Understanding e-Invoicing under GST for Taxpayers Exceeding the INR 5 Crore Threshold

E-invoicing is now an important part of India’s Goods and Services Tax (GST) system. It has become necessary for a bigger range of businesses as the government has slowly lowered the e-invoice limit over time. The government’s changes to the e-invoicing applicability have expanded the range of businesses required to comply with the regulations in the 2023-24 period.  

Notification No. 10/2023—Central Tax, dated May 10, 2023, has been issued by the Central Board of Indirect Taxes and Customs (CBIC). This notification specifies a new turnover limit for GST e-invoicing for all businesses that conduct B2B transactions. All businesses with GST registration and an annual turnover exceeding Rs. 5 crores are required to generate e-invoices, as per the most recent amendment in August 2023. This threshold was Rs. 10 crores before the amendment.” This is another step the government is taking to encourage technology as well as make doing business easier. 

This blog will guide you through the primary components, such as the most recent updates, modifications to the threshold limit, as well as the time limits for e-invoice generation. 

What is an e-Invoicing System? 

Electronic invoicing, also known as e-invoicing, refers to the process of creating, sharing, and storing bills electronically. It eliminates the need for physical invoices and makes it easy for companies and tax authorities to share invoice data. 

The GST Network (GSTN) technology is what makes India’s e-invoicing system work. The GST Network (GSTN) processes and checks all bills. Businesses can use this network to create standard electronic invoices in a specific format. 

The Importance of E-Invoicing 

Use e-invoicing to make, share, and keep invoices online quickly and safely. Adopting digital billing can help companies get rid of mistakes made by hand, lower handling costs, and make sure that data entry is correct and consistent. People are less likely to not pay their taxes if they keep track of their online actions with e-invoicing. You can trade bills right away and settle disagreements fast, which makes things more open. 

Additionally, it facilitates the seamless integration of data among a variety of stakeholders. The expansion of the e-invoicing system contributes to the government’s overarching objective of establishing a digital economy. The government’s objective is to reduce dependency on paper-based processes and promote sustainable practices by encouraging businesses to implement electronic invoicing. 

Moreover, the implementation of e-invoicing will make sure that Indian enterprises follow global standards. Various countries have already implemented electronic invoicing as a mandatory requirement. It’s clear that India wants to stay ahead of the competition in the global business world or create a good setting for investors by switching to e-invoicing. This unity makes India more competitive in the world market and makes it easier for India to do business with other countries. 

In October 2020, the Indian government implemented the e-invoicing system for businesses with an annual aggregate turnover exceeding ₹500 crore, recognizing these advantages. 

Features of the e-Invoicing System 

• Unique Invoice Reference Number (IRN): The system assigns a unique Invoice Reference Number (IRN) to each e-invoice it generates, serving as a digital identifier. The GSTN platform generates the IRN by uploading invoice details, validating them, as well as using a QR code as a digital signature. 

• QR Code: Essential invoice information is encoded in the QR code. By utilizing an e-invoice scanner to scan the QR code, businesses, tax authorities, and other stakeholders can quickly and easily validate the invoice’s authenticity and integrity. 

• Real-Time Reporting: The GSTN platform receives e-invoices in real time, which allows seamless integration with the GST system. This ensures that invoice data is easily accessible for the purpose of compliance and verification. 

Previous Turnover Limit 

On October 1, 2022, the e-invoicing turnover limit for e-invoicing under GST in India was set at ₹10 crore. This was the fifth step. For all business-to-business transactions, companies with yearly turnover exceeding 10 crores had to use the e-invoicing system to create and send their invoices online. For reference: 

• E-invoicing from April 1, 2021, applies to businesses with turnovers exceeding ₹50 crore. 

• The e-invoice turnover limit from April 2022 was reduced to ₹20 crore. 

• The limit has now been revised further to ₹5 crore. 

Updated Turnover Limit 

To make e-invoicing even more useful, CBIC has changed the e-invoice limit. From August 1, 2023, the new e-invoice applicability turnover amount is ₹5 crore. This means that companies that make more than ₹5 crore a year must use e-invoicing for exports and business-to-business turnover of goods and services. 

The changes to the GST e-invoice limit are meant to make the tax system more open, improve compliance, and work better. With this new limit, many small and medium-sized businesses will have to use electronic billing. 

 Time Limits for e-Invoice Generation 

A further requirement of compliance is to adhere to the e-invoice generation time limit. To maintain GST compliance, businesses must generate the e-invoice on the IRP and get the IRN within the 24-hour e-invoice time limit following the issuance of the physical invoice. Failure to meet this e-invoice time limit may result in penalties. 

e-Invoice Scanning and GST Invoice Check 

Businesses can streamline compliance by utilizing solutions like GST scan and e-invoice scanner utilities. These tools assist in confirming the authenticity of e-invoices and ensuring adherence to GST regulations. By using the GST invoice check online, companies can verify the validity of their invoices by comparing them to the IRP database. 

The Procedure for Obtaining an e-Invoice 

The process of generating or raising an e-invoice involves the following steps: 

• To adhere to PEPPOL standards, the taxpayer must ensure the use of the reconfigured ERP system. To incorporate the e-invoice standard set, specifically the e-invoice schema (standards), the taxpayer may collaborate with the software service provider and ensure the CBIC is at least aware of the required features. 

• There are basically two ways that a taxpayer can generate an IRN: 

• On the e invoice portal, you have the option to whitelist the computer system’s IP address for either direct API integration or integration through the GST Suvidha Provider (GSP). 

• To upload invoices in bulk, download the bulk generator tool. To generate IRNs in bulk, you can upload the generated JSON file to the e invoice portal. 

• A regular invoice for the software must be submitted by the taxpayer. He needs to provide all necessary information, such as the transaction value, item rate, suitable GST rate, supplier’s GSTN, and tax amount. 

• Create the invoice in the relevant ERP or billing software after choosing one of the above options. Next, use a direct API, an application service provider (app), a GSP, or a JSON file to upload the invoice details—especially the required fields—to the IRP. The IRP will serve as the main database for authentication and e-invoicing.  

• IRP will confirm the B2B invoice’s relevant details, look for discrepancies, and generate an invoice reference number (hash) for later use. The system constructs IRN using four parameters: the seller’s GSTIN, the invoice number, the FY in YYYY-YY, and the document type (INV/DN/CN). 

• IRP creates a QR code in Output JSON for the supplier, creates the invoice reference number (IRN), and digitally signs the invoice. If the supply seller is mentioned in the invoice, then the e-invoice generation procedure will send them an email. 

• For GST returns, IRP will send the verified payload to the GST portal. If applicable, the system will also send the information to the e-way bill portal. The system automatically fills out the seller’s GSTR-1 for the relevant tax period. It then establishes the tax liability. 

The taxpayer is free to keep printing their invoices. All taxpayers are only required by the e-invoicing system to submit invoices in electronic format on IRP. 

Summary 

In August 2023, the Indian government will drop the e-invoicing limit to ₹5 crore. This is a big step toward fully digitizing the invoicing process. Lowering the e-invoice applicability limit has many benefits, such as better accuracy, better control of cash flow, and stronger business relationships. If businesses want to do well in the digital economy over the long term, they need to stay up to date on changes to the e-invoicing system by getting updates like the e-invoice limit latest notification and adjusting to these changes. 

Indian businesses not only follow GST e-invoicing limits by using e-invoicing, but they also set themselves up to compete on the world stage.