Tax Query: Is e-invoicing applicable to supplies liable to reverse charge?

1) Is e-invoicing applicable to supplies liable to reverse charge?

A. If an invoice has been issued by a notified person, in respect of which reverse charge is liable to be paid under section 9(3) of the Central Goods and Services Tax Act (CGST) on the supplies made by him, then e-invoicing will be applicable.

However, when a notified person receives supplies from an unregistered person, where the reverse charge is liable to be paid under section 9(4) of the CGST Act, then e-invoicing will not be applicable.

2) Is e-invoicing applicable to a Free Trade and Warehousing Zone (FTWZ)?

A. No, e-invoicing does not apply to Free Trade and Warehousing Zones. These zones are a special category of Special Economic Zones (SEZ) itself, who focus on trading and warehousing.

Also Read: Tax Query: What is e-invoicing and is it applicable to my organisation?

3) Is e-invoicing applicable to supplies made by notified persons to Special Economic Zones (SEZs)?

A. Yes, e-invoicing will be applicable on supplies made by notified persons to SEZs. Only SEZs have been exempted from e-invoicing as per Central Tax Notification 61/2020 dated 30th July 2020.

4) Is e-invoicing applicable to invoices issued by Input Service Distributor (ISD)?

A. An Input service distributor (ISD) is an entity which receives invoices for the services used by its branches. The ISD only distributes the tax paid to the branches on a proportional basis by issuing an ISD invoice. Hence, e-invoicing will not be applicable to Input Service Distributors (ISDs).

5) An SEZ unit and a DTA unit both come under the same legal entity, having a single PAN. If the aggregate total turnover of the legal entity is more than Rs.500 crore, but the turnover of the DTA unit is less than Rs.100 crore for FY 19-20, then will e-invoicing apply to the DTA unit?

A. Even though the SEZ unit is exempt from e-invoicing since the DTA comes under the same entity, e-invoicing will be applicable. The eligibility of e-invoicing is decided based on the aggregate annual turnover of the common PAN.

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

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