In India, E-invoice is a process of generating and exchanging invoices electronically between businesses and the government. The government has introduced the e-invoicing system as part of its Digital India initiative to reduce paperwork and improve the ease of doing business in the country.
As per the latest guidelines by the GSTN, businesses with an annual turnover of more than Rs. 10 crores are required to generate electronic invoices for B2B transactions. Companies must register with the e-invoicing system and generate e-invoices for all business transactions.
-Invoicing under GST denotes electronic invoicing defined by the GST law. Just like how a GST-registered business uses an e-way bill while transporting goods from one place to another. Similarly, certain notified GST-registered businesses must generate e invoice for Business-to-Business (B2B) transactions.
What is e-invoice?
The Goods and Services Tax Network (GSTN) is the government organization responsible for developing and maintaining the technological ecosystem for India’s new Goods and Services Tax (GST) regime. It is the backbone of the GST regime and provides the technology infrastructure and services for filing GST returns online. It also maintains the GST portal and provides e-invoicing services for registered businesses.
The GSTN has partnered with the Institute of Chartered Accountants of India (ICAI) and the National Payments Corporation of India (NPCI) to set up the e-invoicing system in India.
E-invoicing is a system for automating the entire process of creating, sending, and storing digital invoices. It is an electronic version of a traditional paper invoice, which is generated and stored electronically instead of being printed and mailed.
The main objective of e-invoicing is to make the invoicing process simpler, faster, and more efficient. The GSTN has introduced E-invoicing in an attempt to help streamline the process and ensure that all the necessary details are captured in a single invoice
Who must generate e invoice and its Applicability?
The e invoice applicability can be explained as follows-
Turnover criteria or e Invoice limit
| Phase | Applicable to taxpayers having an aggregate turnover of more than | Applicable date | Notification number |
| I | Rs 500 crore | 01.10.2020 | 61/2020 – Central Tax and 70/2020 – Central Tax |
| II | Rs 100 crore | 01.01.2021 | 88/2020 – Central Tax |
| III | Rs 50 crore | 01.04.2021 | 5/2021 – Central Tax |
| IV | Rs 20 crore | 01.04.2022 | 1/2022 – Central Tax |
| V | Rs 10 crore | 01.10.2022 | 17/2022 – Central Tax |
| VI | Rs 5 crore | 01.08.2023 | 10/2023 – Central Tax |
The taxpayers must comply with e-invoicing in FY 2022-23 and onwards if their e invoice limit or turnover exceeds the specified limit in any financial year from 2017-18 to 2021-22. Also, the aggregate turnover will include the turnover of all GSTINs under a single PAN across India.
If the turnover in the last FY was below the threshold limit but it increased beyond the threshold limit in the current year, then e-Invoicing would apply from the beginning of the next financial year i.e. FY 2023-24.
Suppose, ABC ltd aggregate turnover was as follows-
FY 2017-18: Rs 15 crore
FY 2018-19: Rs 17 crore
FY 2019-20: Rs 24 crore
FY 2020-21: Rs 19 crore
FY 2021-22: Rs 18 crore
Suppose, QPR ltd started business in FY 2019-20 and earned aggregate turnover as follows-
FY 2019-20: Rs 4 crore
FY 2020-21: Rs 7 crore
FY 2021-22: Rs 11 crore
The ABC Ltd shall mandatorily generate e invoices from 01.04.2022 irrespective of the current year’s aggregate turnover as it has crossed the Rs 20 crore turnover limit in FY 2019-20.
On the other hand, QPR ltd should comply with e-Invoicing from 1st October 2022 since its previous year’s annual turnover exceeds Rs.10 crore.
The fifth phase of e-Invoicing works similar to the fourth phase. Watch the below video to learn easily.
What are the benefits of e-invoicing?
By utilizing the e-invoicing system, taxpayers can gain the following benefits:
- E-invoicing allows businesses to streamline their invoicing process, reduce costs, and improve compliance with government regulations.
- The e-invoicing system is integrated with the GST portal, allowing businesses to generate and file their invoices directly with the GST portal, instead of having to manually submit.
- E-invoicing allows businesses to generate e-invoices, track them, and monitor their status.
Who is eligible for e-invoice?
As per the latest guidelines by the Goods and Services Tax Network (GSTN), the following categories of taxpayers are required to generate and issue E-invoices for their business transactions:
- Taxpayers with an aggregate turnover exceeding Rs.500 crores in any preceding financial year from 2017-18 onwards.
- Taxpayers engaged in the export of goods or services.
- Taxpayers who are required to deduct tax at source (TDS) under the GST regime.
- Taxpayers who are engaged in the supply of goods or services on behalf of other registered persons, known as the ‘Input Service Distributor’.
- DTA units must issue an e-invoice applicability check under the GST applicability, if they meet other requirements for eligibility.
Who need not comply with e-Invoicing?
However, irrespective of the turnover, e-Invoicing shall not be applicable to the following categories of registered persons for now, as notified in CBIC Notification No.13/2020 – Central Tax, amended from time to time-
| Notified Businesses | Documents | Transactions |
| 1)An insurer or a banking company or a financial institution, including an NBFC 2) A Goods Transport Agency (GTA) 3) A registered person supplying passenger transportation services 4) A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services 5) An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax) 6) A government department and Local authority (excluded via CBIC Notification No. 23/2021 – Central Tax) 7) Persons registered in terms of Rule 14 of CGST Rules (OIDAR) | Delivery challans, Bill of supply, financial or commercial credit note or debit note, bill of entry, and ISD invoices. | Any Business-to-Consumers (B2C) sales, Nil-rated or non-taxable or exempt B2B sale of goods or services, nil-rated or non-taxable or exempt B2G sale of goods or services, imports, high sea sales and bonded warehouse sales, Free Trade & Warehousing Zones (FTWZ), and supplies under reverse charge covered by Section 9(4) of the CGST Act. |
Process of getting an e invoice
- The invoice generated must be in a standard format defined by the government.
- All e-invoices must be uploaded to the government’s e-invoicing system for validation and further processing.
- The government then checks all the details on the invoice and approves it if it is found to be accurate.
- The invoice is then sent to the buyer, who can then make the payment.
FAQs
Q: whom will e-invoicing apply?
E-invoicing applies to GST registered persons whose aggregate turnover in any previous financial years (2017-18 to 2021-22) exceeded Rs.20 crore. From 1st August 2023, it applies to those with a turnover of more than Rs.5 crore up to Rs.10 crore.
Q: Will the bulk uploading of invoices for the generation of IRN be possible?
No, invoices must be uploaded one at a time into the IRP. The ERP of a business will need to be designed to place the request for the upload of individual invoices.
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