Aggregate Turnover for E-invoice Applicability Reduced to Rs.10 Crore

Until Monday, August 1, 2022, businesses with an aggregate annual turnover of more than Rs 20 crore were required to issue E-invoices under Rule 48 of the CGST Act 2017. From October 1, 2022, the Centre made E-invoicing mandatory for businesses with total revenue of more than Rs 10 crore.

This decision was made to protect the department’s revenue and to improve GST Act compliance. Surprisingly, the concept of E-invoice was introduced for the first time in the 35th GST Council. Since then, the limit has been reduced five times. Many businesses, ranging in size from Rs. 500 crores to Rs. 10 crores, have gradually been added to the system. Furthermore, businesses with a turnover of Rs 5 crore will be required to use e-invoicing by next year, according to officials. According to experts, this move will allow tax authorities to better analyze trends and the use or misuse of input tax credit across industries, as well as plug revenue gaps.

Now that this limit has been significantly reduced, making it applicable to a large portion of businesses, it is critical for newly added businesses to this system to understand the concept of E-invoicing. The following are some fundamental topics that can assist your business in complying with the E-invoice System:

Meaning Of E-Invoicing

A common misconception among businesses is that E-Invoicing entails creating invoices digitally; however, E-Invoicing does not imply creating invoices on the GST portal, but rather submitting a previously created standard invoice on a common e-invoice portal. As a result, multi-purpose reporting is automated with a single entry of invoice details.

Provision Of E-Invoice

A registered person whose aggregate turnover in any preceding fiscal year from 2017-18 onwards exceeds Rs. 20 Crore (Now, Rs. 10 Crore from 1st October 2022) shall, in respect of the supply of goods or services or both to a registered person (i.e. B2B) or for exports, prepare invoice and other prescribed documents by including such particulars contained in form GST INV-01 after obtaining an invoice reference number by uploading information contained therein on the common platform

However, regardless of turnover, e-Invoicing will not be available to the following registered persons for the time being, as stated in

● An insurer, a bank, or a financial institution, such as an NBFC
● A Goods Transport Agency (GTA)
● A registered individual who provides passenger transportation services.
● A registered person who provides services such as admission to cinematographic film screenings in multiplexes.
● A SEZ unit
● A government department or a local authority

However, on the council’s recommendation, the commissioner may, by notification, exempt a person or a class of registered persons from the issuance of invoices for a specified period, subject to the conditions and restrictions specified.

Process of E-Invoicing

Businesses currently generate invoices using various software and the process normally flows like:

1. The details of these invoices are manually entered into the GSTR-1 return.
2. The invoice information is reflected in GSTR-2B for the recipients once the respective suppliers file the GSTR-1.
3. The consignor or transporters, on the other hand, must generate e-way bills by manually importing the invoices in excel or JSON.

The process of generating and uploading invoice details will remain the same under the e-invoicing system. It is done either directly or through a GST Suvidha Provider by importing using the excel tool/JSON or via API integration (GSP).

Intention Behind E-Invoicing

The main purpose behind E-Invoice is to make GST Portal as the most used tool for structuring an invoice, Because the e-invoice must be generated through the GST portal which will help:

● Tax authorities will have access to transactions as they occur in real-time.
● The invoice is generated before the transaction, there will be less room for manipulation.
● All invoices must be generated through the GST portal, it reduces the possibility of fraudulent GST invoices and allows only genuine input tax credit to be claimed.
● Because input credit can be matched with output tax details, GSTN can more easily track fraudulent tax credit claims.

Benefits & Consequences of Making E-invoice System Applicable To More Businesses:

An Act’s main goal is to provide benefits to all citizens, but in the process of being useful, it leaves out some points that create disadvantages for citizens, specifically businesses in the case of GST. The thing is applicable to the recent E-invoice amendment. Some of the benefits and drawbacks of incorporating an E-invoice system into your business operations are as follows:

1. E-invoice allows for real-time tracking of invoices prepared by the supplier.
2. However, the new system only allows for e-invoicing of B2B invoices, not B2C invoices. Thus, avoiding the major area of fraud i.e. B2C invoices
3. To reduce mismatch errors, e-Invoice resolves and plugs a major gap in data reconciliation under GST.
4. Invoice Registration Portal has the lack of an archiving option. It does not allow keeping invoices for more than 24 hours.
5. Tax authorities are less likely to conduct audits or surveys because the information they require is available at the transaction level.
6. Relevant invoice details would be auto-populated in the various returns, particularly for generating part-A of e-way bills.
7. Genuine input tax credit is now more readily available.
8. An e-invoice cannot be cancelled in part. Even a minor change must be completely cancelled.

Some Things To Know About E-invoices for Newly Added Businesses

With many new businesses added to the E-invoice system as a result of the reduction in applicability turnover beginning October 1, 2022, these new businesses should be aware of the following common facts about the E-invoice System:

● The number of line items allowed per e-Invoice is limited to 1000.
● Headings Contained in an E-Invoice:

1. E-Invoice Schema
2. Masters
3. E-Invoice Template

● An E-Invoice cancellation must be reported to the IRN within 24 hours.
● All changes to an e-invoice must be made through the GST portal in the GSTR-1 return.
● The e-Invoice scheme does not include a placeholder for a company’s logo. The company’s accounting/billing software can accommodate this, but the logo is not sent to the IRP.
● Businesses must issue e-invoices using the GSTN’s e-invoice scheme. The system includes both mandatory and optional fields.

Thus, the new reduction in aggregate turnover to Rs. 10 Crore has brought many new businesses into the GST System, and Binary Semantics is here to help you comply with these new changes seamlessly. GSTrobo® E-Invoicing is the software you require for your company. It will assume full responsibility for E-invoice compliance because it will generate and upload E-invoices on your behalf. To learn more about the product, please visit our website or request a demo.