The Central Board of Indirect Taxes & Customs made e-invoicing under GST compulsory for registered men having a total turnover of above Rs 20 crore in any of the last years 2017-18 to 2021-2022. Indian businesses with yearly turnovers of greater than Rs. 20 crore to Rs. 50 crore, as evaluated in any previous financial year from 2017-18 till 2021-22, have to generate e-invoices from April 1st, 2022.
In this article, you will get detailed information on e-invoicing limits under GST challenges, options, impact on MSME, e-invoicing time limit, and tested results of e-invoicing systems to help businesses.
The main aim of a reduced e-invoicing limit is to decrease fraudulent invoicing and reduce tax evasions. Now, businesses must align their units with the e invoicing portal IRP (Invoice Registration Portal) for an easy generation of IRN (Invoice Reference Number) for all B2B bills. They need to get their accounting systems to adapt changes for obeying the e-invoice structural outline. The e-invoice generation will impact the MSME processes in the following ways:
E-invoices have been made compulsory by the government to curb GST evasion. During the 1st Committee in May 2019 to calculate the implementation and e-invoicing use in India, following the globe-wide developments. Afterward, the panel listed several drafts before the final e-invoice scheme could be made in January 2020. The e-invoicing software was made compulsory from April 1st, 2020 but was delayed by the Council of GST.
Lastly, it went active from October 1st, 2020. During phase 1, Indian businesses with more than Rs500 crore turnover have to issue e-invoices from October 1st, 2020. In the second phase, enterprises with more than Rs100 crore turnover start issuing e-invoices from January 1st, 2021.
Then, in phase three, businesses having turnover greater than Rs50 crore need to generate e-invoices from April 1st, 2021. Around 2,40,567 MSME firms were in this turnover bracket. After a year, the government wished to increase the huge system to about 1,80,000 more Indian firms from April 1st, 2020. These MSMEs fall within Rs20 crore and Rs5o crore turnover in the fiscal years between 2017-18 and 2021-22. Moreover, an official said that the government forecasted a rise in GST registration by 75% after this move.
There are several ways by which the ERP software of any business interacts with the IPR for IRN generation:
From 1st April the previous year, businesses with a turnover of greater than Rs50 crore were doing B2B e-invoice generation. However, this is now extended to businesses with Rs 20 crore or more turnovers. With this, many suppliers will be needed to raise e-invoices from 1st April 2022. If an invoice is invalid, the tax credit on it will not be availed by the taxpayer along with relevant penalties.
Not issuing an e-invoice is said to be an offense and results in penalties. Non-compliant MSMEs need to pay heavy penalties fixed at 10,000 INR for each invoice. Moreover, inappropriate invoices may lead to a penalty of 25,000 INR per invoice.
In addition to penal provisions, in case a taxpayer delays the e-invoice generation, it may result in:
Clients are unable to claim ITC and GST returns will not get auto-filled.
Customers refuse to accept invoices that are not in compliance with the e-invoicing GST provisions.
The e-invoicing generation will apply to Business to Business (B2B) transactions only. All the financial bodies in the banking and insurance business are placed out of this scope. Moreover, the e-invoicing system does not apply to non-banking financial firms, passengers and goods transportation companies, businesses operating in SEZs, and other government bodies.
Below are some famous ways for MSMEs with greater than Rs.20 crore turnover to follow with the e-invoicing limit system:
Web-Based: An enterprise can fill up invoice information over the IRP website for IRN generation.
SMS Based: It covers enterprises filling the invoice information in a specific formation and sharing the same on the IRP through an SMS for processing.
Mobile Application Based: The GST Network has made a mobile-based application for e-invoicing applicability enterprises to comply with the e-invoice generation.
GSP Based: Enterprises can utilize the services of GSP for generating IRP and accessing IRP indirectly.
API-Based: By using API modes, businesses can interact with IRP & do IRN generation either at once or in bulk. Enterprises should use Cloud-based software to manage the e-invoices effortlessly.
No matter how careful you are while invoicing, things happen, and you find yourself in a scenario where you need to update or modify the e-invoice. The key question is whether or not e-invoices may be changed or edited after the IRN and QR code have been produced. 'No,' is the answer. Yes! The e-invoice cannot be edited, updated, or deleted once the IRN has been generated.
However, there are a few things that you can do to take care of it. They are:
Cancel the e-invoice with the wrong information within 24 hrs from the time IRN is generated.
After 24 hrs have passed use a credit or a debit note to nullify the information. After this, record a new invoice and generate a fresh IRN.
Modify the invoice details in GSTR-1