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

Updated on:  

08 min read

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. Later, e-invoicing was made applicable for businesses with a turnover higher than Rs.100 crore and Rs.50 crore from 1st January 2021 and 1st April 2021 respectively.

Latest Updates on e-Invoicing

30th June 2021
The CBIC has issued a notification seeking to waive the penalty imposed on non-compliance of dynamic QR code provisions for B2C invoices between 1st December 2020 and 30th September 2021.

1st June 2021
CBIC has notified vide Central Tax Notification no.23 dated 1st June 2021 that the e-invoicing system shall not apply to a government department and local authority.

30th March 2021

The CBIC has issued a notification seeking to waive the penalty imposed on non-compliance of dynamic QR code provisions for B2C invoices between 1st December 2020 and 30th June 2021, provided the said person complies with the provisions of the said notification from 1st July 2021.

8th March 2021
The CBIC has notified that e-Invoicing will be applicable from 1st April 2021 for businesses with an aggregate turnover of more than Rs.50 crores (in any financial year from FY 2017-18 onwards).

29th November 2020
The CBIC issued a notification seeking to waive the penalty imposed on non-compliance of dynamic QR code provisions for B2C invoices between 1st December 2020 and 31st March 2021, provided the eligible registered person complies with these provisions from 1st April 2021.

10th November 2020
The taxpayers having an aggregate turnover exceeding Rs.100 crore should implement e-invoicing from 1st January 2021.

1st October 2020
The applicable taxpayers have been given a grace period of 30 days for generating an Invoice Reference Number (IRN). However, this grace period is valid for the invoices issued between 1st October 2020 to 31st October 2020.

30th September 2020
Now, the aggregate turnover should be checked from FY 2017-18 till FY 2019-20, for checking the applicability of e-invoicing. Also, the date of implementation of the dynamic QR Code for B2C invoices has been extended until 1st December 2020.

30th July 2020
1. A new refined format of e-invoice has been notified by CBIC adding 20 new fields and removing 13 fields. Certain fields have undergone changes in character length as well.
2. e-Invoicing system shall apply to those taxpayers with an annual turnover exceeding Rs 500 crore instead of Rs 100 crore.
3. Special Economic Zones (SEZ) units shall also be exempted from issuing e-invoices.

23rd March 2020
The implementation of e-invoicing and the QR code has been deferred to 1st October 2020.
Exemption from e-Invoicing and QR code has been granted to sectors such as insurance, banking, financial institutions, NBFCs, GTA, passenger transportation service and movie tickets.


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.50 crore. 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.50 crore, 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.50 crore, 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:

IRN generated/cancelled byAccess by the E-commerce operatorAccess by Supplier
E-commerce operatorYesYes
SupplierNoYes
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