GST Update: E-Invoicing Compliance Tightens For Firms From 1 April: How Will It Impact Businesses?

Owners of Micro, Small and Medium Enterprises (MSMEs) are required to submit e-invoices of their compliances within thirty days as per the revised guidelines for Goods and Services Tax (GST) invoicing, which came into effect on 1 April. The revision of GST e-invoicing norms includes stricter deadlines, input tax credit (ITC) claims conditions, etc.

The revised GST e-invoicing norms are likely to impact owners of businesses with an annual turnover of more than Rs 10 crore. These GST e-invoicing changes will improve transparency and efficiency and increase security among people. Here are the key details about changes related to GST e-invoicing.

What is GST e-invoicing?

GST e-invoicing refers to the details of filing GST documents to the Invoice Registration Portal (IRP), a government-notified portal, and obtaining an invoice reference number. Taxpayers whose aggregate turnover exceeded a certain limit (certified by the government) in a financial year had to file GST e-invoice in compliance with the regulations.

Certain GST-registered businesses are also required to generate an e-invoice for Business-to-Business (B2B) transactions. A GST invoice for B2B transaction will be valid only with a valid IRN.

GST e-invoicing: What are the key changes announced from 1 April?

Tighter deadline: As per the revised guidelines, businesses need to upload their e-invoice details to the IRP within thirty days. Earlier, the thirty-day deadline was not mandatory for the businesses. However, business would have to follow the deadline to avoid repercussions.

Revision of annual turnover: The mandatory 30-month deadline was earlier applied to businesses with an Annual Aggregate Turnover (AATO) above Rs 100 crore. However, from 1 April onwards, the deadline will be also applicable on businesses above Rs 10 crore.

ITC challenges: Failure to follow the mandatory deadline of one month for filing GST e-invoicing will result in problems related to claiming ITC. The problems may create a hindrance in claiming working capital. If a business owner eligible for GST e-invoice is unable to file the same within a month, then they won't be able to claim the ITC with the raised GST e-invoice bill.
Penalties and Rejection: Apart from facing problems in claiming ITC, business owners can also face extra penalties and rejection on failure to adhere to the GST e-invoicing deadline. Submitting GST e-invoicing late may lead to rejection of the form by IRP and even penalties.

Billing and invoicing: To match the deadline, businesses need to update their billing and invoicing system to accommodate the new due dates. It would also require them to modify their internal software system and also conduct employee training. According to CNBC TV18, the government has revised e-invoicing norms to streamline GST filing process and make it more transparent, efficient and secure. The revised guidelines would help the Centre in targeting the outdated bills and e-invoices and minimise compliance gaps. The rule would also encourage businesses to file GST invoices within time and follow strict e-invoicing norms.

Business owners are required to report the data of their GST e-invoices on the IRP portal in a fixed format. IRP is a website created for uploading and reporting invoices by the notified persons. According to an undated GST tutorial on Goods and Services Tax's official website, there are six active Invoice Registration Portals (IRPs) that offer services for reporting e-Invoices and generating Invoice Reference Numbers (IRN), free of charge.