E-Invoicing Applicability: Who Must Generate E-Invoices?

E-invoicing in GST is considered to be one of the major compliance measures in India for businesses. However, not all businesses are required to comply with it. This is because E-Invoicing applicability in India depends on multiple aspects like business turnover and the industry type. Failure to comprehend these criteria can attract violation of the law, hence leading to penalties and closure of operations.

In this blog, we will take a closer look at e-invoicing applicability understanding whom it applies to in India, whether there are any exemptions to e-invoicing, what happens if a business fails to meet e-invoicing requirements, and how one can meet compliance requirements.

What is E-invoicing?

E-invoicing can be defined as the method of creating invoices in an electronic format as prescribed by the government. This process replaces the conventional paper-based invoicing and provides standardization, accuracy, and real-time reporting of e-invoices to the GST system.

The GST e-invoice is aimed to combat tax evasion, enhance invoice transparency, and streamline e-invoicing process for all enterprises. It applies to B2B transactions and mandates compliance with prescribed e-invoice format specifications, including e-invoicing mandatory fields.

E-invoicing Applicability Criteria

E-invoicing applicability depends mainly on the turnover of the business. The government has set turnover thresholds for e-invoicing. Additionally, it has gradually decreased the threshold limit to slowly standardize the e-invoicing process for more businesses.

Turnover Threshold	Applicability
Above INR 500 Crore	Mandatory since October 2020
Above INR 100 Crore	Mandatory since January 2021
Above INR 50 Crore	Mandatory since April 2021
Above INR 20 Crore	Mandatory since April 2022
Above INR 10 Crore	Mandatory since October 2022
Above INR 5 Crore	Mandatory since August 2023

Therefore, all businesses exceeding the above-mentioned thresholds are mandated to comply with e-invoicing requirements. This includes all forms of organizations ranging from giant multinationals, sole proprietors, and LLPs to SMEs. SME e-invoicing also must follow the same standards which verify GST compliant.

Transactions Covered Under E-Invoicing

1. Business to Business (B2B): All transactions between two businesses.

2. Business to Government (B2G): Transactions between businesses and the government where businesses supply goods or services.

3. SEZ Developer Transactions: All transactions involving SEZ Developers.

4. Export Transactions: For all transactions exporting goods or services outside India.

5. Deemed Exports: Transactions considered exports as per GST.

6. Deemed Supply: Transactions considered supply under GST.

7. Debit Notes: Notes issued to increase the value of an invoice.

8. Credit Notes: Notes issued to correct the value of an invoice.

Exemptions from E-invoicing

Some businesses might fall under the e-invoicing applicability criteria as per their threshold but are exempt if they fulfill certain conditions. Some key e-invoicing exemptions include:

• Insurance Companies: Insurance companies are exempt from e-invoicing because of the complex nature of transactions for them along with their operational complexity that is not adaptable to the standard e-invoicing format.
• Banks and Financial Institutions: Financial service providers, including NBFCs, are also exempt since they provide a variety of financial services, which cannot fit into the typical goods and services e-invoicing format.
• Special Economic Zones (SEZs): Even units located within SEZs are exempt. SEZs are considered foreign territories for trade and taxation and are hence their supplies are considered zero-rated exports that attract 0% GST.
• Goods Transport Agencies (GTAs): Transport companies which are mainly involved in the movement of goods are also a part of the e-invoicing exemption list. This is because their services include complex logistics and documentation that is difficult to align with the standardized e-invoicing format.
• Passenger Transport Agencies (PTAs): PTAs, because of their complex logistics and ticketing processes, do not align with the standardized format of e-invoicing and hence stand exempt.
• Multiplexes or Cinema Halls: Cinema halls exhibiting cinematographic films in multiplexes or anywhere are exempt from e-invoicing. This is majorly because they too have complicated ticketing and revenue processes which are difficult to integrate into a standard e-invoicing format.

These exemptions are rather important for businesses to understand as they help them understand the e-invoicing applicability criteria in greater depth. For example, a bank could have a turnover above INR 5 crore but still not fall under the mandatory e-invoicing applicability list. However, the other GST compliance regulations are the same for these exempt businesses.

Consequences of Non-Compliance

Failure to conform to the set e-invoicing regulations attracts heavy legal and financial consequences. Below is a detailed table outlining the potential consequences:

Consequence	Details
Penalties	A fine of INR 10,000 per invoice can be imposed in the case of non-generation of e-invoices.
Inability to Generate E-Way Bills	You can end up affecting logistics as improper or failure to generate e-invoices can make it difficult to generate e-way bills as well.
GST Return Issues	You may end up attracting return scrutiny and even other penalties in case non-compliant e-invoices affect your GST return filings.
Disruption in B2B Transactions	Many businesses may not want to engage themselves with non-compliant enterprises.
Legal consequences	Consistent non-compliance can result in severe financial and reputational damage.

All companies need to know is that, where e-invoicing applicability criteria is met, it is mandatory to comply with e-invoicing regulations. Moreover, one way to make this process easier for yourself is to implement some secure e-invoicing software solutions. With such software solutions, much like GSTrobo®, it will be possible to avoid non-compliance, and correctly fill all mandatory fields in e-invoicing, following a prescribed e-invoice format.

Steps to Ensure Compliance

To stay compliant with all e-invoicing applicability criteria, businesses should follow these steps:

1. Assess Turnover: You should check whether your business falls under the e-invoicing turnover thresholds. Currently, your organization needs to e-invoice if the annual-turnover is more than ₹ 5 crore as per the GST norms.

2. Choose E-invoicing Software: It is advisable to choose e-invoicing software that is compatible with your company’s current accounting systems. So, seek a system like GSTrobo that supports e-invoice automation and minimizes the amount of work done manually, consequently increasing the level of efficiency.

3. Understand Document Requirements: Make sure you are well aware of the document requirements for e-invoicing and ensure all necessary details are present in those documents.

4. Generate E-invoices Correctly: Make sure all the invoices are created on the e-invoice portal as per the prescribed e-invoice format with all the e-invoicing mandatory fields.

5. Regular Compliance Checks: Update your processes on a regular basis to maintain compliance with the e-invoicing regulations.

Conclusion

It thus becomes necessary for any business operating under GST in India to comprehensively understand the e-invoicing applicability. With this blog, we aimed to help businesses learn more about the turnover thresholds, exemption criteria, and the implications arising from non-adherence to e-invoicing policies and procedures.

One easier way to stay compliant with all e-invoicing regulations is to automate your e-invoicing process with the help of e-invoicing software. GSTrobo® is one such solution, being an intelligent and easy to use e-invoicing software that will meet all your compliance needs. Irrespective of the company size, SMEs or a large entity, GSTrobo®’s solutions enable every company to meet e-invoicing regulations and optimize the process of invoicing at once. With its advanced automation, it allows you to generate and send e-invoices to your vendors within 3 seconds. Check out GSTrobo® e-invoicing software to optimize and streamline your e-invoicing process today!