e-Invoicing is the new normal!
More & more taxpayers are being included in the e-invoicing system by the government, & it seems that the government is on the path to include all the small & micro businesses under the umbrella of e-Invoicing irrespective of the annual aggregate turnover of the enterprise.
In this article, we will discuss some important concepts about e-Invoicing which are a MUST-KNOW for all the small businesses who are recently added to the e-Invoicing under GST.
We have divided this article into 3 different parts so that you can easily grasp the meaning of this system and check how this provision applies to your business.
We will see the details in the 3 fragments as mentioned above.
- In the large crowd of taxpayers, there are some ‘fake suppliers’ or ‘cheater suppliers’ who are NOT supplying the goods or Services but pretend as if they are making the supply.
- These ‘Fake Suppliers’ although do not make any real supply, they prepare the fake GST return documents, fake e-Way Bills & fake e-Invoices.
- These ill-practicing Suppliers used to report ‘Incorrect Outward supplies’ in their GSTR-1 & based on this improper GSTR-1, the Recipient of this Supplier used to avail ‘fake Input Tax Credit’ based on this improper GSTR-1.
Backdated Invoice Generation
- In the pre-e-Invoicing era, the businesses used to generate back-dated invoices to pump up their annual turnover.
- They used to generate backdated invoices after the yearly audit and then upload these invoices in their GSTR-1 & GSTR-3B.
- Further, these businesses used to then pay the GST with the interest on these fake sales.
With all this fraud going on, the businesses were fearlessly claiming fake Input Tax Credit and were evading taxation on a very large scale.
In this way, the fake invoice generation was surging day-by-day & committing multiple GST frauds & this came to the attention of the Government.
What was the impact on the Government?
- Loss of Revenue to the government
- Inadequate GST Collection
- Bad effect on the economy
To keep all these issues in check, the government introduced the concept of e-Invoicing under GST Rule 48 (4) of CGST Rules, 2017 which came into effect from 1st October 2020.
Now, it is important to know the eligibility criteria for this provision.
In the next section, we will be discussing the eligibility criteria for e-Invoicing under GST.
Eligibility Criteria for e-Invoicing
Eligibility for the e-Invoicing is decided on the Annual Aggregate Turnover of the business.
w.e.f 1st April 2021, the businesses whose Annual Aggregate Turnover lies above 5 Cr. are eligible for an e-Invoice generation.
Now, what does Aggregate Turnover mean?
Section 2 (6) of the CGST Act, 2017, suggests that the ‘Annual Aggregate Turnover’ includes:
- Taxable supply
- Exempted Supplies
- Nil-rated Supplies
- Non-GST Supply
- Non-taxable supplies
- Branch transfer to distinct persons.
Now, let’s look at an example.
Following are some of the details of a Supplier:
- Taxable supplies = 25 Cr.
- Exempt Supplies = 15 Cr.
- Non-GST Supplies = 8 Cr.
- Exports (zero-rated supplies) = 10 Cr.
- Total Turnover = 58 Cr.
Now, here the question arises that, though the total turnover of this business is above 50 Cr., but the total taxable supplies in this turnover constitute only 25 Cr.
Is e-Invoicing under GST mandated for this business?
YES, as discussed above, Section 2 (6) of the CGST Act, 2017 defines that ‘Annual Aggregate Turnover’ includes all the supplies as described in the above section.
- Which year’s aggregate turnover should be considered for deciding the eligibility of e-Invoicing?
- Any 1 of the three preceding financial years.
- Meaning, if my business has to be enrolled for e-Invoicing under GST in April 2021 then the annual aggregate turnover in any 1 FY from three preceding FYs (any 1 between FY 20-21, FY 19-20, FY 18-19), has to be greater than the threshold of 50 Cr.
- Tell me the important points of Notification 05/2021
- This notification defined the new threshold limit of the annual aggregate turnover of 50 Cr. for the businesses to be eligible for e-Invoicing.
- If your ‘Annual Aggregate Turnover’ exceeds 50 Cr in any 1 of the preceding three financial years, then you are eligible for e-Invoicing under GST according to this notification.
- Small & medium businesses shall continue to create physical invoices in their ERP software like Tally, SAP, Oracle or any other customized ERP but should strictly follow these conditions:-
- Follow the SCHEMA defined by the e-Invoice portal
- Your ERP should generate a JSON file.
- This JSON file generated by your ERP shall be uploaded on the e-Invoice portal, (einvoice1.gst.gov.in)
- Now, this e-Invoice portal shall generate an Invoice Reference Number (IRN) for every invoice uploaded by the taxpayer.
- Corresponding to every e-Invoice, the IRP portal shall append the QR code and also digitally sign this e-Invoice for the authenticity of the document.
- Tell me the e-Invoice generation process in short
- You can directly generate an e-Invoice from the ERP software which you are currently using.
- Your ERP should be integrated with the IRP portal to do so.
- For example, if you are using Tally software, you can use Tally Connector of any GSP to directly create an e-Invoice right from your ERP software & you will not need to visit the IRP portal even once.
- You can easily get these connectors from a government-authorized GST Suvidha Provider.
- What if I am eligible for e-Invoicing but my Registration is NOT enabled?
- This has been the case with many of the businesses that have recently been added to the e-invoicing system.
- You can use the following steps to ‘Enable’ your e-Invoicing registration.
- On the IRP portal, there is a feature called ‘e-Invoice Enablement’.
- Log on to www.einvoice1.gst.gov.in > Registration > e-Invoice Enablement
- Enter your GSTIN.
- You will receive an OTP on your registered mobile number.
- On providing this OTP on the portal, your e-Invoice Registration will be enabled.
- What if any business is NOT eligible for e-Invoicing and even then he has got erroneously enrolled for e-Invoicing?
- Even this scenario is possible.
- Your turnover may be below 50 Cr & even then your business has been erroneously been mandated e-Invoicing.
- Follow the below-given steps to disable your e-Invoice Registration.
- You need to send an e-mail to the GST Grievances Redressal Portal.
- The portal then looks into the issue and verifies it.
- If the issue is found to be legitimate, action will be taken in few days.
This will ‘Disable your e-invoicing’.
- Can I modify/amend or rectify e-Invoice once generated?
- E-Invoice once generated CAN NOT be amended/modified or rectified.
- Then what is the solution if I create an incorrect e-Invoice?
- Then, the Supplier may CANCEL the e-Invoice from the IRP portal within 24 hours of generation of this e-Invoice.
- Is e-Invoicing required for Exempt Supplies or Nil-rated Supplies?
- E-Invoicing under GST only applies to the ‘Taxable’ goods or services or both.
- It is also applicable to the EXPORTS.
- However, e-invoicing does NOT apply to the ‘Nil-rated supplies‘ or ‘Exempt Supplies.
- Is e-Invoicing required for supplies to un-registered or end consumers?
- e-Invoicing applies to only B2B taxable goods or services supplies.
- Hence, e-Invoicing will NOT apply to the supplies made to the consumers or ‘Unregistered Recipients’.
In this article, we have tried to address the most frequent doubts in the minds of the taxpayers who have recently entered the e-Invoicing system.
e-Invoice generation in bulk can be a frustrating task.
Even if you try to be as accurate as possible while manually uploading every invoice on the IRP, there are high chances that you may introduce an error in the e-Invoice generation and end up with an incorrect e-Invoice.
Tax experts advise the taxpayers to use eInvoice software or an ERP Connector to ease out the process of e-Invoicing & save your time & cost.
GSTHero’s tally Connector is one such tool that will help your Tally ERP to seamlessly integrate with the IRP portal which will allow you to directly generate e-Invoice from your Tally ERP without even visiting the IRP portal.
This will save businesses a lot of time and will allow the bulk e-Invoice generation without any error.
Stay updated, stay ahead.
Until the next time…
About the Author– GSTHero– Making GST Simple! GSTHero is the best GST filing, e-Way Bill Generation & E Invoicing Software in India. GSTHero is a government authorized GST Suvidha Provider. Both Businesses and Tax Practitioners can file GSTR 1, GSTR 3B, GSTR 9 and GSTR 9C with all supporting reports. 1 Click Auto Reconciliation & report-matching feature helps you in claiming up to 100% ITC and finds your GST Defaulting Suppliers. GSTR2A vs GSTR-3B, GSTR-1 vs GSTR-3B, ‘GSTR-1, GSTR-2A & GSTR-3B’ annual report matching is also provided by GSTHero.
GSTHero ERP Plugins provide 1 Click e-Way Bill & E-Invoice, Generation, Operation & Printing from your own ERP like Tally, SAP, Marg, Busy, Microsoft Dynamics, Oracle & others itself with high data security