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A new reform called e-invoicing has been introduced under GST. It has come into force from 1st October 2020 for taxpayers with a turnover over Rs 500 crore.
It became applicable to all taxpayers having a turnover more than Rs 100 crore from 1 January 2021 onwards. Currently, it was notified that it shall also apply to taxpayers with turnover of more than Rs 50 crore from 1st April 2021.
Latest Updates
Update as on 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.
Update as on 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).
Update as on 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.
Update as on 10th November 2020
The taxpayers having an aggregate turnover exceeding Rs.100 crore should implement e-invoicing from 1st January 2021.
Update as on 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.
Update as on 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 01.12.2020.
Some of the issues which will be faced by taxpayers on the implementation of the new provisions under e-invoicing are discussed below:
Businesses must integrate their ERP systems with that of IRP/GSP/ASP* to allow a smooth flow of invoice data to the IRP and e-invoices back to the ERP system. The GSTN has released APIs for this purpose. As most of the ERPs used by various enterprises can be customized, it provides leeway for making changes as per the standard e-invoice schema.
Also, the printing of the QR code (scanning the QR code identifies the IRN) on the current invoice format is necessary. Please note that it is not mandatory to integrate ERP systems as the IRP also provides a bulk e-invoice generation tool, which is excel-based.
However, non-integration of ERPs could prove to be a challenge for companies with large volumes of invoices.
*IRP = Invoice Registration Portal, GSP = GST Suvidha Provider, ASP = Application Suvidha Provider.
E-invoicing applies only to B2B invoices and not B2C invoices. Thus, B2B invoices require both e-way bills and e-invoices, whereas B2C invoices only require e-way bills to be generated (wherever e-way bill is applicable).
In most of the cases, the transporter ID will need to be mentioned at the source in cases where e-way bill generation is required. Hence, sorting of invoices will be required and needs automation to some extent, without which, a lot of time and effort gets invested.
An e-invoice cannot be partially cancelled. Even for a small change, it needs to be entirely cancelled. Cancellation of e-invoices is allowed on the IRP within 24 hours. After 24 hours, the cancellation cannot be made on the IRP; it needs to be done on the GST portal.
It is to be noted that a new e-invoice cannot be raised with the previous invoice number. A taxpayer will need to revise the invoice number in addition to fixing the errors, if any, and raise a new e-invoice on the IRP.
On the IRP, the data will remain for only 24 hours. Thus, an alternate arrangement for archiving needs to be set up, as the IRP does not provide archiving of data at the moment. However, the e-invoice data gets sent to the GST portal and can be viewed in the GSTR-1 return.
A taxpayer will need to undertake a reconciliation between his e-invoice data, e-way bill data, and his GSTR-1 return. Even though the e-invoice data is passed on to the e-way bill and GST portals, the government still recommends that the taxpayer carry out reconciliation of the data between these 3 portals to fix any discrepancies which could lead to the taxpayer being penalised. A reconciliation may be done with the support of tools or utilities.
The maximum amount of fraud happens in B2C invoices as no ITC is involved. As of now, e-invoicing is not applicable to B2C transactions. However, the law requires certain entities (to whom e-invoicing is applicable. As of 15th December 2020, it is to business with >Rs.500 turnover) to generate and print a dynamic QR code for B2C invoices.
This requirement has come into force from 1st December 2020, but the CBIC issued a notification seeking to waive the penalty imposed on non-compliance of the dynamic QR code provisions between 1st December 2020 and 31st March 2021, provided the eligible registered person complies with these provisions from 1st April 2021.
As mentioned earlier, e-invoicing applies only to B2B invoices. Thus, a separate workflow must be in place for delivery challans, bill of supply, job work and other similar transactions. Creating a different workflow for various types of transactions requires a lot of time and effort.
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