e-Invoice Limit 10 Crore | e-Invoicing for businesses above Rs.10 crore turnover

The e-invoicing system or electronic invoicing system is a Goods and Services Tax (GST) rule that applies to certain taxpayers in a phased manner. As per the e invoice notification 17/2022 dated 1st August 2022, the fifth phase applied to businesses with an e invoice turnover limit of more than Rs.10 crore up to Rs.20 crore from 1st October 2022. As per the latest e-invoice limit notification 10/2023 dated 10th May 2023, the sixth phase applies to businesses with turnover more than Rs.5 crore in any FY 2017-18 onwards.

This write-up explains A-Z about the fifth phase of e-invoicing, the notification’s applicability, business process changes, available modes of e-invoice generation, steps for registration, challenges and tested solutions such as Clear e-Invoicing to assist such businesses. 

Further, Clear is officially GSTN-approved IRP. More than 3,000 large enterprises trust the Clear e-Invoicing solution for unified e-invoicing and e-way bill compliance journey.

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. 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.

Businesses covered in the fifth phase of e-invoicing

From 1st October 2022, the government made e invoicing mandatory for businesses with a total annual turnover of more than Rs.10 crore in any previous financial year from 2017-18 to 2021-22.

Previously, the first phase applied to the e invoice turnover limit of more than Rs.500 crore beginning from 1st October 2020. In the second phase, enterprises with a turnover of more than Rs.100 crore began to issue e-invoices on or after 1st January 2021. 

The third phase encompassed enterprises with a turnover higher than Rs.50 crore starting from 1st April 2021. After a year, the government extended this system to Indian firms with a turnover for e invoice limit ranging from Rs.20 crore to Rs.50 crore beginning on 1st April 2022 as the fourth phase.

Businesses can expect the e-invoicing system to get extended to lower turnover bracket. The GSTN announced voluntary enablement of e-invoicing in March 2023 for businesses currently not required to comply with the e-invoicing rules.

The government has made e-invoicing applicable to the following documents-

• Tax invoices, 
• Debit notes, 
• Credit notes, and 
• Invoice-cum-bill of supply

The system covers transactions such as-

• Taxable Business-to-Business (B2B) sales of goods or services, 
• Business-to-Government (B2G) sales of goods or services, 
• Exports, and
• Supplies made under Reverse Charge Mechanism (RCM)

However, the e-Invoicing scope excludes the following documents, transactions and businesses–

• Exempted supplies where the bill of supply is raised, 
• Imports, 
• Job works, 
• Delivery challans 
• Banks, financial institutions, insurance businesses
• Presenting cinematographic films on multiplex screens
• Non-banking financial companies, 
• Goods and passenger transportation agencies, 
• Business units operating in SEZ or special economic zones, and 
• Government departments.

Objective & e-Invoicing impact 

The main objective of reducing the threshold turnover limit in e-invoicing was to prevent GST evasion and fraud while improving compliance. Businesses along the supply chain can claim verified Input Tax Credit (ITC). Thereby, it plugs revenue leakages in GST for the government. e-Invoicing also aims to widen the GST digitisation net and allows capturing transaction details at the source, i.e., invoicing stage.

The primary impact on the applicable businesses is the change in business process, GSTR-1 preparation and modifications to the billing system or software. While GSTR-1 filing becomes easier with auto-population, complications arise in reconciliations, explained in the later section. Easy access to formal credit channels such as invoice discounting forms a major advantage of the e-invoicing initiative for these small businesses as their invoices is validated. 

On the flip side, large enterprises sourcing from these applicable businesses must ensure that their vendors comply with the mandate not to lose tax credits or face delays in claims. Eventually streamlined, they enjoy claims of genuine tax credits. 

Changes in business processes & how to prepare

Businesses had to prepare, set up and test the new system before 1st October 2022. The GST Network enabled testing of e-invoicing setup in a sandbox environment for such applicable businesses in July 2022.

A higher number of taxpayers fell in the Rs.10-20 crore yearly turnover range compared to previous phases at the time of implementation. Further, these small businesses tend to have a higher transactional volume posing fresh compliance challenges.

Here’s how businesses must implement e-invoicing and how e-Invoicing will impact or change their business processes-

Reporting of tax invoices

e-Invoicing does not mean generating invoices on the government portal, but it refers to reporting already generated invoices to the government for validation.

Setting up continuous staff training

Spread sufficient awareness about the change in invoicing process across their invoicing, tax and accounting teams before the implementation date. Get a complete understanding of e-invoicing, starting with our article on ‘All about e-Invoicing’. Team Clear also has collated insightful resources in videos, articles and whitepapers on e-invoicing. Clear has a talented team for managed services for round-the-clock technical support.

Modifying the billing or accounting, or ERP system

Accounting or billing software must be modified to comply with the e-invoice schema or format. Recognise transactions and documents where e-invoicing applies and segregate them from the rest for reporting onto the Invoice Registration Portal (IRP) such as NIC and Clear. Since e-way bills can be optionally auto-generated based on e-invoice details entered, sort documents accordingly. Ensure that the printing set-up captures IRN and QR code in the e-invoice. These require modifications in the current billing, ERP, accounting systems, or software.

Ensuring accuracy of invoice details

If not in the past, begin maintaining proper and verified records of supplier and customer master data. For accuracy, it should contain additional invoice information such as valid GSTIN, bank account and payee details. Any rejection by the IRP leads to invoice cancellation and regeneration hassles for the team, leaving customers disappointed with the delay as amendments of e-invoices are impossible.

Choosing the mode of e-invoice generation

Decide the best-suited mode of generating Invoice Reference Number (IRN) and signed QR code from the IRP. Various options are available, ranging from online and real-time processing to SMS, offline and batch processing. Some of the popular modes are-

• SFTP or API integration using fully functional, end-to-end solutions such as Clear e-Invoicing, 
• Access to IRP via existing e-way bill APIs, 
• Web-based direct integration with IRPs such as NIC and Clear, 
• Integration via GST Suvidha Provider (GSP) such as Clear, 
• SMS-based or mobile app-based generation, and 
• Offline spreadsheet-based utilities such as the GePP.

It is advised to use a cloud-based solution that provides IRN backup and retrieval service. Also, check for the ability to handle large-scale invoices in the shortest time with high data security. Clear e-Invoicing generates IRN at the highest speed of 200 ms against the 3-second market average.

Registering on the e-invoice portal or IRP

First-time compliance requires the applicable business to register on the e-invoice portal or notify IRP such as NIC (https://einvoice1.gst.gov.in/) or Clear. Read our article ‘Steps to register on the e-invoice portal or IRP’ for complete details and steps.

Preparing GSTR-1 & reconciliation

Note the change in the GST returns preparation and filing process. The e-invoice details will be auto-populated into the GSTR-1, whereas taxpayers must report the non-taxable and B2C supplies later. Reconcile between books of accounts and e-invoices auto-filled in GSTR-1 to ensure accuracy of the information reported and avoid notices.

Sorting out network issues

The major issues that the small businesses may face are an intermittent network, especially in tier II and tier III cities, absence of internal technology to enable a real-time generation and IRN capture on invoices. 

Avoiding delays in IRN generation

Enterprises of this turnover range raise thousands of B2B invoices daily. They should not keep the customers waiting for such time until e-invoice generation. Hence, such businesses must use the services of GSP or IRP such as the one provided by Clear for a smooth implementation.

Is e invoicing mandatory? – Consequences of not generating e-invoices

If applicable businesses did not generate e-invoices from 1st October 2022, it attracted huge penalties. Non-compliant businesses must pay Rs.10,000 for every invoice not generated. Moreover, non-generation of IRN is considered inaccurate invoicing and can attract a penalty of Rs.25,000 for every such invoice.

Apart from the penal provisions, small businesses can face the following repercussions-

• GSTR-1 not getting auto-filled.
• Buyers cannot claim eligible ITC on time and may hold up payments. It eventually affects the working capital of the applicable businesses. 
• Buyers refuse to accept invoice that is not e-invoicing compliant and can adversely affect the business contracts.

How can Clear help you with e-Invoicing?

Get a quick glimpse at how our Clear e-Invoicing solution helps your enterprise to be e-invoicing compliant. Clear e-Invoicing is a cloud-based software solution for unified e-invoice and e-way bill generation.

Here are some more ways you can ensure compliance with our e-invoicing solution-

• Helps with a complete e-way bill generation (B2C EWB, Delivery challan, Bill of supply)
• Supports easy ingestion (Excel, JSON)
• Enables downloading of e-invoices as PDF, JSON, Excel, CSV
• Provides a single e-Invoicing and e-Waybill MIS dashboard
• Gather insights with the instant e-invoice vs GSTR-1 Report
• Generate and print e-Invoices in bulk
• Get e-way bill expiry alerts & notifications
• Enjoy print templates of e-invoices in the standard govt format and formats by Clear 
• Experience basic user access management
• Provides chat/email customer support
• Be assured of basic enterprise-grade security
• Get access to the Tally Connector