Understanding E-Invoicing Requirements for GST Compliance

Understanding E-Invoicing under GST

E-invoicing under the Goods and Services Tax (GST) is a requirement for entities whose aggregate turnover exceeds ₹5 crores in any preceding financial year starting from FY 2017-18. This requirement is applied on a PAN (Permanent Account Number) basis rather than GSTIN (Goods and Services Tax Identification Number). Several sectors, including insurance, banking, NBFCs (Non-Banking Financial Companies), SEZ (Special Economic Zone) units, GTA (Goods Transportation Agencies), and government departments, are exempted from this mandate.

E-invoicing mainly applies to:

B2B transactions
Export sales (both with and without IGST)
SEZ sales
Deemed exports
B2B transactions subject to reverse charge

It does not apply to unregistered buyers (B2C), with further distinctions made between B2CL (business-to-consumer large customers with inter-state taxable supplies exceeding ₹1,00,000) and B2CS (small consumers). Only tax invoices, debit notes, and credit notes are included, while bills of supply are excluded. E-invoicing is applicable solely to taxable supplies, leaving out exempt, nil-rated, and non-taxable supplies. Both goods and services are included provided all criteria are met. Suppliers must adhere to these provisions to ensure compliance with GST.

1. Turnover Criteria

If a registered person's turnover exceeds the specified limit, e-invoicing mandates apply.

a. Turnover Limit

An entity with a turnover exceeding ₹5 crores in any preceding financial year from FY 2017-18 is required to implement e-invoicing from the following financial year.

b. Criteria

For e-invoicing eligibility, the aggregate turnover is considered instead of state-specific turnover. Once the aggregate turnover surpasses the limit, e-invoicing is applicable across all branches.

Example

If a company operates with 10 GSTINs and has a total turnover of ₹10 crores in any preceding financial year (with each GSTIN corresponding to ₹1 crore), the aggregate turnover is ₹10 crores, which exceeds the threshold. Therefore, e-invoicing is required as it surpasses the specified limit and is assessed PAN-wise.

2. Suppliers Covered

Certain exceptions apply, where e-invoicing is not mandated despite exceeding turnover limits. These include:

Insurers
Banking companies
Financial institutions
NBFCs
Goods transportation agencies (GTAs)
SEZ units
Passenger transportation services
Services related to the exhibition of cinematograph films in multiplexes
Local authorities
Government departments
OIDAR (Online Information & Database Access or Retrieval Services)

3. Recipients Covered

E-invoicing is applicable for the following recipient categories:

B2B transactions
Export sales with IGST
Export sales without IGST
SEZ sales with IGST
SEZ sales without IGST
Deemed export sales
B2B sales subject to reverse charge
Sales to deemed distinct persons (DDP)

4. Recipients Not Covered

Certain recipients are exempt from e-invoicing requirements:

B2CL: Unregistered large customers with inter-state taxable supplies exceeding ₹1,00,000 are not mandated to use e-invoicing.
B2CS: Recipients outside the B2CL category also do not require e-invoicing.

Conclusion

For unregistered recipients, e-invoicing is not applicable.

5. Documents Covered

Suppliers can issue various documents under the GST Act. E-invoicing applies to the following:

Tax invoices
Debit notes
Credit notes

Note: Bills of supply are not included in the e-invoicing provisions.

6. Nature of Supplies

E-invoicing is applicable only to specific types of supplies:

Taxable supplies are covered under e-invoicing.
Exempt, nil-rated, and non-taxable supplies are excluded.

Conclusion

E-invoicing is generated only for taxable supplies. If a registered person provides exempt sales, e-invoicing does not apply.

7. Nature of Transactions

Registered persons engaged in supplying goods or services must adhere to e-invoicing requirements as long as the stipulated criteria are met.