e-Invoicing for businesses above Rs.50 crore turnover

The Central Board of Direct taxes and Customs (CBIC) has made the e-invoicing system mandatory for taxpayers with a turnover higher than Rs.50 crore from 1st April 2021.
The government extended the e-invoicing applicability to businesses having more than Rs.20 crore turnover w.e.f 1st April 2022. From 1st October 2022, the limit has been revised to Rs.10 crore. 

Latest Updates on e-Invoicing

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. Further, 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.

1st August 2022 
The e-Invoicing system for B2B transactions has now been extended to those with an annual aggregate turnover of more than Rs.10 crore up to Rs.20 crore starting from 1st October 2022, vide notification no. 17/2022. 

Who should comply with e-Invoicing and Roadmap Notified

The government-mandated e-invoicing to avoid GST tax evasion. The first Committee was set up in May 2019 to discuss the usability of e-invoicing and its implementation plan in India, considering global implementations. Since then, several drafts were issued, and finally, the e-invoice schema was introduced in January 2020. E-invoicing was supposed to be mandatory from 1st April 2020 but was later pushed by the GST Council, and finally, it became live from 1st October 2020 in a phased manner.

In the first phase, companies with turnover higher than Rs.500 crore had to issue e-invoices from 1st October 2020. In the second phase, companies with turnover greater than Rs.100 crore had to issue e-invoices from 1st January 2021.  In the third phase, companies with turnover higher than Rs.50 crore must issue e-invoices from 1st April 2021.

In the fourth phase, the government mandated that companies with a turnover of more than Rs 20 crore to issue e-invoices from 1st April 2022. In the fifth phase, the system applies to those businesses with a turnover of more than Rs.10 crore to begin e-invoice generation from 1st October 2022.

How will e-invoicing impact or change business processes?

Businesses will now have to get their systems integrated with the government’s invoice registration portal for a seamless generation of Invoice Reference Number (IRN) for every B2B invoice. They will also have to make changes in their accounting software to comply with the e-invoice schema. Generating e-invoices will impact the business processes as follows-

1. The business will now have to identify transactions to which e-invoicing may apply and segregate them accordingly for compliance.
2. Businesses will have to maintain a vendor and customer master to incorporate additional information for invoices like bank details and payee details.
3. Businesses will have to make changes in the GST return preparation process since the B2B supplies can be auto-populated in the returns, and B2C supplies are manually updated.
4. Businesses will have to decide whether they want to comply with e-invoicing via API integration, offline utilities like GePP, or integrate via GSP (GST Suvidha Provider).
5. The biggest challenge that the businesses will face is to engage themselves in the continuous generation and capturing of IRNs. Big retailers generate thousands of B2B invoices in a day. They cannot make the customers wait till the time e-invoice is generated. Such businesses need to utilise the services of GSP for smooth implementation.

What happens if an e-invoice is not generated?

Non-generation of e-invoice is an offence and attracts penal provisions. It attracts heavy penal provisions of up to Rs.10,000 per invoice, while incorrect invoicing can lead to a penalty of Rs.25,000 per invoice. Further, as per the latest GSTN advisory, taxpayers with a 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.

Other than penal provisions, if a taxpayer delays in generation of e-invoice-

1. The GST returns will not get auto-populated.
2. Customers will not be able to claim validated ITC.
3. Customers may refuse to accept an invoice that does not comply with e-invoicing provisions.

NIC Guidelines dated 16th March 2021

NIC has issued the below guidelines for the taxpayers whose turnover exceeds Rs.50 crore:

1. The specified GSTINs are enabled for e-invoicing, and their registration and login is open.
2. A taxpayer can prepare to register live invoices. He may even download e-invoice bulk tools for preparing JSON and IRN generation.
3. E-way bills can be generated for the taxpayers IRNs, and he can also register for e-invoice APIs.

The e-Invoice API access mechanism
 

There are several ways in which the taxpayer’s system can interact with the IRP for IRN generation:

1. Companies have direct access to APIs- In this case, a taxpayer can generate his username and password and access API through client ID and client secret of the company that has access to the API.
2. Taxpayers having access to e-way bill APIs- If the taxpayer already has access to the e-way bills API, then he can use the same credentials to access the e-invoice system.
3. Through GSPs, the taxpayer can generate his username and password and tie-up with GSPs to access API using the Client ID and Client Secret of the GSPs.
4. Through ERPs, the taxpayer can generate his username and password and tie-up with ERPs to access API using the Client Id and Client Secret of the ERPs.

Steps to prepare for e-invoicing implementation

E-invoice is a new concept in India. Thus, businesses will have to take certain steps for the smooth implementation of e-invoicing:

1. Changes in the accounting software- Businesses will have to re-configure their ERP/accounting system to communicate with the IRP portal for IRN generation. Also, the printing infrastructure will have to be re-configured to incorporate additional fields such as QR code. Such changes will require a significant amount of investment. 
2. Providing educational sessions to the employees- Before e-invoicing, businesses used to generate invoices using common formats. But, e-invoicing requires organisations to follow standard formats. This format is divided into three parts-e-invoice schema, masters and e-invoice template. Thus, to familiarise the employees with the new compliances, they will have to impart training to its employees.
3. Choosing the best ERP integration- The most common integrations for e-invoice generation are API based and SFTP based. An organisation may choose the integration based on its budget and specific business requirements. 
4. Data security- Ensuring data security is most important as the e-invoices will mostly be directly generated from the organisations ERP/accounting software. This accounting software contains vital information about its business. Also, if a taxpayer is planning to use ASP/GSP services, use two-factor authentication enabled and ISO 27001 certified.  

Popular Modes available for IRN generation

1. Web-based- A taxpayer can enter the invoice details through the website of IRP for IRN generation. 
2. API-based- Through this mode, the taxpayers accounting system can interact with IRP and generate IRN. IRN can be generated either one at a time or in bulk.
3. SMS-based- This method involves entering invoice details in a specified format and sending it to the IRP through SMS for further processing.
4. Mobile app-based- GSTIN has also made mobile apps available for taxpayers for e-invoicing compliances.
5. Offline tool-based- The invoice details can be updated through the offline tool available on the IRP portal. 
6. GSP-based- Taxpayers can take services of GSP for IRN generation.