E-Invoicing under GST – Provisions FAQs

As per the latest decision of the GST Council, businesses with an annual turnover of Rs 50 crore or more will have to generate e-invoices for business-to-business (B2B) transactions from April 1, 2021. The e-invoicing system aims to enhance the ease of doing business while also improving tax compliance by reducing the risk of tax evasion. In this article, we will explore the provisions related to e-invoicing under GST and answer some frequently asked questions on the topic.

What is e-invoicing under GST?

E-invoicing is a system in which invoices are generated electronically in a standard format, which is then authenticated by a central system. The e-invoicing system under GST is designed to make the process of generating and reporting invoices more efficient and accurate. The invoices generated through this system will have a unique invoice reference number (IRN) and a QR code, which will help in verifying the authenticity of the invoice.

Who needs to generate e-invoices under GST?

As mentioned earlier, businesses with an annual turnover of Rs 50 crore or more are required to generate e-invoices for B2B transactions from April 1, 2021. It is important to note that this turnover threshold is based on the aggregate turnover of all registered entities under the same PAN. Therefore, if a business has multiple GST registrations under the same PAN, the turnover of all these registrations will be considered for determining the eligibility for e-invoicing.

What are the benefits of e-invoicing under GST?

E-invoicing under GST has several benefits, some of which are as follows:

Reduces errors and improves accuracy
Ensures faster invoice processing and payment cycles
Reduces the risk of tax evasion by improving tax compliance
Reduces the need for manual data entry and reduces the associated costs
Improves the overall ease of doing business

What is the process for generating e-invoices under GST?

The process for generating e-invoices under GST is as follows:

The taxpayer generates the invoice in their accounting or billing software
The invoice is uploaded to the Invoice Registration Portal (IRP)
The IRP validates the invoice and generates an IRN and a QR code
The IRP digitally signs the invoice and sends it back to the taxpayer
The taxpayer includes the IRN and the QR code on the invoice and issues it to the recipient

What are the technical requirements for generating e-invoices under GST?

The technical requirements for generating e-invoices under GST are as follows:

The taxpayer must have a GST Identification Number (GSTIN)
The taxpayer must have an accounting or billing software that is compatible with the e-invoicing system
The taxpayer must have a digital signature certificate (DSC) or an Aadhar-based authentication mechanism to authenticate the invoice
The taxpayer must have access to the Invoice Registration Portal (IRP) to upload the invoice

What happens if a taxpayer does not generate e-invoices under GST?

If a taxpayer who is required to generate e-invoices under GST does not comply with the provisions, they may be subject to penalties and fines. The penalty amount may be up to Rs 10,000 per invoice, subject to a maximum of Rs 1,00,000. Therefore, it is important for businesses to ensure compliance with the e-invoicing provisions to avoid these penalties.

Conclusion

E-invoicing under GST is an important step towards improving tax compliance and making the process of generating and reporting invoices more efficient. While the initial rollout of e-invoicing is limited to businesses with an annual turnover of Rs 50 crore or more, it is expected that the threshold will be lowered in the future. Therefore, it is important for all businesses to be aware of the provisions related to e-invoicing under GST and ensure compliance with the same.