises using ERPs- The enterprise can generate a username and password and tie up with ERPs to access the API with the ERP provider’s Client Id and Secret.

Popular modes available for IRN generation

Following are some of the popular modes available for mid-sized businesses with more than Rs.20 crore turnover to comply with e-invoicing-

• API-based or SFTP-based- Using these modes, the businesses’ accounting system can interact with the IRP and generate e-invoices, either real-time or at pre-scheduled intervals. They can generate IRN either in bulk or one at a time. Businesses must use Cloud-based software providers such as the Clear e-Invoicing solution to manage and store e-invoices seamlessly.
• Web-based- A business can fill the invoice details over the IRP website to generate IRNs. 
• Mobile app-based- The GST Network has also released a mobile application for applicable businesses to comply with e-invoicing.
• SMS-based- It involves businesses filling the invoice details in a particular format and sharing it on the IRP via an SMS for further processing.
• GSP-based- Businesses can use the services of GSP for IRN generation for indirect access to the IRP.
• Offline tool-based and GePP- The invoice details can be added and updated offline using the spreadsheet-based tools downloaded from the IRP portal.