What is e-invoicing and which all businesses are required to generate e-invoicing?

The e-invoicing was introduced on 1^st October 2020, for tax payers with an aggregate turnover exceeding Rs. 500 crore. This was also extended on businesses from 1^st January 2021 whose aggregate turnover is exceeding Rs. 100 crore. The CBIC also informed that e-invoicing will also applicable for businesses with total turnover ranging between Rs. 50 crore to Rs. 100 crore from 1^st April 2021.

WHAT IS E-INVOICING?

E-invoicing or electronic invoicing is a system where you can raise invoices, and the invoices generated under this system can also read with other system. It also reduces the need for any fresh data entry or errors. The invoices generated under this system has standardized format and the data can also be shared with others.

WHICH ALL BUSINESSES ARE REQUIRED TO GENERATE E-INVOICING?

E-invoicing is compulsory from 1^st October 2020, to all the businesses whose aggregate turnover exceeds Rs. 500 crore in any financial year from 2017-2018 to 2018-2019. And it also started too applicable on businesses whose aggregate turnover exceeds Rs. 100 crore in any financial year from 2017-2018 to 2019-2020 from 1^st January 2021. In addition to this from 1^st April 2021 it is applicable to businesses with a total turnover of more than Rs. 50 crore.

Irrespective of the turnover, E Invoicing is not applicable to the below registered persons: Though e- invoicing is not applicable to following registered person, no matter what the turnover is:

• An insurer or a banking company or a financial institution which includes an NBFC;
• A Goods Transport Agency;
• A registered person who supplies passenger transportation services;
• A registered person who supplies services by way of admission to the exhibition of cinematographic films in multiplex services;
• A Special Economic Zone unit;
  • Note: As per notification no. 61/2020 SEZ, units are exempted from issuing e-invoice. No exemption is available for SEZ developers.
• A department of government and local authority.

BENEFITS OF E-INVOICING

There are some benefits of e-invoicing which is as follows:

1. The data under form GSTR-1 is all kept ready for filing while using e-invoicing system.
2. It helps in eliminating reporting in multiple formats as it generates invoices while one time reporting of B2B invoices.
3. With the use of e-invoice data you can also generate E-way bills.
4. There is minimum need for data settlement between books and GST returns which is filed.
5. It also eliminate the verification of Input Tax Credit issues.
6. It helps in better management and self-operating of the tax filing process.
7. E-invoicing can reduces the number of frauds as the access is also with the tax authorities. And,
8. Lastly it also eliminates the generation of fake GST.

SUPPLIES CURRENTLY COVERED UNDER E-INVOICING

E-invoicing currently applies to:

• Supplies which is made to registered person;
• Supplies which is made to Special Economic Zone;
• Export supplies; and
• Deemed export supplies.

IS E-INVOICING IS APPLICABLE TO NIL RATED OR WHOLLY EXEPMT SUPPLIES?

In the types of supplies which is nil rated or wholly exempt then the e-invoicing is not applicable as in these cases no invoice is created but bill of supply is issued, so e-invoice will not be applicable to the supplies which is nil rated or wholly exempt.

Authored by Adv Shivam Kumar