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

1. What is e-Invoicing, and is it applicable to my organisation?

E-invoicing is a new reform introduced in India, to bring about uniformity in invoicing formats, and machine readability and interoperability amongst ERP and tax systems. Businesses currently generate their invoices through different accounting/billing and ERP software, and the invoices are then manually uploaded on the GST portal. E-invoicing will enable the automatic transmission of invoices across the GSTN. It will also facilitate the simultaneous generation of e-way bills. This reform will not just ease business processes in India, but also bring about path-breaking reforms in tax administration and compliance.

From 1st October 2020, e-invoicing will apply to all businesses who have a turnover which exceeds Rs.500 crore. However, irrespective of the turnover, e-invoicing shall not apply to the following categories of registered persons:

• A Goods Transport Agency (GTA)
• An insurer
• A banking company or financial institution, including an NBFC
• A registered person supplying passenger transportation services
• A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services
• An SEZ unit (excluded via N/no. 61/2020)

Also Read: Tax Query: What is my income tax liability from intraday trading in shares?

2. What is the penalty for the non-generation of e-Invoices?

The non-generation of e-invoices will imply the non-intimation of supply transactions to the government. The CGST rule 48(5) states that any invoice issued by an applicable taxpayer without the IRN will be considered an invalid invoice. In other words, it is regarded as a non-issue of invoices.

The penalty for the non-generation of e-invoices is as follows:

1. Penalty for the non-issuance of invoices – 100% of the tax due or Rs.10,000, whichever is higher.
2. Penalty for incorrect invoicing – Rs.25,000.

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