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. 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.

The government thereafter extended the e-invoicing applicability to businesses having more than Rs 20 crore turnover w.e.f 1st April 2022. As per the latest update, it will apply to those with a turnover limit of more than Rs.10 crore from 1st October 2022.

Latest Updates on e-Invoicing

26th December 2022
The CBIC has clarified that there is no proposal before the GST Council and no plans of the government to implement the next phase of e-invoicing for those businesses with turnover over Rs.5 crore from 1st January 2023.

11th October 2022
The GST Council may implement the next phase of e-invoicing for businesses with an annual turnover of more than Rs.5 crore from 1st January 2023. The system may get extended to businesses with a turnover of over Rs.1 crore by the end of the next fiscal year.

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.

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.20 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.20 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.20 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:

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