E-Invoicing in India: What do taxpayers need to know?

General

India has gradually been implementing electronic invoicing since 2020. Subsequently, many postponements for the mandated use of e-invoices have been allotted. The postponements are to ease the adjustment into the current global digitalisation, of which, India has now become a gracious participant. The implementation of e-invoicing in India is based on the revenue of a business entity, thus businesses that meet the current threshold are required to create e-invoices and submit them to the Indian Registration Portal (IRP).

The Continuous Transaction Control Model utilised by India is the “Hard-Clearance”-model. Which translates to real-time validation of electronic invoices by the Goods and Services Tax Council (GSTC).

 Structure of e-invoices in India

The use of e-invoicing has led to the consequential development of structured processes to send and receive these legally valid e-invoices. The creation of the invoice, being the initial step in the electronic transaction process, is done by way of prescribed accounting/billing software. The format to be utilised in India is FORM GST INV-1 (JSON). This format is prescribed by legislation and must be complied with for the invoice to be considered a valid e-invoice in India.

India’s GSTC has, in addition to the format, prescribed the use of uniquely generated Invoice Reference Numbers (IRNs) and QR Codes. The QR Code will be generated by the Tax Office after verification and authentication in B2B and B2G transactions, however, the QR Code for B2C transactions will be self-generated.

 India Implementation Timeline Breakdown

The current applicable mandate in India is that taxpayers with an aggregate turnover exceeding Rs. 5 Crore will be obliged to issue e-invoices. This mandate came into effect on 1 August 2023 (applicable to traders who have reported an annual turnover above Rs. 5 crore in 2017-18 onwards) and finds application to B2G, B2B and B2C transactions.  

The table below advises on the initial mandate implementation to the current mandate:

The GSTC stated that they had plans to reduce the threshold again in 2024, however, no formal announcement has since been made regarding the reduction in the threshold amount.

 What’s new in India?

21 February 2024: GSTC issued a notice rolling-out the upgraded e-invoice master information portal, with: Successful introduction of 5 (five) IRP-portals, e-invoice master information portal; and e-invoice QR Code Verifier application. Many new features have been added due to the above introductions.

9 September 2024: GSTC hosted their 54^th Meeting, in which discussion were held regarding the recommended roll-out of the B2C e-invoicing pilot, due to the positive results of the B2B e-invoicing implementation.

1 October 2024: GSTC will introduce a new Invoice Management System (IMS). This will assist in making input tax credit (ITC) claims easier by allowing taxpayers to either accept/reject/keep invoice pending for a later review. Further, this will allow erroneous invoices to be amended between suppliers and buyers.

8 October 2024: The GSTC stated that they wish to implement e-invoicing in the Gold Trade, in an attempt to curb tax evasion in the gold-industry.

 P.S.

In the instance of non-compliance with the prescribed obligations, such as non-compliance with the issuance of e-invoices, when there is such an obligation imposed; the recipient will not be eligible to claim the input tax credit.