GST E-Invoicing Limit Decreased to ₹5 Crores: What Does it Mean for Businesses?

The GST E-Invoicing limit has been decreased from ₹10 crores to ₹5 crores w.e.f. 01 August 2023. This means that businesses with a turnover of ₹5 crores or more will have to start implementing e-invoicing from this date. It is important for businesses to prepare themselves for this change in order to comply with the new regulation and avoid any penalties.

Steps of E-Invoicing:

E-invoicing is the process of generating invoices in a standard format, which is then validated by the GST Network (GSTN). Here are the steps involved in e-invoicing:

1. Creation of the invoice by the supplier in their own accounting or billing system.

2. Transmission of the invoice details to the Invoice Registration Portal (IRP).

3. Validation of the invoice by the IRP and assigning a unique Invoice Reference Number (IRN).

4. Sharing of the validated e-invoice with the supplier and the recipient.

5. Uploading of the e-invoice details by the supplier to their GST Returns.

Preparing for E-Invoicing:

Here are some important steps businesses can take to prepare for e-invoicing:

1. Ensure that your accounting or billing system is compatible with e-invoicing standards.

2. Register for the IRP and obtain your login credentials.

3. Train your employees on how to create and upload e-invoices.

4. Ensure that your customers and suppliers are aware of the e-invoicing process.

5. Verify the GSTN details of your customers and suppliers.

FAQs on E-Invoicing:

Q: Is e-invoicing mandatory for all types of businesses?

A: No, e-invoicing is only mandatory for businesses with an aggregate annual turnover of 5 crores or more in any financial years from 2017-18 onwards.

Q: Is e-invoicing mandatory for all types of transactions?

A: E-invoicing is mandatory for B2B, Export, NIL rated, Exempt transactions for supply of goods or services. Currently, e-invoicing is not applicable for B2C transactions for supply of goods or services.

Q: Whether e-invoicing is applicable for supplies by notified persons to Government Departments?

A: E-invoicing by notified persons is mandated for supply of goods or services or both to a registered person. Thus, where the Government Department doesn’t have any registration under GST (i.e. not a ‘registered person’), e-invoicing doesn’t arise. However, where the Govt. department is having a GSTIN (as entity supplying goods/services/ deducting TDS), the same has to be mentioned as recipient GSTIN in the e-invoice.

Q: Credit notes/ debit notes also to be raised through e-invoicing?

A: Yes, credit notes/ debit notes also to be raised through e-invoicing.

Q: What is the applicability of e-invoice for import transactions?

A: E-invoicing is not applicable for import Bills of Entry.

Q: Whether e-invoicing is applicable for invoices between two different GSTINs under same PAN?

A: Yes. e-invoicing by notified persons is mandated for supply of goods or services or both to a registered person.

Q: What are the consequences of not implementing e-invoicing?

If an e-invoice is not generated, then such an invoice would not be treated as a valid tax invoice for all GST related matters. The penalty for non generation of e invoice applicable here are:

- Penalty for non-issuance of invoice: 100% of the tax due or INR 10,000 (whichever is higher) will be imposed for each instance of non-compliance.

- Penalty for incorrect invoice: INR.25,000 will be imposed as e invoice penalty notification here.

- No ITC: Purchaser of goods/ service will not be eligible to use such ITC, since it is not a proper invoice.

- In case the goods are transported without a valid invoice, the department may detain the goods and the vehicle. Penalty may be imposed here.

Here is a video explaining step by step procedure of generating E-invoicing:

In conclusion, the decrease in the GST E-Invoicing limit from to ₹5 crores w.e.f. 01 August 2023 will require businesses to start implementing e-invoicing. By preparing for this change and following the necessary steps and guidelines, businesses can comply with the new regulation and avoid any penalties.

We at Monik Advisors LLP help businesses to comply with their GST and E-invoicing requirements. Feel free to contact us for any queries.