GST E-Invoicing: Meaning, Applicability, Benefits, Implementation

The GST law defines e-invoicing as electronic billing instigated by GSTN. Any exchange between the buyer and the seller is authenticated by an electronically generated document. Such a document is referred to as an e-invoice. Back in the day, when there was no sign of digital documentation, manual bills and invoices were subjected to manipulation and fraud. To override the issue, the GST Council came up with the concept of e-invoicing.

Every registered business person subject to the prescribed threshold limit has to mandatorily prepare the e-invoice. Now, all B2B/B2G transactions and exports are supported by an e-invoice to avoid any discrepancy arising in the future related to the authenticity of transactions.

E-invoicing in GST is often wrongly taken to be generated via the GST portal. However, it is not the case. E-invoicing involves preparing an invoice based on a machine-readable standard Performa and only uploading it on the portal. The portal acknowledges the invoice and assigns a unique identification number to it in terms of IRN, which further eases the return filing and e-way generation processes

With the idea of making documentation entirely digital, the government is making changes to the eligibility criteria constantly to include all that are involved in such transactions.

E-invoicing began as an obligation only for big businessmen with turnover exceeding 500 crores in any year beginning from 2017-18. Subsequently, in every financial year, the limit kept on decreasing, including more and more business persons under this umbrella. Within a year, the limit dropped to 100 and then 50 crores. By the end of FY 22-23, the criterion was dropped down to 10 crores. As per the notification no. 10/2023 – Central Tax, any registered taxpayer with a turnover of Rs 5 crores or above shall be required to submit their e-invoice.

E-invoicing in GST has more to it than just easy tax compliance. The time and cost saving stands on one pillar of it, while the real long-term benefits to buyers and sellers have a long list to follow. The following are some of the prime benefits associated to GST e-Invoicing:

• Time & Cost Efficient: Starting with the basics, the foremost benefit is the time and cost savings. Document automation will save the time that was earlier spent in manual preparation and paperwork, further accelerating the payment cycle. In addition, costs involved in printing, storage, and postage of manual invoices are now terminated.
• Minimal Errors: The digital generation of invoices has reduced data entry errors and discrepancies with customers.
• Minimised tax-evasion: Since the data is auto-populated, the ITC claim cannot be manipulated, reducing tax evasion and eliminating fake invoice claims.
• Increased operability: Machine-readable invoices allow the invoices created by one software to be accepted by a whole different software, enhancing interoperability.
• Less requirement of audits/surveys: An invoice once uploaded will be rejected by the portal if tried to be uploaded again. Also, all the tax information is available at transactional level which can easily be accessed by tax authorities anytime, thus reducing the need for audits/surveys/rechecking from time to time.

The aggregate turnover forms the foundation for the applicability of e-invoicing in GST. However, irrespective of turnover, a certain class of business has been completely forbidden from the generation of e-invoices. Check the following list for the same.

• Banking & financial services (including services by non-banking financial institutions)
• Insurance services
• Goods and Transport Agency (GTA)
• Businesses engaged in passenger transportation
• SEZ units
• Government bodies and local authorities
• OIDAR (Online Information Database Access and Retrieval) services
• Businesses involved in rendering exhibitions of cinematographic films in multiplex services.

The concept of e-invoicing in GST was implemented from 1st October 2020, for all taxpayers with turnover exceeding 500 crores. As of now, the recent amendment has lowered the aggregate turnover from Rs 10 crores to Rs 5 crores and is applicable from 1st August 2023.