Worldwide tax guides /India E-invoicing & Digital Reporting GuideIndiaE-Invoicing & Reporting

India E-invoicing & Digital Reporting Guide

E-InvoicingDigital Reporting
E-invoicing is mandatory Yes

India Electronic Invoicing and Digital Reporting Requirements

Overview
Indirect tax control regimeCTC
E-Invoicing/CTC ModelClearance e-invoicing
Obligation statusLive
Governing entityGST council
Infrastructure/platformIRP (Invoice Registration Portal)
Peppol connectivityNo
Scope
TaxpayersAll registered taxpayers whose aggregate turnover in any of the preceding financial years exceeds INR 50,000,000 (INR 50 million) is liable to issue from August 1, 2023.
Taxpayers exempted1. An insurer or a banking company or a financial institution, including an NBFC; 2. A GTA (Goods Transport Agency); 3. A registered person supplying passenger transportation services; 4. A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services; 5. An SEZ (Special Economic Zone) unit (excluded via CBIC Notification No. 61/2020); A government department and Local authority (excluded via Notification No. 23/2021).
Mandatory for Supplies to Special Economic ZonesYes
Domestic TransactionsB2B - yes, B2C - no, B2G - yes
Cross-border TransactionsExport - yes, Import- yes (through reverse charge and/or self billing)
DocumentsInvoices, Credit/debit notes
Supplier-side requirements (AR)
Format(s) while sending to the platformJSON file
Format for exchange with buyer/recipientPaper, PDF or JSON. (PDF is the most common and recommend format by the GSTN.)
eSignature/SealNot required, however, recommended
Buyer-side requirements (AP)
Receiving document in electronic formatOptional
Validation requiredNo. However, QR code verification app can be used to verify the authenticity and get the data of an e-invoice in a readable format.
Acknowledgement of receiptNot required
Response to the document received (Accept or reject)Not required
Storage
Archiving AbroadAllowed with conditions
Archiving Period6 years
Other Digital Reporting Obligations
SAF-T or other accounting filingNot required
GST returnThere are 13 returns under GST to be filed for each state. They are the GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR-7, GSTR-8, GSTR-9, GSTR-10, GSTR-11, CMP-08, and ITC-04. However, all returns do not apply to all taxpayers. Taxpayers file returns based on the type of taxpayer/type of registration obtained.
E-waybillIt is mandatory to issue e-waybills for transportation of goods above 50.000 rupees

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Background

The e-invoicing system under GST was implemented on 1st October 2020 for taxpayers with an aggregated turnover exceeding INR 5,000,000,000 (INR 5,000 million). After a few extensions, through Notification No. 10/2023, the Ministry of Finance has reduced the threshold for mandatory e-invoicing to INR 50,000,000 (INR 50 million), effective August 1, 2023. GST-registered individuals with turnover above this limit in any financial year from 2017-18 are required to generate e-invoices (for further details on this, refer to our blog).

More details on the turnover criteria for the E-invoicing phased implementation:

PhaseAggregate turnoverApplicable dateNotification Number
IINR 5,000,000,000 (INR 5,000 million)October 1, 2020https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-61-central-tax-english-2020.pdf and https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-70-central-tax-english-2020.pdf
IIINR 1,000,000,000 (INR 1,000 million)January 1, 2021https://www.cbic.gov.in/resources/htdocs-cbec/gst/notfctn-88-central-tax-english-2020.pdf
IIIINR 500,000,000 (INR 500 million)April 1, 2021https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-05-central-tax-english-2021.pdf
IVINR 200,000,000 (INR 200 million)April 1, 2022https://taxinformation.cbic.gov.in/view-pdf/1009232/ENG/Notifications
VINR 100,000,000 (INR 100 million)October 1, 2022https://taxinformation.cbic.gov.in/view-pdf/1009474/ENG/Notifications
VIINR 50,000,000 (INR 50 million)August 1, 2023https://taxinformation.cbic.gov.in/view-pdf/1009732/ENG/Notifications

What Types of Businesses Does This Apply to?

For registered persons whose Aggregate Annual Turnover (based on PAN) in any preceding financial year from 2017-18 onwards, is more than the prescribed limit (as per relevant notification), e-Invoicing is mandatory. For taxpayers whose aggregate turnover in the preceding financial year exceeds INR 50,000,000 (INR 50 million), it's mandatory to issue an e-invoice for supplies made from August 1st 2023.

Governmental Body Responsible for E-invoicing in India

The Goods and Services Tax e-invoice system

Penalties for Not Adhering to India's E-invoice Mandates

In the event that there are any differences/errors in e-Invoices, the following 2 penalties are applicable, according to sub-rule (5) of Rule 48 under the CGST Act 2017:

  1. Penalty for non-issuance of e-invoice- 100% of the tax due or INR 10,000 whichever is higher.
  2. Penalty for an incorrect or erroneous e-invoice is INR 25,000.

What is the time limit for reporting e-invoices on the Invoice Registration Portal (IRP)?

  • The GSTN has recently imposed a time limit for reporting invoices on the Invoice Registration Portals (IRPs).
    • Taxpayers with an aggregate turnover greater than or equal to INR 1000 million (100 crore) must ensure the generation of an e-invoice within seven days of the invoice date.
    • Taxpayers with an annual aggregate turnover of less than INR 1000 million (100 crore) are currently excluded from this requirement.
  • The exact date of implementing this time limit is yet to be announced.

What does the e-invoicing process in India look like?

  1. Invoice Creation: An invoice is created using accounting or billing software as per the prescribed schema for E-invoicing.
  2. Invoice Registration Number (IRN) Generation: The supplier can generate a unique Invoice Reference Number (IRN) using a standard hash-generation algorithm.
  3. Upload on Invoice Registration Portal (IRP): JSON file for each B2B invoice is uploaded on the Invoice Registration Portal (IRP)
  4. IRP Validation of Invoice Information: The IRP will validate the generated hash/IRN attached with JSON and authenticate the file against the central registry of GST for any duplication. The IRN will be the unique identity of the E-invoice for the entire financial year.
  5. Digital Signature and QR Code Generation: Upon successful verification, the invoice will be updated with IRP’s digital signature on the invoice data and a QR code will be added to the JSON file
  6. Delivery of e-invoice back to the Supplier: IRP will send ****back the signed JSON together with the QR code to the supplier.
  7. E-invoice delivery: Supplier must deliver e-invoice to the buyer. IRP will not send anything to the buyer.

Is SAF-T Needed in India?

No.

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E-Invoicing & Global Tax Automation with Fonoa

One way to comply with Digital Reporting Requirements in India is to use a provider like Fonoa.

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