If you are a GST-registered business whose total turnover exceeds Rs 5 Crore in any financial year, you need to be aware of the latest changes in the e-invoicing system. Starting on August 1st, 2023, generating e-invoices will be mandatory for B2B supply of goods or services, as well as for exports. This means that you will have to upload your invoices to the Invoice Registration Portal (IRP) and get them authenticated with a unique Invoice Reference Number (IRN) and QR code before issuing them to your customers.
What is e-invoicing and why is it important?
E-invoicing is a system in which B2B invoices are authenticated electronically by GSTN/IRP portal of Government of India . This is done by issuing/validating an identification number (IRN) and QR code against every invoice for further use by various Government portal like GSTN or EWay Bill portal. E-invoicing aims to reduce tax evasion, improve compliance, increase transparency, and streamline the GST return filing process.
E-invoicing was introduced in phases from October 1st, 2020 for businesses with an annual turnover of more than Rs 500 Crore.The threshold was gradually reduced to Rs 100 Crore from January 1st, 2021 and then to Rs 50 Crore from April 1st, 2021. The latest phase of e-invoicing will cover businesses with an annual turnover of more than Rs 5 Crore from August 1st, 2023.
How to generate e-invoices?
To generate e-invoices, you need to follow these steps:
- Prepare your invoice in your accounting or billing software as per the standard schema prescribed by the GSTN. The schema contains mandatory and optional fields that you need to fill in with relevant details.
- Upload your invoice to the IRP either directly or through a GSP (GST Suvidha Provider) or ASP (Application Service Provider). The IRP will validate your invoice and generate an IRN and QR code for it. The IRN is a 64-character alphanumeric code that uniquely identifies your invoice. The QR code contains basic details of your invoice such as supplier GSTIN, recipient GSTIN, invoice number, date, value, etc.
- Download the signed e-invoice with IRN and QR code from the IRP. The IRP will also send a copy of the e-invoice to your email and to the GST portal.
- Issue the e-invoice to your customer either electronically or in print form. The customer can verify the authenticity of the e-invoice by scanning the QR code or checking the IRN on the IRP or GST portal.
What are the benefits of e-invoicing?
E-invoicing has several benefits for both businesses and the government, such as:
- Reducing errors and duplication of data entry
- Improving efficiency and accuracy of tax administration
- Facilitating faster availability of input tax credit
- Simplifying reconciliation and matching of invoices
- Enabling real-time tracking of invoices
- Enhancing interoperability and integration of systems
- Reducing compliance costs and paper usage
What are the consequences of not generating e-invoices?
If you fail to generate e-invoices as per the prescribed rules and timelines, you may face the following consequences:
- Your invoice will not be valid and you will not be able to claim input tax credit or issue an e-way bill for it.
- You may be liable for a penalty of Rs 10,000 per invoice or 100% of the tax amount involved, whichever is higher.
- You may also face other legal actions such as cancellation of registration, seizure of goods, etc.
Therefore, it is advisable to comply with the e-invoicing system and generate e-invoices for all your B2B transactions from August 1st, 2023 onwards.
If you need any assistance or guidance on how to generate e-invoices, you can contact us at pretaxessolutions@gmail.com. We are a team of experts who can help you with all your GST-related queries and issues.
Thank you for reading!
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