e-Invoicing under GST- Applicability & Exemption!

SEMrush

Introduction

e-Invoicing under GST is the new method of managing B2B invoices that the Government has currently mandated for all large enterprises.

With its successful start unlike the e-Way Bill System, the government plans on spreading e-Invoicing to all businesses by April 2021.

With the government’s futuristic plan, it is important for all businesses to have a deep understanding of all aspects of e-Invoicing under GST

In this blog, we have explained the working, applicability & exemption of e-Invoicing

Additionally, towards the end, we have also discussed & recommended the best eInvoicing software, so read till the end.

What is e-Invoicing under GST?

e-Invoice under GST is the new provision proposed by the government under GST to manage invoices electronically & more efficiently.

All businesses having an annual aggregated turnover of less than Rs. 500 Crores will have to comply with the provisions of e-Invoicing.

Businesses are supposed to create the invoices in the SCHEMA format that has been fixed by the GSTN.

These invoices shall then be uploaded to the unified portal called the IRP or Invoice Registration Portal.

The portal will validate the invoice in real-time & provide a unique IRN & QR Code for the invoice, upon successful validation.

The users can then share the invoices with their vendors & continue the transactions per usual.

e-Invoicing is applicable to the following documents under GST, B2B Invoices, B2G Invoices, RCM invoices, Export invoices, Credit Notes, & Debit Notes.

Additionally, businesses are required to generate QR Codes for their B2C invoices too.

Nevertheless, the validation of the above-mentioned documents & B2C invoices will be very different from each other.

The B2C QR Codes shall contain the detail of the invoices along with the payment reference link.

Working of the e-Invoicing Process

working of the Invoicing process

The working of e-Invoices is simple, Businesses are required to create invoices on their own but in a specified format & upload the same to the IRP for validation & IRN-QR Code generation.

SCHEMA is a fit for all invoice format, as there are multiple mandatory & optional fields & appropriate sections for all types of supplies & business transactions.

Post creation, the user will have to upload these invoices to a unified portal, IRP, or Invoice Registration Portal.

The portal will validate the Invoice & on successful validation, it will assign a unique IRN (Invoice Reference Number) & a QR Code to the invoices.

The user can then use these invoices further & share it with the buyer.

However, an invoice without IRN & QR code will not be considered as a valid invoice & any transactions based on such invoices will be deemed illegal.

Here is the series of changes that e-Invoicing has brought to the working of B2B Invoices

  1. Format- GST Council has already drafted & modified recently, a new generic invoice SCHEMA format that all the taxpayers will have to follow. (Including the e-Way Bill detail section for generating both parts of the e-Way Bill)
  2. Electronic- Since e-Invoicing will take place on desktops, most of the invoice-sharing & storage will be in the form of soft-copy, unless required otherwise.
  3. Digitally signed & validated- The e-Invoices will be 100% authentic because it will be validated & digitally signed in real-time
  4. Data auto-population- The IRP will share the e-Invoice data with the GST portal & the details will auto-populate in your GST returns.
  5. e-Way Bills- The IRP will also share the e-Invoice data with the e-Way Bill Portal, & part A of your e-Way Bill will be auto-populated from the same.
  6. Recipients- The IRP will also share the e-Invoices with your recipients in real-time this will help you to enhance the cash flow of your business.

Applicability & Exemption From e-Invoicing- Explained in-Detail

The Government has laid down some ground rules when it comes to the applicability of the e-Invoicing process under Rule 48.

As per this, there are certain types of businesses & documents on which eInvoicing solution will apply & certain others that are exempted from it considering their nature of the business or the types of the taxpayer.

applicability & exemption

Exempted from e-Invoicing

Since e-Invoicing is a B2B based process most companies dealing in B2C transactions as their major, are exempted from e-Invoicing. Banks, Financial Institutes, Airlines, Telecommunication companies, & other institutes that deal with customers directly, irrespective of the size of the enterprise are exempted from e-Invoicing.

Additionally, the SEZ & FTWZ (Free Trade & Warehousing Zones) Units are also exempted from e-Invoicing.

Interestingly, Registered persons providing services of – admission to an exhibition of cinematograph films in multiplex screens are also exempted from e-Invoicing as per the CBIC Notification.

Apart from the above-mentioned businesses, Goods Transport & Agency (GTA) transporting goods by road in a goods carriage

Transport service providers, providing passenger transportation services are also exempted from generating e-Invoices.

Note- Here is a list of other businesses, documents, & types of supplies that are exempted from e-Invoicing-

  1. Input Service Providers
  2. Supplies Received from unregistered person
  3. Supplies Received through the import of services
  4. Bills of Supplies
  5. Import Bills of Entry
  6. B2C Invoices
  7. Small & Medium Businesses- e-Invoicing, for now, will only apply to large enterprises having an annual aggregated turnover of Rs. 500 crores and above (until stated otherwise)

e-Invoicing Applicability

Now that you know which documents & businesses are exempted from e-Invoicing, it will be easier to remember the ones to which e-Invoicing will actually apply.

e-Invoicing under GST is applicable to all businesses that have an annual aggregated turnover of Rs. 500 Crores & above, unless the government exempts them specially.

These businesses will have to declare the following documents on the IRP, without fail-

  1. B2B Invoices
  2. B2G Invoices
  3. RCM invoices
  4. Export Invoices
  5. Credit Notes
  6. Debit Notes

Additionally, the government has rolled out a notice stating that e-Invoicing will apply to all businesses with an annual aggregate turnover of Rs. 100 Crore+ from January 1st, 2020.

As per sources, this is around the same time, when B2C Invoices will also be included in e-Invoicing, mandatorily.

Conclusion

e-Invoicing has proven to be one of the most successful laws of the Government.

It is rightly serving its purpose without compiling the compliance burden on the businesses.

Many businesses have already adopted e-Invoicing smoothly & there is a reduction in the chances of tax evasion because of the same.

Now with such a positive response, the Government will gradually yet quickly make e-Invoicing live for all businesses in the Indian Market, except the exempted businesses to protect them or their powers.

In any case, businesses will have to learn to comply with e-Invoicing better & quicker.

To make this task simpler, the Government has enabled the assistance from GSPs & ASPS for businesses to comply better with e-Invoices.

GSTHero is a government authorized GST Suvidha Provider which is also the best e-Invoicing Software in the market, stacked with features to make e-Invoicing way simpler to understand & to operate.

Here is why e-GSTHero is the perfect match for your business-

  1. Simple integration
  2. Data Security
  3. Direct integration with the IRP
  4. Scalable for high data volume
  5. Highly Automated- requires minimal human input
  6. Reduced Errors with automation
  7. Enhanced productivity of your accounts team
  8. Compliance in real-time
  9. Bulk Operations- Generate, cancel, print, validate & edit e-Invoice in bulk within the ERP
  10. Achieve 100% Compliance with e-Invoicing
  11. Cost-effective
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