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Last updated on May 13th, 2022 at 03:49 pm

The Central Board of Indirect Taxes & Customs (CBIC) has issued a notification regarding E-invoices, dated 24th February 2022. As per the latest E-invoice notification, the E-invoice under GST limit has been lowered to ₹20 crores from the earlier prescribed limit of ₹50 crores, w.e.f. 1st April 2022. This is seen by experts as an initiative taken by the Government to simplify compliance and further prevent revenue losses due to input tax credit fraud. Such a change is expected to address tax evasion among small businesses, a weak point as far as tax compliance is concerned.

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What is E-invoice in GST?

E-invoice in GST is an electronic authentication system. Inside this system, B2B (Business to Business) invoices are digitally certified by a GST Network for further use on the common GST portal. Under the E-invoicing system, the Invoice Registration Portal (IRP) issues an identification number against an invoice. The identification number is then managed by the GST Network (GSTN). A GST Network is a unique and intricate IT enterprise that establishes a communication pipeline between taxpayers, the central and various state governments, and other stakeholders. 

In simpler terms, E-invoice in GST is a self-help system for registering an existing invoice and obtaining an e-signed digital version of it.

E-invoice under GST Applicability

Applicability for taxpayers having an aggregate turnover of more thanApplicable dateNotification number
Rs 500 crores01.10.202061/2020 – Central Tax & 70/2020 – Central Tax
Rs 100 crores01.01.202188/2020 – Central Tax
Rs 50 crores01.04.2021
5/2021 – Central Tax
Rs 20 crores01.04.20221/2022 – Central Tax

However, E-Invoicing shall not apply to the following categories of registered persons, irrespective of the turnover as notified in CBIC Notification No.13/2020 – Central Tax:

  1. An insurer, a banking company, or a financial institution, including an NBFC
  2. A Goods Transport Agency (GTA)
  3. A registered person supplying passenger transportation services
  4. A registered person supplying services by way of admission to the presentation of cinematographic films in Multiplex services
  5. An SEZ unit
  6. A government department and Local authority 

E-invoice Turnover Limit from April 2022

As per the latest E-invoice notification issued by CBIC, the E-invoice under GST limit has been reduced to ₹20 crores from the earlier specified limit of ₹50 crores. This has been the third time the turnover limit has been amended by the GST council. The date from which this notification will take effect is 1st April 2022.

The taxpayers must act in accordance with e-invoicing if the turnover exceeds the prescribed limit in any financial year from 2017-18 to 2021-22. Also, the aggregate turnover will include the turnover of all GST Identification Numbers under a single PAN across India. 

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Benefits of E-invoice in GST

The benefits of E-invoice include some long-term implications that are set to refine the tax ecosystem in India. Small-scale businesses encounter little to no curbs. But the recent reduction in the E-invoice under GST limit tends to change the status quo. Some of the distinct benefits of E-invoicing under GST are listed below.

  • E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
  • Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-filled in the various returns, especially for generating the Part-A of e-way bills.
  • E-invoices created on one software can be read by another, allowing standardization and helping reduce data entry errors.
  • Real-time tracking of invoices prepared by the supplier is facilitated by E-invoice.
  • Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.
  • Faster availability of genuine input tax credit.

Conclusion

E-invoice under GST limit has been amended for the third time by the GST council. This decision has met with some frowned faces, those of small businesses where the margins are high and the transactions take place by the virtue of ‘Kacha bills’. It also targets tax evasion by fake invoices. All in all, a wise decision has been taken to impose compliance and prevent tax fraud.

E-invoice under GST FAQs

What is the limit of E-invoice under GST?

The E-invoice under GST limit has been reduced to ₹20 crores w.e.f. 1st April 2022.

What is E-invoice in GST?

E-invoice in GST is an electronic authentication system in which B2B (Business to Business) invoices are digitally certified by a GST Network for further use on the common GST portal.

Can we generate backdated E-invoice?

No, there is a window of 24 hours a day to generate an IRN and IRN cannot be obtained for backdated invoices.

What is the penalty for not generating an E-invoice?

The penalty for non-issuance of the invoice is 100% of the tax due or INR 10,000 (whichever is higher) and will be imposed for each instance of non-compliance. The penalty for an incorrect invoice is INR. 25,000.

What is IRN in GST?

An IRN or Invoice Reference Number is a number that a GST registered taxpayer may generate from the e-way bill portal by uploading an invoice in Form GST INV- 01.

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