UPDATE on 25th Feb 2022
e-Invoicing is mandatory for business whose turnover is more than 20 Crores from 01st Apr 2022 (CBIC – 20021/1/2022-GST).
What is e-Invoice & the Benefits ?
e-Invoice essentially an electronic Invoice document with a specific structure to report to a Government-notified portal and obtaining a reference number called as IRN – Invoice Reference Number that is unique in India and has to be shown to the authorities while moving goods when demanded.
The intended benefits of e-invoicing in India are of standardization, inter-operability, auto-population of invoice details into GST return and other forms (like e-way bill), reduction in processing costs, reduction in disputes, improvement in payment cycles and thereby improving overall business efficiency. as per GST Portal.
During October 2020, GST Council made a decision to rollout the e-Invoicing and made mandatory for the entities whose turnover is more than Rs. 500 Crores for the immediately preceding fiscal. While the council contemplating to rollout such functionality for all including businesses whose turnover is more than Rs. 50 Crores. At this time EZTax.in made our opinion public and shared to the GST Network too that it is impossible for the field to cope up with such functionality.
Today, GST Council made an announcement that the businesses whose turnover is more than Rs. 50 Crores are required to follow e-Invoicing from Apr 1st 2021. Which is shorter than a month to comply.
From EZTax.in perspective, it would be a right decision to have all businesses whose turnover is more than Rs. 100 Crores rather a 50 Crores mark to have mandatory e-Invoicing compliance.
One way above decision made MSMEs out of e-Invoicing compliance, which is impossible to comply, where majority of the MSMEs are not quite happy with the GST system due to extra diligence required to comply Monthly, Quarterly compliances.
There are some exceptions to the mandatory requirement to follow e-Invoicing, sectors such as transportation, insurance & banking companies, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempt from e-invoicing. In addition, units in special economic zones too are exempt from the mandatory e-Invoicing procedures.
Expert opinion is that the goal is to replace the existing e-way bill system as the e-Invoicing data can be used to show the evidence of goods movement when in-transit.
The GST Network has clarified that carrying physical copies of e-invoices (mandatory for companies having an annual turnover of Rs. 500 crore and 50 Crore soon), are not required while the goods in-transit. The Network further clarified that it is sufficient to carry QR code having invoice reference number (IRN) electronically for verification by the Officer.
Overall the intended benefits are huge and bring greater transparency and reduce corruption. It is equally understand that the field, particularly MSMEs in India are not ready for such in near future.
If you need further clarification and or software, Services in GST Accounting and Invoicing, contact EZTax.in/contact