e-Invoicing under GST is getting deeper and deeper into the Indian business landscape as Government is expanding its scope. Recently CBIC (Central Board of Indirect Taxes & Customs) Reduced e-Invoice Limit to Rs.5 Crores w.e.f. 01 Aug 2023. All businesses with a turnover exceeding 5 crores are mandated to generate e-invoices for all B2B transactions.
e-invoicing is a slightly complex procedure that requires integration with GST portal for bill generation. Let’s understand in detail the e-invoicing limit under GST rules and regulations, turnover limit, invoice generation time, and process. At the end we will also tell you how you can generate e-Invoices under GST with ease.
CBIC announced Notification No. 10/2023–Central Tax dated May 10, 2023, as an amendment to Notification No. 13/2020 – Central Tax, dated March 21, 2020, to reduce the e-invoicing turnover limit to Rs 5 Crore, to be implemented wef August 1, 2023. This means that e-Invoice generation will be Mandatory for every taxpayer with an annual aggregate turnover exceeding Rs 5 Crore in any year from 2017-18 onwards to generate e-invoices for B2B supplies w.e.f. August 1, 2023.
Before let’s understand what e-invoicing really is.
Prior to the introduction of-Invoicing term under GST rule bill generated digitally using a computer was considered as e-invoice.
However, in the context of the Goods and Services Tax (GST) regime, ‘e-Invoicing’ or ‘electronic invoicing’ refers to a system introduced by the government for the authentication of B2B invoices and certain other documents through the GST portal.
e-Invoicing is not about creating invoices directly on the GST portal. Instead, it involves submitting invoices that have already been generated in a standard format on a common e-invoice portal. This process helps automate various reporting requirements by entering invoice details just once.
In this electronic invoicing system, each invoice is assigned a unique identification number by the Invoice Registration Portal (IRP), which is managed by the GST Network (GSTN).
The information from these invoices is automatically transferred in real-time from the IRP to both the GST portal and the e-way bill portal. So taxpayers don’t need to manually fill details when filing GSTR-1 returns and generating part-A of e-way bills.
The implementation of e-invoicing under the Goods and Services Tax (GST) regime has witnessed a gradual expansion of its scope and applicability over time. Initially, when e-invoicing was introduced, it had a prescribed turnover threshold of business with turnover greater than 500 crore to generate electronic invoices.
However, as the system evolved and gained acceptance, the turnover limit for e-invoicing has been periodically revised and expanded to cover a larger segment of businesses. Now even the smaller businesses are covered under the e-invoicing rule in GST.
Here is a Table showing e-invoicing turnover limit applicable to different segments over time.
|Applicability Date||e-Invoicing Turnover Limit|
|01.08.2023||Rs 5 crore|
|01.10.2022||Rs 10 crore|
|01.04.2022||Rs 20 crore|
|01.04.2021||Rs 50 crore|
|01.01.2021||Rs 100 crore|
|01.10.2020||Rs 500 crore|
In future, there is a that the limit for e-invoicing will come further down.
Starting from 1st August 2023, it is mandatory for businesses that have an annual aggregate turnover of over Rs.5 crore in any previous financial year from 2017-18 to implement e-invoicing.
Let’s say there is a company called XYZ Pvt. Ltd. that has been operating since 2015 and has seen inconsistent growth in its business. Their annual turnover over the year has been as follows.
Even though XYZ’s annual turnover in part 3 years is less than 5 cr, since the business has exceeded the threshold limit of 5 Crore in financial year.
Although e-invoicing primarily refers to Invoices, it covers other documents as well which needs to be submitted on the GST portal.
The following types of transactions require to go through the e-Invoicing process
The e-invoicing system does not cover the following documents, transactions, and businesses:
Here are the major differences between Normal Invoicing an e-Invoicing
|Systems||Before e-invoicing||After e-invoicing|
|Invoicing||Invoices generated through various software/excel||Invoices generated through e-invoicing software and imported using Excel/JSON or via API integration|
|GSTR-1 Filing||Manual uploading of invoice details in GSTR-1 return using excel/ Json||Seamless flow of invoice data for GSTR-1 preparation through the e-invoicing system|
|GSTR-2B reconciliation||Invoice information reflected in GSTR-2B after suppliers file GSTR-1||Invoice information reflected in GSTR-2B for recipients without the need for manual data entry or import.|
|E-way Bill Generation||Manual import of invoices in Excel/JSON or via ERP for e-way bill generation||E-way bill generation facilitated through seamless flow of data from the e-invoicing system, eliminating the need for manual import of invoices|
|Import Method||Manual import of invoices using Excel/JSON or via ERP||Import of invoice details using Excel/JSON or via either directly or through a GST Suvidha Provider via API integration.|
|Data Flow||Manual steps involved in invoice data transfer||Automated and streamlined flow of invoice data for GSTR-1 preparation and e-way bill generation, facilitated by the e-invoicing system|
|Key Tool||Not applicable||The e-invoicing system acts as the key tool for generating, validating, and facilitating the seamless flow of invoice data.|
The e-invoicing system brings several advantages for businesses and especially the Government. Here are the key benefits explained in simple terms:
Here are the steps to generate e-invoices.
These are the general steps in generating e-invoices. You can use HostBooks e-Invoicing Software to reduce the complexity in generating e-invoices.
The mandatory implementation of e-invoicing for businesses with an annual aggregate turnover of over Rs. 5 crores will grip thousands of businesses across India and will smoothen the process generation, validation, and reporting of invoices.
We can expect e-invoicing system to eliminate duplication, reduce errors, and enhance transparency in business transactions, simplify the reconciliation process, and facilitate seamless data flow for GSTR-1 filings and e-way bill generation for smaller businesses as well.
E-invoicing is not a suggestion but a mandatory rule and no compliance can lead to severe penalties. Use HostBooks e-invoicing software to stay compliant with e-invoicing rule under GST.
FAQ’s about e-Invoicing Limit under GST
Q1. What is the limit of e-invoicing in GST?
Starting from August 1, 2023, e-invoicing is applicable to all businesses whose turnover has exceeded Rs 5 crore in any preceding 5 years.
Q2. What is the turnover limit for e-invoices?
Previously, the turnover limit for e-invoices was set at Rs 10 crore. However, the Central Board of Indirect Taxes and Customs (CBIC) has expanded the applicability, and now it is mandatory for businesses having a turnover greater than Rs 5 crore.
Q3. Is e-invoicing mandatory for businesses with a turnover of 5 crore?
Yes, e-invoicing is mandatory for businesses with a turnover exceeding Rs 5 crore. However, there are some exceptions to this requirement. Business units in Special Economic Zones (SEZ), certain B2C companies, exempt sales, and other specific categories may be exempted from the e-invoicing obligations.
Q4. Is e-invoicing mandatory for B2C businesses?
No, e-invoicing is not mandatory for B2C businesses. The primary focus of e-invoicing is on B2B (Business-to-Business) transactions.
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