What Are the E-Invoice Requirements in India

Goods in Transit (GIT) regime introduced the electronic invoice system in India for B2B transactions on October 1, 2020. The E-invoice system is a digitized form of invoicing in which a registered taxpayer is required to generate and issue an e-invoice for electronic authentication on the GST portal.

E-invoicing is mandatory in India for taxpayers with a turnover above Rs.20. The e-invoice requirements include compliance with Rule 48, the use of standardized invoice format, the incorporation of essential documents, and adherence to the amendment, cancelation, and printing process.

As a business owner in India,  it is crucial to know the requirements of e-invoicing. This knowledge will ensure adequate compliance with GST electronic invoice requirements.

The process can be daunting as you must adhere to all the rules and regulations—failure to issue an e-invoice or an incorrect invoicing attracts a penalty that may hurt your business.

Keep reading this article to protect yourself from such errors. The article will explore key points about e-invoicing, including the agency that governs it, who it is for, the rules and regulations guiding it, and the process of e-invoicing in public procurement in India.




Who governs e-invoicing in India?

The body responsible for overseeing Goods and Services Tax is the GST Council,  a body attached to the Central Board of Indirect Taxes and Customs.

The Central Board of Indirect Taxes and Customs (CBIC), formally known as the Central Board of Excise & Customs, is a part of the Department of Revenue, Ministry of Finance in India.

This body is responsible for formulating policy concerning levies and collecting indirect taxes such as customs, Central Excise Duties, and Central Goods and Service Tax.

The GST handles the policy section of the CBIC.

On September 20, 2019, during its 37th meeting, the GST council approved the introduction of the electronic invoice.

The Goods and Services Tax Network (GSTN) is the company that acts as a channel of communication between the government, taxpayers, and relevant stakeholders. They provide IT infrastructure and services on the electronic invoice.

Businesses registered under GSTN will be allotted a 15-digit Goods and services tax identification number (GSTIN), which will replace the Tax identification number (TIN).



Is electronic invoicing mandatory in India?

Electronic invoicing is mandatory and applicable for taxpayers with an aggregate turnover exceeding Rs.20 crore from 2017 to date.

The e-invoicing system was introduced and made mandatory in phases.

GST first implemented the system for taxpayers with an aggregate turnover above  Rs.500 crore on October 1, 2020.

On the 1st of January, 2021, it was extended to businesses with an aggregate turnover exceeding Rs.100 crore.

Then, on April 1, 2021, GST included businesses with a total turnover between Rs.50 crore and Rs.100 crore.

The current phase, created on April 1, 2022, has made it mandatory for taxpayers whose turnover exceeds Rs. 20 crores in the previous financial years from 2017-2018 upwards.

E-invoicing applies to B2B supplies, supplies to Special Economic Zones, exports, and deemed exports that the applicable taxpayer makes.

However, some categories are exempted from this rule even if they have exceeded the required turnover limit.

According to Notification No.13/2020-Central Tax, e-invoicing does not apply to the following categories:

  • An insurer, banking company, financial institution, and a non-banking financial company.
  • A goods transport agency that offers supplying services via transportation of goods by road or a goods carriage.
  • A business offering passenger transportation services.
  • A registered person offering an exhibition of a cinematograph film in multiplex films. In this case, the electronic ticket is viewed as the tax invoice.

Additionally, following Notification No.23/2021-Central Tax, government departments and local authorities are excluded.

Special Economic Zone units are also exempt from using e-invoices.



E-invoicing rules and regulations in India

The rules and regulations guiding e-invoicing in India include that it is compulsory for registered taxpayers with a turnover exceeding Rs. 20 crores, compliance with Rule 48, the use of a standardized format, the inclusion of the essential particulars, adherence to the amendment, cancelation, and printing process, and paying the penalty for non-compliance.


Mandatory for a particular category of taxpayers

One of the rules of e-invoicing in India is that it is mandatory for registered taxpayers that have exceeded a turnover above Rs. 20 crores in any of the previous years from 2017 to date.

It was stated in Notification N0.01/2022-Central Tax, based on the exercises of the powers conferred by sub-rule (4) of rule 48 of the Central Goods and Services Tax Rules, 2017.

E-invoicing should only be used by applicable taxpayers, while others exempted from it can continue using other invoicing systems.


Compliance with Rule 48

All concerned taxpayers are required to adhere to the issuance of invoices according to Sub-rule 3 of Rule 48 of Central Goods and Services Tax (CGST) Rules, 2017, which notes that the serial number of invoices issued during a tax period shall be furnished electronically through the common portal in FORM GSTR-1.


The use of a standardized invoice format

A specific schema is mandatory for every business to ease machine readability and uniform interpretation. This format provided by GST has been customized to cater to business practices and requirements in India.

You need to use an e-invoicing system with compliance features supported by the GST.

When businesses use different accounting or invoicing software to generate invoices, it is difficult for it to be accessed by the GST system. This is because the system cannot have connectors for all accounting software.


Inclusion of specified particulars

The e-invoice system will include mandatory particulars that will consist of invoices, credit notes, and debit notes that are issued by applicable taxpayers.

The process of invoicing allows taxpayers to continue to generate their own invoices in their various company systems or software.

Then, following sub-rule 4, the invoice should be prepared by the taxpayer to include the particulars contained in FORM GSTR-1.

This will be done after they have obtained an Invoice  Reference Number. They will then upload the information in the invoice on the  Common Goods and Services Tax Electronic Portal.

The portal will issue a unique Invoice Reference Number, a digital signature on the Invoice Registration Portal (IRP), and a QR Code.


The printing process

When printing the signed e-invoice from IRP, the seller should include the QR code, as this is one of the CGST requirements under Rule 46.


Amendment and cancelation process

In case a taxpayer needs to amend or cancel a reported invoice, they can do so within a specified time limit of up to 24 hours. But they cannot do the amendment through the Invoice Registration Portal.

Amendment of an e-invoice already uploaded on IRP is only possible on the GST portal.


Penalty for non-compliance

The non-issuance of e-invoices attracts a penalty of 100% of the tax due or Rs.10,000, whichever is higher.

Following sub-rule 5 of Rule 48,  any e-invoice that does not follow the standard format stated will not be treated as one. This also attracts a penalty of  Rs.10,000.



What is the e-invoicing process in public procurement in India?

According to  Notification No.23/2021-Central Tax, government departments and local authorities are excluded from e-invoicing. The electronic invoicing is only for B2B supplies.

However, it can also apply to business-to-government (B2G) supplies. The GST registration number is to be used for supplies to government departments that are GST registered, which should be only for tax deducted at source purposes.



Conclusion

Electronic invoicing is a vital aspect of the GST rules in India for B2B businesses.

The body governing e-invoicing is the GST Council, which is attached to the Central Board of Indirect Taxes and Customs.

E-invoicing is mandatory for taxpayers with an aggregate turnover of more than Rs.20 crore, B2B supplies, supplies to Special Economic Zones, exports, and deemed exports that are made by the applicable taxpayer.

Registered taxpayers who need to comply with e-invoicing rules and regulations have to use the standardized invoice format.

However, the exempted taxpayers include insurers, banking companies, financial institutions, non-banking financial companies, businesses offering passenger transportation services, and registered individuals offering an exhibition of cinematograph and multiplex films.

Government agencies, local authorities, and Special Economic Zones are also exempt from issuing e-invoices.

The process of e-invoicing can be cumbersome. If you need an e-invoicing company that will automatically enable compliance features for GST, get in touch with Storecove today.


More information about e-invoicing in India?

Call us on: +31 (0) 20 261 17 91 or send an e-mail to: helpdesk@storecove.nl


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