e-Invoicing Impact on TCS and e-commerce operators under GST

e-Invoicing is being implemented in India in a phased manner. It began from 1st October 2020 for taxpayers with a turnover greater than Rs.500 crore. At present, it applies to businesses with a turnover of more than Rs.10 crore. 

From 1st August 2023, e-invoicing will be applicable to businesses with a turnover exceeding Rs.5 crore in any financial year from 2017-18.

Latest Updates on e-Invoicing

10th May 2023
The CBIC notified the 6th phase of e-invoicing, applicable to businesses with a turnover exceeding Rs.5 crore in any financial year from 2017-18 w.e.f. 1st August 2023.

6th May 2023
The GST department has deferred the time limit of 7 days to report the old e-invoices on the IRP portals by three months. Further, the department is yet to announce the new implementation date.

13th April 2023
As per the GST Network's advisories dated 12th April 2023 and 13th April 2023, taxpayers with annual turnover equal to or more than Rs.100 crore must report tax invoices and credit-debit notes to IRP within 7 days of invoice date from 1st May 2023. 

Overview of TCS applicability under GST and liability of e-commerce operators

Tax collected at source (TCS) under GST is the tax collected by e-commerce operators on the net value of taxable supplies made through it by other suppliers, where the consideration for these supplies is collected by the e-commerce operator.

Section 52 of the CGST Act requires all e-commerce operators, who are not acting as an agent, to collect TCS on all sums collected by it on behalf of the supplier of goods or services. TCS at 1% is collected from the supplier on the net taxable value of the supply.

Guidelines for e-commerce operators to integrate their ERP systems with the Sandbox system

The e-invoicing system is available to e-commerce operators (ECO) to report invoices to the Invoice Registration Portal (IRP), that were generated by them on behalf of their suppliers.

The e-commerce operators shall follow the procedure listed below to integrate their ERP system with the sandbox of the IRP:

• Select the option ‘e-commerce operator’ under the registration module and enter the GSTIN type as ‘TCS’ to get registered on the sandbox portal. Update the OTP received on the registered mobile number.
• The API credentials mentioned below may be generated:
  • Client ID
  • Client secret
  • Username and password
• Login to the sandbox tool. Prepare the payload for IRN generation and test it in this tool.
• The payload shall contain the seller’s GSTIN, buyer’s GSTIN, the e-commerce operator’s GSTIN, along with the other details.
• For using functions such as ‘Cancel IRN/ EWB’,’ Generate EWB by IRN’ or ‘Get new IRN’, provide the ‘Supplier GSTIN’ along with other required parameters.

Steps for integration with the production system

e-Commerce operators shall follow the procedure mentioned below to integrate their ERP system with the production system of the IRP:

• Login to the IRP and click on the ‘API registration’ tab.
• The application for whitelisting the IPs can be sent along with a summary test report. A maximum of four Indian Static IPs is allowed.
• After scrutinising the application, the network team will whitelist the IPs.
• Next, API credentials such as client ID, client secret, username and password can be generated.
• The username and password for the other GSTINs under the same PAN can also be created by selecting the above GSTIN.
• Using these credentials, the payload for IRN generation can be prepared, and IRNs can be generated.
• As mentioned previously, the payload shall contain the seller’s GSTIN, buyer’s GSTIN, the e-commerce operator’s GSTIN, along with the other details.

Points to be noted by suppliers or e-tailers on e-invoicing

• e-Commerce operators registered under GST can generate IRNs and e-way bills on behalf of the supplier of goods (as well as cancel these IRNs/e-way bills on behalf of the supplier).
• The supplier selling goods through the e-commerce operator’s online platform should have a turnover greater than Rs.10 crore (or Rs.5 crore w.e.f. 1st August 2023). Either the supplier or e-commerce operator can generate IRNs.
• If the e-commerce operator is selling goods under his brand name, then in this case, the e-commerce operator acts as a supplier. So, if the e-commerce operator’s turnover is greater than Rs.10 crore (or Rs.5 crore w.e.f. 1st August 2023), then an e-invoice should be generated for such transactions.
• If the e-commerce operator is issuing invoices to the suppliers for using their online platform, and the e-commerce operator’s turnover is greater than Rs.10 crore (or Rs.5 crore w.e.f. 1st August 2023), then IRNs should be generated as well.

What is the scope of access to IRN generated by e-commerce operators and suppliers?

The table below illustrates the scope of access: