Recent Announcements and Updates on E-invoicing Under GST

E-invoicing under the Goods and Services Tax, a much-awaited tax reform system was finally implemented on October 1, 2020, after being deferred twice in 2020. Taxpayers generated over 65 lakh invoice reference numbers (IRNs) in the first week of its implementation. The Centre has shared several updates regarding e-invoicing. Here are all the latest updates on e-invoicing under GST. 

It was announced earlier that businesses with a turnover exceeding Rs.500 crore in the preceding financial year would initially require this new system, except for a few sectors which had been exempted. With the latest update, the CBIC has notified that instead of the preceding financial year, any year from the financial year 2017-18 will now be considered to determine the applicability of e-invoicing to a business. This means that if a business’s turnover has exceeded Rs.500 crore in any year from the financial year 2017-18, the business will have to generate e-invoices. 

Finance Secretary Ajay Bhushan Pandey has announced that while e-invoicing is presently available to businesses with an annual turnover exceeding ₹500 crores, B2B transactions by businesses exceeding an annual turnover of ₹100 crores are likely to be brought under the e-invoicing radar starting January 1, 2021. In a statement to the media, the Finance Secretary said, “It is a great step forward as e-invoicing has many advantages both for the business and the tax administration. Buyers and sellers will be able to have realtime information of the invoices. It replaces the physical invoice and will soon replace the existing e-way bill system, and taxpayers will not have to generate separate e-way bills.” The finance secretary also spoke of the e-invoicing system doing away with the present system for filing tax returns for micro, small and medium business enterprises (MSMEs) as e-invoicing will help pre-populate for such businesses. “The returns will be automatically generated for all supplies for which e-invoices have been issued,” he said. Based on their initial review of the implementation of e-invoicing, the Finance Ministry has also announced the implementation of e-invoicing for all business to business transactions starting April 1, 2021. 

Finance Secretary Ajay Bhushan Pandey has announced that the new e-invoicing system that was rolled out on October 1, 2020, is likely to replace the present e-way billing system. In a meeting that was held to review the progress of the e-invoicing system that is only a few weeks old, it was observed that the system would soon replace the current e-way bill system as it will eliminate the need to generate physical invoicing or subsequent e-way bills to move goods. “As e-invoicing is an exceedingly progressive system, we expect that it will also have other major advantages of improving the payment cycle for the industry and give a boost to invoice-based lending to MSMEs,” said Ajay Bhushan Pandey in a statement. As per numbers released by the Goods and Services Tax Network, over 65 lakh invoice reference numbers have been issued in just the first week of e-invoicing being implemented. A physical copy of the invoice is not required to move goods if e-invoice is applicable. IRN and electronic QR code are sufficient for verification by the authorities.

The Goods and Services Tax Network has issued a notification clarifying that carrying physical copies of a tax invoice is not mandatory for companies with an annual turnover exceeding ₹500 crores as they have to take up e-invoicing mandatorily. If the company has been issued with an invoice reference number for the goods in question, they will also have been issued a QR code. Both an IRN and a QR code are more than enough documentation for the verification of goods that are being moved, said the GSTN. 

The Central Board for Indirect Taxes and a Customs has also issued a clarification stating that while e-invoicing has been made mandatory for companies who have had an annual turnover exceeding ₹500 crores in the last three years, they will not be penalised for moving goods with eInvoicing, provided they have a valid invoice reference number. However, this relief is only temporary and is only valid for October 2020. This means any invoices issued in October 2020 without following the new e-invoicing system will be deemed valid if the IRN for said invoice is obtained within 30 days from date of issue. Any invoices issued starting November 2020 will be deemed invalid if e-invoicing is not undertaken. 

The CBIC has relaxed the time period for generating IRNs, keeping in mind the hardships faced by taxpayers due to COVID-19 lockdown. As some taxpayers, who are required to generate e-invoices, are still not ready, the government relaxed the e-invoicing norms of uploading invoice details on invoice registration portal (IRP), obtaining the IRN and issuing e-invoices with the QR code. These invoices will be deemed to be valid, and no penalties applicable as long as the IRN for such invoices is obtained within 30 days from the date of the invoice.

E.g., If the invoice date is October 31, 2020, IRN should be generated by November 11, 2020.

However, for every invoice issued from November 1, 2020, IRN generation is compulsory at the time when the invoice will be issued. Without an IRN, the invoice will be invalid.

The government deferred the requirement of printing dynamic QR code on B2C invoices till December 1, 2020. Quick Response Code or QR Code help users verify the details in the digitally signed e-invoice. However, for B2C (business-to-consumer) transactions, e-invoice is not yet mandatory. There is quite a lot of ambiguity on the compliance for B2C invoices and businesses have welcomed this move as they were waiting for an explicit clarification on this requirement along with a deferment. 

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