New CBIC notification excludes government departments from e-invoicing compliance

The Central Board of Indirect Taxes and Customs (CBIC) has issued a fresh notification regarding e-invoicing. The Central Tax notification number 23/2021 was issued on 1st June 2021 and other notifications on GST return’s due date extensions and penal reliefs on account of the pandemic. 

As per the new notification, the authority has extended exemption to all the government departments and local authorities. These are exempt from the requirement of complying with the e-invoicing norms and reporting invoices with the invoice registration portal. Currently, taxpayers that raise Business-to-business (B2B) invoice on their buyers and having a turnover of Rs.50 crore in any preceding fiscal years, from FY 2017-18, must comply with e-invoicing. However, applicable government departments will no longer be subject to these rules.

A new entry is added to the existing list of exemptions from the e-invoicing system. The earlier notified list was as follows:

• An insurance company, a banking company as well as a financial institution.
• A Non-banking Finance Company (NBFC).
• A Goods Transport Agency (GTA) registered under GST.
• A registered taxpayer providing passenger transportation services.
• A registered person rendering services of admission to the exhibition of cinematographic films in multiplex services.
• A Special Economic Zone (SEZ) units.

With the exemption list getting bigger with every passing phase of e-invoicing, the government provides relief to those sectors having the most hassles in processing invoices. Most of these sectors that are currently notified as exempted from e-invoicing involve considerable transactions in the stream of Business-to-Consumer (B2C) or have businesses established with a sensitive economic background or need government support.

Hence, more such sectors such as amusement parks and digital cable service providers must be given exemption from e-invoicing. Previously, the government passed two notifications to exempt a few sectors and taxpayers from e-invoicing. These are Central Tax notification numbers 61/2020 on 30th July 2020 and 13/2020 on 23rd March 2020. The GST Council must look into the matter in the next meeting.

It must be noted that the government also intends to bring the B2C transactions under the ambit of e-Invoicing in the future. But before that, e-invoicing shall be extended to taxpayers with turnover exceeding Rs.5 crore and raising B2B invoices by the end of 2021.

An idea behind exempting these B2C rich industries and sectors is to allow smooth functioning of the e-invoice portal without breakdowns. It would also help these sectors in smoothly conducting their day-to-day billing without interruptions. 

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in