E-invoicing Mandatory for Turnover Above Rs. 10 Crores

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E-invoicing Mandatory for Turnover Above Rs. 10 Crores

The government has been mandating the applicability of e-invoicing for businesses in a phase-wise manner. In the latest round of amendments, e-invoicing has been mandated for businesses with turnover above Rs. 10 crores with effect from 1st October 2022. Therefore, if your turnover in a financial year exceeds Rs. 10 crores, then you shall be required to generate an e-invoice for your business. Following is the phase-wise applicability of the e-invoices:

Phases E-Invoice Applicability Turnover E-invoicing Applicability Date Applicable Notification
I Rs. 500 crores 1st October 2020 61/2020 – Central Tax
II Rs. 100 crores 1st January 2021 88/2020 – Central Tax
III Rs. 50 crores 1st April 2021 05/2021 – Central Tax
 
IV Rs. 20 crores 1st April 2022 01/2022 – Central Tax
 
V Rs. 10 crores 1st October 2022 17/2022 – Central Tax
 

Until now, e-invoicing was mandatory for businesses with turnover exceeding Rs. 20 crores (as per phase IV). However, this is set to change from 1st October 2022 wherein registered persons with turnover exceeding Rs. 10 crores will be mandatorily required to generate e-invoices.

 

What is E-Invoice?
 

Electronic invoicing, also known as e-invoicing, is a mechanism whereby the details regarding B2B invoices are uploaded by the supplier which is authenticated by the designated e-invoicing portal. This system was launched in order to standardize invoice generation practices among businesses.

Once an e-invoice is generated, an Invoice Reference Number (IRN) is issued against each invoice. IRN is a 64-character long unique number that is generated by the Invoice Registration Portal (IRP) using the hash algorithm. Following are the benefits of e-invoicing:


•    Auto population of B2B invoices in GSTR-1
•    Facilitating the generation of E-way bills
•    Bulk e-invoice generation facility
•    Complete trail of all B2B invoices thereby reducing the scope of tax evasion
•    Communication of invoices to the buyers in their registered email IDs

Persons Exempted from Generating E-invoices?

Certain persons are granted exemption from the applicability of e-invoices under the GST law. Therefore, if you fall in the below categories of persons, then you are not required to generate an e-invoice despite crossing the above turnover threshold limit:

•    A banking company, financial institution, or an NBFC
•    An insurer
•    Goods Transport Agency
•    The registered person providing passenger transportation services
•    Government department or a local authority
•    A unit located in SEZ
•    The registered person providing services in relation to admission to the exhibition of cinematographic films in the multiplex.

In a Nutshell
Considering the benefits of e-invoicing to the tax administration and the taxpayers at large, the government is expanding the applicability of e-invoicing by reducing the threshold limit of turnover. If you have any queries regarding the applicability of e-invoices or how to generate e-invoices, then feel free to contact your eAuditors!
 

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