CBIC Reduces e invoicing Threshold to 5 Crores
In the new rapidly evolving business landscape, keeping your business updated with the latest technological developments is very crucial. The recent decision by the Central Board of Indirect Taxes & Customs (CBIC) to reduce the e-invoice threshold has brought a major change in the operations of small businesses. As per the new guidelines, businesses with a turnover exceeding ₹5 Crores are now required to generate electronic invoices. The new rules are applicable from August 1, 2023. Earlier, the limit was set to ₹5 Crores for complying with e-invoicing. This change reinforces the importance of reliable e-invoicing solutions like OneStop Invoicing Software to seamlessly adapt to these regulatory shifts.
What is e-invoicing?
E-invoicing or electronic invoicing is the process of generating and transmitting the invoices electronically. E-invoicing is a very effective tool for managing business operations. It keeps track of bills, customer information and other details and completely eliminates the need for paper-based invoices. It not only reduces manual errors but also improves data accuracy and hence, improves overall efficiency.
Read: Invoicing Software vs. Manual Invoicing: Which is Right for You?
E-invoicing Process
The process of e-invoicing involves generating the invoice in a prescribed format, uploading it to the Invoice Registration Portal (IRP), which then validates and authenticates the invoice data with an Invoice Registration Number (IRN) and QR code. This process ensures data accuracy, reduces the risk of errors, and provides a standardized format for interoperability.
Specialized software like OneStop Invoicing offers a user-friendly interface and allows businesses to create, validate and transmit e-invoices to the IRP. It is a perfect solution for businesses looking for seamless generation of e-invoices. Onestop Invoicing software not only simplifies the process but also eliminates the chances of error.
Who should issue an e-invoice?
Starting from August 1, 2023, businesses with a turnover of more than ₹5 Crores must generate e-invoices for their B2B transactions. This includes generating invoices for supplies made to other businesses, ensuring a standardized and accurate invoicing process.
E-invoicing in the GST framework was introduced in phases. Initially it was made applicable to the businesses with a turnover of over ₹500 Crores in October, 2020. Then the threshold was brought down to ₹10 Crores 1st October, 2022 last year, before finally reducing it to ₹5 Crores in August 2023.
Benefits of e-Invoicing for Businesses
E-invoicing offers several advantages to businesses as explained below:
Enhanced Data Reconciliation
E-Invoicing addresses and rectifies a significant loophole in data reconciliation within the GST system and thus reduces instances of errors.
Interoperability and Error Reduction
Invoices generated on one software platform can be seamlessly interpreted by other systems, fostering interoperability and reducing data input errors to a greater extent.
Real-time Invoice Tracking
E-invoicing facilitates real-time monitoring of invoices generated by suppliers, contributing to improved transparency and oversight.
Seamless Return Filing
The integration of e-invoicing streamlines the process of GST return filing through automated insertion of relevant invoice details into various return forms.
Reduced Audit Probability
The comprehensive transaction-level information accessible through e-invoicing diminishes the necessity for extensive tax authority audits or surveys.
What are the mandatory fields of an e-invoice?
There are several mandatory fields that must be included for compliance purposes. These fields include details such as supplier information, buyer information, invoice date, invoice number, product details, tax amounts, and more.
Here is a list of fields that must be compulsorily declared in an e-invoice:
| Field Name | Description | Remarks |
| Document Type Code | Enumerated list (e.g INV/ CRN/ DBN) | Type of document must be specified |
| Supplier’s Legal Name | String (Max length: 100) | Legal name of supplier as per PAN card |
| Supplier GSTIN | Max length:15 (alphanumeric) | GSTIN of the supplier raising the e-invoice |
| Supplier’s Address | Max length: 100 | Building/Flat, Road/Street, Locality, etc of the supplier |
| Supplier’s Place | Max length: 50 | Supplier’s location (City/ Town/ Village) |
| Supplier’s State Code | Enumerated list of states | Select State from GSTIN’s list |
| Supplier Pincode | Six-digit code | Supplier’s locality pincode |
| Document Number | Max length: 16, Sample: “Sa/1/2019” | Unique Invoice Identification number |
| Preceding Invoice Reference | Max length: 16, Sample: “Sa/1/2019” | Reference for Original Invoice |
| Document Date | String (DD/MM/YYYY) | Date when the invoice was issued |
| Recipient Legal Name | Max length: 100 | Buyer’s Name as per PAN |
| Recipient’s GSTIN | Max length: 15 | GSTIN of the buyer |
| Recipient’s Address | Max length: 100 | Buyer’s address |
| Recipient’s State Code | Enumerated list of states | State of supply |
| Place of Supply State Code | Enumerated list of states | Place of supply state |
| Recipient’s Place | Max length: 100 | Recipient’s location |
| IRN (Invoice Reference No.) | Max length: 60, Sample: “a5c12dca8…750f229” | Unique reference generated by GSTIN |
| Shipping to GSTIN | Max length: 15 | GSTIN of the recipient or the delivery person |
| Shipping to State, Pincode, State Code | Max length: 100 (state), 6-digit (Pincode) | State and Pincode for delivery |
| Dispatch from (Name, Address, Place and Pincode) | Max length: 100 for state, Pincode: 6 digit, and Enumerated list for Codes | Details of Entity dispatching goods (Name, Address etc.) |
| Is_service | String (length:1) | Mention whether or not it is a supply of service |
| Supply Type Code | Enumerated list of codes | Code will be used to identify types of supply such as B2B, B2C, supply to SEZ, export or deemed export |
| Item Description | Max length: 300, | Relevant Description of the item. Give detailed description if there are two or more items belonging to the same HSN code. |
| HSN Code | Max length: 8 | Enter applicable HSN code for goods and services |
| Item Price | Decimal (12, 3) Sample value is 50 | Unit price, excluding GST |
| Assessable Value | Decimal (13, 2) Sample Value is 5000 | Item price, excluding GST |
| GST Rate | Decimal (3, 2) Sample value is 5 | Applicable GST rate |
| IGST Value, CGST Value and SGST Value Separately | Decimal (11, 2) Sample Value is 650 | Tax amount for each type |
| Total Invoice Value | Decimal (11, 2) | Total Invoice amount with GST |
Who is exempted from e-invoicing?
Exemptions from the requirement of e-invoicing encompass various categories, as detailed in CBIC Notification No. 13/2020. These exclusions apply regardless of the annual turnover of the registered entity.
The following entities are among those exempted:
- Special Economic Zone (SEZ) units, as specified in CBIC Notification No. 61/2020
- Entities such as insurers, banking companies, financial institutions, including non-banking financial companies
- Goods transport agencies that provide road-based goods carriage services.
- Suppliers engaged in passenger transportation services
- Providers of services related to admission to cinematograph film exhibitions on multiplex screens
- Government departments and local authorities, as per CBIC Notification No. 23/2021
Certain types of documents are also exempted from the requirement of e-invoicing, these include:
- Delivery challans
- Bills of supply
- Commercial credit notes or debit notes issued for financial purposes
- Bill of entry
- Invoices for supplies under Input Service Distributor mechanism
Following transactions are also not subjected to the e-invoicing mandate:
- Sales made in a Business-to-Consumers (B2C) context.
- Sales of goods or services falling under nil-rated, non-taxable, or exempt categories in Business-to-Business (B2B) scenarios.
- Nil-rated, non-taxable, or exempt sales of goods or services to government entities (B2G).
- Import transactions, high sea sales, and sales from bonded warehouses.
- Transactions within Free Trade & Warehousing Zones (FTWZ).
- Supplies subject to reverse charge as covered by Section 9(4) of the CGST Act.
Get your business ready for e-invoicing with OneStop’s user-friendly Invoicing solution
One Stop offers an effective e-invoicing solution that is tailored for all businesses. OneStop Invoicing software makes upgrading easy without losing your past data. It helps you create different types of digital invoices, and it complies with GST rules.
Here is a glance at the features of OneStop Invoicing software that can meet all your e-invoicing requirements:
- It helps you keep track of people you do business with (like customers and sellers) by collecting their details.
- You can list the things you sell or the services you offer and organize them with special codes.
- You can generate e-invoices easily and send them across to your customers via email.
- It lets you keep a track of your inventory, keeps details of how many products you have in stock and if you are low on inventory.
- OneStop Invoicing Software can make all your complicated financial reports for you at a single command.
- Keeps you informed of your bills, expenses and any dues, and can even pay them automatically.
- It can place orders to suppliers without making any mistake.
FAQs
What type of documents are to be reported to the GST system?
E-invoices generated for B2B transactions need to be reported to the GST system.
How does the invoicing process change with the e-invoice concept?
Yes, the process shifts to generating standardized electronic invoices, improving efficiency and accuracy.
Can an e-invoice be cancelled partially or fully?
Yes, e-invoices can be cancelled partially or fully, following the prescribed cancellation process.
Will there be a facility for e-invoice generation on the common GST portal?
Yes, businesses can generate e-invoices using compliant software or the common GST portal.
Will the e-invoice concept alter the invoicing process?
Yes, businesses will upload invoice data to the IRP, which then issues an IRN and QR code for valid invoices, requiring seamless software interaction for compliance.
What is the time limit for e-Invoicing?
E-invoices must be created on the Invoice Registration Portal (IRP) within seven days from the invoice, debit note, or credit note date.
Can we raise e-invoice after the invoice date?
No, e-invoices must be generated before the supply is made.
Can e-invoice be generated backdated?
No, e-invoices cannot be generated backdated. Hence, ensuring accurate and timely invoicing.
As businesses navigate the ever-evolving landscape of compliance and technology, e-invoicing emerges as a key factor for accuracy, efficiency, and transparency. By embracing e-invoicing software, businesses can not only meet regulatory requirements but also gain numerous operational benefits, including reduced errors, improved accountability, and environmental sustainability. Stay ahead of the curve with OneStop Invoicing Software and ensure a seamless transition into the world of e-invoicing.
Read : Integrating Invoicing Software and Accounting Systems
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