Government Notifies Revised E-Invoice Schema & Threshold E-Invoices

Updates on E-invoicing

Government has notified e-invoicing schema (FORM GST INV-1) and the applicable threshold for the mandatory generation of e-invoices. The details have been summarised below:

Threshold For E-Invoicing / Dynamic QR Code

The threshold for e-invoicing has been increased to ₹500 crores of aggregate turnover in a financial year, computed on all India basis for B2B transactions vide Notification 61/2020 – Central Tax. Further, such companies shall also be required to generate dynamic QR code in case of B2C supplies.

Given this, the requirements will have to be complied by all registrations of the company where the annual turnover of the company as a whole, on pan-India basis exceeds the threshold, subject to the exemptions mentioned below.

Interplay Between The Exemptions & Aggregate Turnover

The principal Notification proposing the threshold for e-invoicing prescribes ‘aggregate turnover in a financial year’ as the base for determining the mandatory requirement for generating e-invoices.

The term ‘aggregate turnover’ has been defined so as to include value of all supplies of persons having the same Permanent Account Number, computed on all India basis.

Section 2(6), CGST Act

“Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax, and cess;

Considering the specific exemptions provided to the certain class of registered persons, such as SEZ units, it needs to be seen whether the mandatory requirement would continue to apply for the companies having units in SEZ and DTA, where turnover of each of them is below ₹500 crores but exceeds the threshold at aggregate level.

Applicability Of E-Invoicing For The Purpose Of Export Transactions

The Notification had mandated generation of e-invoice only for supplies to ‘registered persons’ and generation of dynamic QR code for supplies to unregistered persons, commonly referred as B2C transactions.

The term ‘registered person’ has been defined as a person who is registered under section 25 but does not include a person having a Unique Identity Number. Thus, in case of export transactions, the recipient of goods or services located outside India would not be registered under the Act and hence such transactions would not fall within the ambit of mandatory e-invoicing.

However, the FAQs on e-invoicing issued by GSTN in February, before the issuance of relevant Notifications by the Government had stated e-invoicing to be applicable for export transactions. Given this, it needs to be seen if suitable clarifications are issued from the Government in this regard.

Exemptions From E-Invoicing

The exemption from e-invoicing has been extended to units in Special Economic Zones vide Notification 61/2020 – Central Tax. Thus, a combined reading of Notification No 61 and Notification No 13/2020, following class of persons will now be exempted from e-invoicing:

  • Units in Special Economic Zones,
  • Insurer, banking company, financial institution including NBFC,
  • Tickets issued for transportation of passengers or goods,
  • Multiplexes.

Exemptions From QR Code Generation

Thus, a combined reading of Notification No 61 and Notification No 13/2020, following class of persons shall be exempted from generating dynamic QR codes:

  • OIDAR services providers,
  • An insurer, banking company, financial institution including NBFC,
  • Tickets issued for transportation of passengers or goods,
  • Multiplexes.

Key Clarifications Awaited From The Government

Whilst the notification has mandated the applicability of e-invoicing a few nuances are pending to be clarified which are summarized below: –

  • The notification has not clarified the financial year (whether previous FY or current FY) to be considered in ascertaining the threshold value. However, the discussions with the officials in the open forum has indicated turnover of FY 19-20 to be considered for ascertaining the threshold value.
  • Requirement of compliance with e-invoicing provisions by a taxpayer having supplies from non SEZ units in aggregate not exceeding INR 500 Cr and in aggregate of SEZ unit it crosses the threshold value
  • Notification mentions requirement for creating e-invoice in case of supplies to registered persons whereas FAQ’s released in early February 2020 requires e-invoice to be created for export transactions.
  • Mechanism to identify the vendors who require IRN to be created
  • Whether GSTR 2A will also provide IRN numbers of supplier invoices

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