Rs 5 crore are mandated to use e-invoicing
Rs.5 crore are mandated to use e-invoicing The e-invoicing system, introduced under the GST law, has been phased in for certain taxpayers. The latest update, notified through Notification No. 10/2023–Central Tax, mandates e-invoicing for businesses with a turnover exceeding Rs. 5 crore, effective from August 1, 2023.
The e-invoice mandate for businesses with turnover exceeding Rs. 5 crore was established through Notification No. 10/2023 on May 10, 2023, amending the previous Notification No. 13/2020 – Central Tax issued on March 21, 2020. Rs.5 crore are mandated to use e-invoicing This amendment applies to turnovers exceeding Rs. 5 crore in any financial year from 2017-18 onwards, with enforcement beginning on August 1, 2023.
Rs.5 crore are mandated to use e-invoicing Continue reading to gain a comprehensive understanding of the sixth phase of mandatory e-invoicing setup for taxpayers with a turnover limit of 5 Crore, including updates on the latest e-invoice notifications, operational changes, guidance on selecting between different e-invoice generation modes, steps for one-time registration, and solutions for issues tested with Clear IRP and Clear e-Invoicing to support businesses in compliance.
Here are the latest updates:
- On May 10, 2023, the CBIC notified the 6th phase of e-invoicing, making it mandatory for taxpayers with a turnover of Rs. Businesses with a turnover exceeding 5 crore in any f.y. from 2017-18 must issue e-invoices applicable from August 1, 2023.
- On May 6, 2023, the GST department extended the deadline for reporting old e-invoices on the e-invoice IRP portals by three months. Rs 5 crore are mandated to use e-invoicing The new implementation date has not been announced yet.
- On April 13, 2023, in line with advisories from the GST Network on April 12 and 13, taxpayers with an annual turnover of Rs. 100 crore or more are required to report tax invoices and credit-debit notes to the IRP within 7 days of the invoice date, effective from May 1, 2023.
Businesses covered in the sixth phase of e-invoicing, effective
From August 1, 2023, are those with an annual aggregate turnover exceeding Rs. 5 crore in any previous financial year from 2017-18.
Previously, phase I applied to businesses with a turnover limit of over Rs. 500 crore starting from October 1, 2020. In phase II, businesses with an annual turnover exceeding Rs. 100 crore began issuing e-invoices from January 1, 2021.
Phase III was expanded to include businesses with an annual turnover exceeding Rs. 50 crore, starting from April 1, 2021. Rs.5 crore are mandated to use e-invoicing A year later, the government lowered the e-invoice limit to more than Rs. 20 crore for phase IV. Rs 5 crore are mandated to use e-invoicing to use e invoicing Recently, phase V was implemented from October 1, 2022, covering businesses with an annual turnover of over Rs. 10 crore.
The e-invoicing implementation in India until the sixth phase:
| Sl no | Turnover limit | Date of applicability |
| 1 | 500 Cr | 1st October 2020 |
| 2 | 100 Cr | 1st January 2021 |
| 3 | 50 Cr | 1st April 2021 |
| 4 | 20 Cr | 1st April 2022 |
| 5 | 10 Cr | 1st October 2022 |
| 6 | 5 Cr | 1st August 2023 |
E-invoicing applies to:
- Tax invoices
- Debit notes
- Credit notes
- Invoice-cum-bill of supply
The e-invoicing system covers transactions such as:
- Taxable Business-to-Business (B2B) supply of goods or services
- Business-to-Government (B2G) supply of goods or services
- Export sales
- Sales falling under the Reverse Charge Mechanism (RCM)
The e-invoicing scope excludes the following documents, transactions, and businesses:
- Exempted sales for which the bill of supply is raised
- Imports
- Job works
- Delivery challans
- Banks, financial institutions, and insurance companies
- Exhibiting cinematographic films on multiplex screens
- Non-banking financial companies
- Goods transportation and passenger transportation agencies
- Units in SEZ or special economic zones
- Government departments.
e-Invoicing objective and impact
Rs.5 crore are mandated to use e-invoicing The main aim of reducing the threshold turnover limit for e-invoicing is to combat GST evasion and fraud while improving GST compliance, particularly among MSMEs. This phase covers nearly 4 lakh businesses.
Rs.5 crore are mandated to use e-invoicing By facilitating genuine and verified Input Tax Credit (ITC) for enterprises across the supply chain, e-invoicing helps prevent GST Rs.5 crore are mandated to use e invoicing revenue leakages for the government. Rs.5 crore are mandated to use e-invoicing Additionally, to use e invoicing e-invoicing promotes digitization in India by enabling the digitization of all transactions at the source, i.e., the invoicing stage.
Rs.5 crore are mandated to use e-invoicing The primary impact on the notified businesses is a significant shift in their business processes, including changes to GSTR-1 preparation and adjustments to their billing systems or software. Rs 5 crore are mandated to use e-invoicing While GSTR-1 filing becomes simpler due to the auto-population of details, reconciliations may become more complex, as elaborated later on.
Small businesses benefit from hassle-free access to formal credit channels like invoice discounting or financing, as their invoices are validated and authenticated by the government, providing them with leverage.
Large enterprises purchasing from small businesses that are notified for e-invoicing may face a challenging task. Rs.5 crore are mandated to use e-invoicing They need to ensure that their small vendors consistently adhere to the e-invoicing mandate. Rs.5 crore are mandated to use e invoicing Rs 5 crore are mandated to use e-invoicing This is crucial because failure to generate e-invoices can result in the loss of input tax credits or delays in claims. Ultimately, when vendor businesses streamline their e-invoicing system, they can rightfully claim genuine tax credits.
Changes in business processes due to e-invoicing & how to prepare?
Businesses newly included in the e-invoicing mandate must ensure they are equipped, implement the necessary systems, and thoroughly test their setup before the notification date. Rs.5 crore are mandated to use e-invoicing The GST Network (GSTN) has facilitated testing of e-invoicing setups in a sandbox environment for these businesses since July 2022.
A significant portion of taxpayer companies falls within the Rs. 5-10 crore annual turnover category compared to the previous phase. Rs.5 crore are mandated to use e invoicing Additionally, these small businesses often have a higher transaction volume, which poses new compliance challenges.
Rs.5 crore are mandated to use e-invoicing Continue reading to discover how enterprises can easily implement e-invoicing and understand how it can transform their business processes.
In e-invoicing, businesses do not create invoices directly on the government portal. Instead, they report pre-existing tax invoices to the government-authorised Invoice Registration Portal (IRP) for validation and authentication. Rs 5 crore are mandated to use e-invoicing The IRP includes portals such as NIC’s e-invoice portal and Clear IRP.
Ensure continuous staff training by raising awareness about the changes in invoice-handling across different finance and accounting teams well in advance of the applicability date. Rs.5 crore are mandated to use e invoicing Familiarize your teams with the entire e-invoicing process and equip them to navigate any challenges with our informative content on ‘All about e-Invoicing’.
Team Clear has curated resources in the form of videos, articles, and whitepapers on e-invoicing. Additionally, our talented managed services team provides round-the-clock technical support for all your needs.
To comply with the rules and e-invoice schema, accounting or billing software must be adjusted or realigned. Identify applicable e-invoicing transactions and documents and separate them from the rest for uploading onto the Invoice Registration Portal (IRP) like NIC and Clear.
Revamping the billing, accounting, or ERP system as required.
E-way bills can be automatically generated using e-invoice details, as per the user’s preference. Therefore, it’s important to categorise these documents appropriately to prevent duplication. Invoice print commands need to be adjusted to include IRN and QR code details on the e-invoice. While Rs.5 crore are mandated to use e-invoicing some teams handle document segregation manually, utilising tools like Clear e-invoicing solution can streamline the process, Rs.5 crore are mandated to use e invoicing reducing errors and increasing efficiency. In any case, these tasks necessitate modifications in the current billing, ERP, accounting systems, or software.
Ensuring accuracy in invoice details
It is essential to begin maintaining accurate and verified records of supplier and customer master data, especially if not done previously. Rs 5 crore are mandated to use e-invoicing These records should include additional invoice details such as validated GSTIN, bank account, and payee details for precision. Any rejection of invoices by the IRP results in invoice cancellation and regeneration, placing additional burden on the team. Rs 5 crore are mandated to use e-invoicing This can lead to dissatisfaction among buyers due to delays, as amendments to e-invoices are not permitted.
Selection of e-invoice generation method-
Choose the most suitable mode for generating Invoice Reference Number (IRN) and signed QR code from the Invoice Registration Portal (IRP). Various options are available, broadly categorised as online and real-time processing, SMS, offline, and batch processing. Rs.5 crore are mandated to use e-invoicing Some popular modes include:
- SFTP or API integration within comprehensive solutions like Clear e-Invoicing.
- Accessing IRP via existing e-way bill APIs and GST APIs.
- Direct web-based integration with IRPs such as NIC and Clear.
- Integration through a GST Siddha Provider (GSP) like Clear.
- 4SMS-based or mobile app-based generation.
- Offline spreadsheet-based utilities like the GST e-invoice preparing and printing (GePP).
opt for a cloud-based solution that offers backup and retrieval options for Invoice Reference Number (IRN). Rs.5 crore are mandated to use e-invoicing Additionally, Rs.5 crore are mandated to use e invoicing ensure the capability to handle large-scale invoices efficiently with enhanced data security. Clear e-Invoicing stands out for its ability to generate IRN at the fastest speed, processing in just 200 milliseconds compared to the market average of 3 seconds.
Enrolling on the e-invoice portal or Invoice Registration Portal (IRP).
New registrants need to sign up on the e-invoice portal or inform the Invoice Registration Portal (IRP) like NIC (https://einvoice1.gst.gov.in/) or Clear. Rs 5 crore are mandated to use e-invoicing Refer to our article ‘Steps for registration on the e-invoice portal or IRP’ for detailed guidance on the process.
Reconciliation and reporting in GSTR-1 entail matching and recording transactions accurately-
Rs.5 crore are mandated to use e-invoicing With e-invoicing, the process of preparing and filing GST returns undergoes changes. While e-invoice details are automatically populated into the GSTR-1, taxpayers are required to manually input other details such as non-taxable and B2C sales. It is essential to reconcile the sales register with Rs 5 crore are mandated to use e-invoicing the auto-filled in GSTR-1 to ensure accurate reporting and avoid receiving any notices.
Possible internet connectivity problems-
Rs.5 crore are mandated to use e-invoicing Small businesses face a significant challenge due to the potential for intermittent network issues, particularly in tier II and tier III cities. Rs.5 crore are mandated to use e-invoicing These businesses often lack the internal technology necessary for real-time e-invoice generation and capturing Invoice Reference Numbers (IRNs) on invoices.
Experiencing delays in generating IRNs-
Rs.5 crore are mandated to use e-invoicing Businesses struggling with the requirements of the sixth phase of e-invoicing, especially those processing thousands of B2B transactions daily, may face challenges in keeping customers waiting for e-invoice generation. Rs.5 crore are mandated to use e-invoicing As a solution, these businesses can consider utilising the services of a GST Suvidha Provider (GSP) or Invoice Registration Portal (IRP) such as the one offered by Clear to ensure smooth compliance.
SOURCES: https://cleartax.in/s/e-invoicing-businesses-above-rs-5-crore-turnover
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