Electronic invoicing, popularly called as ‘e-invoice’ is a concept in which all B2B invoices are electronically uploaded by the supplier and authenticated by Invoice Registration Portal (IRP) with a unique number called IRN and a QR code. An invoice is considered valid only when there is a unique IRN and QR code printed on the invoice. Rule 48(4) of the CGST Rules, 2017 has been inserted to provide for preparation of an e-invoice.
First of all, it is important to understand that e-invoice is not applicable for all registered persons under GST. The categories of person on whom e-invoice is not applicable are as follows:
- Banks, Insurance Companies, and Financial Institutions including but not limited to NBFCs
- Goods Transport Agency
- Passenger Transport Services
- Supplier of Services by way of admission to the exhibition of films.
- Special Economic Zones (SEZ) Units (E-invoicing is applicable to Economic Zone Developers)
- A government department and Local authority
- OIDAR i.e. person supplying online information and database access or retrieval services from a place outside India to a non-taxable online recipient
Therefore, all persons either issue B2C invoices or they fall in the above-mentioned categories, are exempted from e-invoice.
E-invoice has been implemented phase-wise for reporting B2B invoices. Only the large businesses were targeted initially to start with the e-invoice system, and gradually, in a phased manner, smaller businesses have been brought into its scope by reducing the turnover limit.
The applicability of e-invoice based on the turnover has been given below:
|
Annual Turnover |
Date of implementation |
|
Exceeding 500 crore |
1st October 2020 |
|
Exceeding 100 crore |
1st January 2021 |
|
Exceeding 50 crore |
1st April 2021 |
|
Exceeding 20 crore |
1st April 2022 |
|
Exceeding 10 crore |
1st October 2022 |
|
Exceeding 5 crore |
1st August 2023 |
Therefore, w.e.f. 1st August 2023, all businesses with annual turnover exceeding five crore rupees shall mandatorily issue e-invoice. Further, it should be noted that turnover for the purpose of determining the eligibility of e-invoice means turnover of all GSTINs under a single PAN for any of the financial years from 2017-18 onwards.
If the applicable provisions for e-invoice are violated, two types of penalties may be levied:
- Penalty for failure to create an e-invoice: If a person to whom e-invoice applies, fails to generate an e-invoice, the penalty would be equal to either 100% of the tax owed on the supply or Rs. 10,000, whichever is greater.
- Penalty for incorrect e-invoice: If an e-invoice is created improperly, penalty equal to Rs. 25,000 per invoice shall be levied.
With the increasing litigation under GST, various notices are being issued levying penalty for non-compliance of e-invoice provisions. Hence, it is important to check the eligibility criteria and turnover threshold to determine whether e-invoice is eligible to a person or not for the period under dispute.
Also read our other articles:
https://gstplatform.com/gst-return-revision/
https://gstplatform.com/no-itc-reversal-for-gstr2a-mismatch-says-supreme-court/
https://gstplatform.com/return-filing-cannot-be-denied-at-any-cost-says-high-court/