E-Invoicing Under GST: Key Guidelines and Compliance Requirements

[TUSHAR Malik]

E-invoicing is mandatory for businesses whose aggregate turnover exceeds Rs. 5 Crore in any previous financial year since 2017-18.

Applicability of E-Invoice:

• B2B Transactions: E-invoicing is mandatory for all Business-to-Business (B2B) transactions for businesses with an aggregate turnover exceeding Rs. 5 Crore in any previous financial year since 2017-18.

• B2C Transactions: While e-invoicing is mandatory for B2B transactions, it is voluntary for Business-to-Consumer (B2C) transactions, but only in select sectors as per the 54th GST Council meeting. The date for full implementation of e-invoicing for B2C transactions is yet to be notified.

What is Aggregate Turnover?

As defined under Section 2(6) of the GST Act, aggregate turnover includes:

• All taxable supplies
• Exports of goods and services
• Exempted supplies
• All inter-state supplies made by a person under the same PAN.

This definition serves as the basis for determining whether a business is required to comply with e-invoicing rules under GST.

Documents and Supplies Covered Under E-invoicing

E-invoicing is applicable to the following documents:

• Invoices
• Credit Notes
• Debit Notes

It is mandatory for the following supplies to be covered under e-invoicing:

• B2B Supplies
• Export Supplies
• Deemed Exports
• Supplies to Government Departments

Exemptions to E-invoicing

While e-invoicing is compulsory for many businesses, certain sectors and entities are exempt from its provisions, including:

• Banking and Insurance Sector
• Goods Transport Agencies (GTAs)
• Passenger Transport Service Providers
• Multiplex Cinemas (admission to cinematograph films)
• SEZ Units
• Local Authorities or Government Departments

Additionally, individuals registered under Rule 14 of the CGST Rules are also exempt from e-invoicing requirements.

Time Limits for Generating E-invoices

The government has set clear timelines for generating e-invoices based on the taxpayer’s Aggregate Annual Turnover (AATO):

1. Taxpayers with an AATO of Rs. 100 Crores or more: E-invoices must be generated within 30 days from the invoice date.

Explanation:

• Previously, the time limit for generating e-invoices was set at 7 days, but the government extended this period by three months.
• The time limit for reporting e-invoices on IRP portals has been extended for taxpayers with an AATO of at least 10 crores, effective April 1, 2025.
• Non-compliance: If e-invoices are not generated within the prescribed time limit, the e-invoice portal will block the creation of new e-invoices. This could lead to permanent non-compliance and penalties under GST law. In such cases, the taxpayer must report the transaction manually in Form GSTR-1.
• Interest and Penalties: If the time limit is not adhered to, interest at the rate of 18% per annum may apply, along with penalties.
• For taxpayers with an AATO below Rs. 100 Crores, there is no specific deadline for generating e-invoices. However, it is advisable to generate the e-invoice as soon as possible, preferably before filing the GSTR-1 return.

Time Limit for Cancellation or alteration of E-invoices

The cancellation or alteration of e-invoices must be done within 24 hours from the time of issuance. This feature comes in handy when there is an error in issuing the invoice or when an order is canceled. The e-invoicing process allows for a straightforward and convenient method for correcting such mistakes.

Conclusion

E-invoicing is an important tool under the GST regime that simplifies compliance, ensures transparency, and reduces the possibility of tax evasion. Businesses must be aware of the requirements and timelines to avoid penalties and maintain smooth operations. Ensuring timely generation and cancellation of e-invoices is crucial for adhering to the GST framework and avoiding any legal or financial repercussions.