The tax invoice known as "e-invoice" comprises
additional information in the form of a QR Code in addition to the tax invoice
that is typically sent by every registered entity. B2B invoices are
electronically validated by GSTN under the "e-Invoicing" system
before being used on the public GST portal. The tax invoice created using
accounting software, such as Tally, Busy, etc., is sent via the IRP, or more
specifically, the e-invoicing portal, in the form of a json file. Every invoice
issued under the electronic invoicing system will receive an IRN (unique
invoice reference number for each invoice) from the GST Network-managed Invoice
Registration Portal (IRP) (GSTN) and adds a QR Code before validating the data
and returning the json file with a DSC. This json file is loaded into the ERP
system to allow for the printing of invoices with QR codes.
The term "e-invoice" does not refer to an
invoice that is generated via government portal. Just after receiving the JSON
file of the supplier's invoice, the government portal verifies the information,
creates an IRN, adds a QR code, and then sends the signed JSON file back. Since
the data is sent directly from the IRP to the GST site, it will also eliminate
the requirement for manual data entry for filing GSTR-1 returns and creating
part-A of the e-way bill.
Liability to issue an E-invoice?
After F.Y. 2017–18, every registered taxable person whose
total annual turnover exceeds Rs. 20 Cr is required to issue an electronic
invoice from 1st April, 2022 by
uploading their tax invoice as a json file to the Invoice Registration Portal
(IRP) in accordance with the e-invoice schema in INV-01 and receiving a
digitally signed json from the IRP along with an IRN and QR Code. Additionally,
all GSTINs in India under a single PAN will be included in the total turnover.
In the event that the turnover in the last financial year
(FY) was below the threshold limit but increased over the threshold limit in
the current year, e-Invoicing would be applicable from the beginning of the
next financial year. E-invoicing is applicable to the provision of both
products and services. Export is covered by e-invoicing, whether there is
payment or not. E-invoice cannot be used on voluntary basis.
Exemption from issuing an E-invoice?
As per Notification No. 13/2020 CT dated March 21, 2020,
registered persons who are covered by Rule 54's sub-rules (2), (3), (4), and
(4A) are exempt from issuing electronic invoices like: Insurance companies,
banks, and non-bank financial institutions (NBFCs)
· Transportation of
products by the Goods Transport Agency by road [Rule 54(3)]
· Passenger transportation
service provider (see Rule 54(3))
· As per Notification No.
61/2020 CT dated 30/07/20, a person providing services by way of admission to
cinematographic film exhibition in multiplex screens in a SEZ Unit is exempt.
Advantage of E-invoicing:
· There will be less
chances of manipulation to avoid taxes due to real-time reporting of invoices
on the Government Portal.
· It will automatically
report invoice details in GSTR-1 of supplier and GSTR-2A of recipient.
· E-way bill auto
generation should be made easier.
· Standardize the invoice
format to prevent disputes between the parties to a transaction.
· Increased overall
Consequences of Non-compliance with
1) Invalid Tax Invoice: Every supply of goods,
services, or both must be accompanied by an invoice or bill of supply, as
required by Section 31 of the CGST Act, 2017. Additionally, Rule 46(r) calls
for the mention of a QR Code wherever an invoice is issued in accordance with
Rule 48(4). As previously mentioned, when IRN is generated, the QR code is
obtained. Therefore, if an invoice is not registered on the IRP, it is not
regarded as a valid tax invoice and will be subject to a fine.
2) Failure to Issue Invoice: Rule 48(5) mandates
that if an E-Invoice is not issued, even if it is required to be issued in
accordance with Rule 48(4), the invoice so issued shall not be a valid invoice.
Therefore, it is regarded a failure of the issuance of an invoice if a taxpayer
fails to create IRN.
3) Refusal of an ITC claim: A tax invoice is an
important record under GST. It serves as proof of the provision of products,
services, or both, and is also a necessary document for the recipient to claim
an Input Tax Credit (ITC). According to Section 16 of the CGST Act 2017, a registered
person cannot claim an input tax credit unless he has a tax invoice or a debit
note in his possession. Therefore, the buyer has the option to reject delivery
of the goods and/or payment in the absence of a valid tax invoice with an IRN,
which may have an impact on the buyer's eligibility to make an ITC claim.
Additionally, without IRN, GSTR-1 of the supplier and GSTR-2A of the buyer will
not automatically populate with the invoice data. In this case, the buyer is
not eligible to claim an Input Tax Credit (ITC) for the tax that the supplier
has already paid.
4) Detention of Goods: Section 129 of the
CGST Act of 2017 states that any transit of items that does not adhere to the
regulations established by the GST Act may result in the detention of the
goods. Transporting goods without a legitimate tax invoice with an IRN may
result in the detention of the products and the vehicles since an invoice
without a QR code is not regarded as a valid tax invoice. Additionally, a
regular e-way bill penalty could be imposed.
Penalty for Non-compliance with
According to sub-rule (5) of Rule 48 under the CGST Act
2017, the following 2 fines are payable if there are any discrepancies or
inaccuracies in electronic invoices:
• The non-issuance of an electronic invoice
carries a penalty of Rs. 10,000 or 100% of the tax due whichever is higher.
• A wrong or inaccurate electronic invoice
carries a Rs. 25,000 fine.
It is clear that any violation of the e-invoice mandate might subject taxpayers to severe fines. Therefore, taxpayers should start upgrading to electronic invoicing as soon as possible if they haven't already done it.