Businesses having a turnover of more than Rs 20 crore will be required to issue electronic invoices for B2B transactions beginning April 1, according to the Central Board of Indirect Taxes and Customs. E-invoicing for business-to-business (B2B) transactions became necessary under Goods and Services Tax (GST) law on October 1, 2020, for enterprises with a turnover of more than Rs 500 crore, and was later extended to those with a turnover of more than Rs 100 crore on January 1, 2021. Companies having a turnover of more than Rs 50 crore began generating B2B e-invoices from April 1, last year. This is now being extended to businesses with a turnover of more than Rs 20 crore. With this, additional vendors will be forced to issue e-invoices beginning April 1, 2022. If the invoice is not genuine, the recipient will not be able to claim input tax credit on it, in addition to any relevant penalties.

Phases of E-Invoicing Implementation — Synopsis of Changes

1. In the first phase, CBIC issued Notification No. 13/2020–Central Tax on March 21, 2020, requiring taxpayers with a turnover of more than INR 500 crore to produce e-invoices beginning October 1, 2020.

2. In the second phase, CBIC issued Notification No. 88/2020–Central Tax on November 10, 2020, requiring taxpayers with a turnover of more than INR 100 crore to produce e-invoices beginning January 1, 2021.

3. The CBIC announced in Notification No. 05/2021–Central Tax dated March 8, 2021 that taxpayers with a turnover of more than INR 50 crore must furnish e-invoices commencing April 1, 2021.

4. In the fourth phase, the CBIC has issued a modification to Notification 13/2020, vide Notification No. 01/2022 – Central Tax dated February 26, 2022, to announce such turnover limit from INR 50 crores to INR 20 crores in the following manner:

Broad action plan

1.Determine whether E-Invoicing is applicable based on aggregate turnover criteria.
2.Analyse gaps between current ERP report fields vis-à-vis the requirements of the e-invoice schema.
3.Set the roadmap for implementation to initiate necessary changes in the ERP system to conform to e-invoice schema.
4.onfigure information systems to establish connectivity with the IRP and generation of IRN. For this, assess and select the optimal model: GSP / API / Connector / Excel Upload.
5.Training teams and revisiting internal control processes/policies may be necessary Utilize the limited time for trails, testing and corrections.

Taxpayer’s preparedness to be

1. The client’s ERP/billing software system has to be configured according to new “E-invoice schema”. Creation of mandatory fields in the ERP system/reports to capture the data required for IRN/QR Code generation.

2. There are minimum and maximum length of characters that can be sent in the API for each filed, which needs upgradation of ERP seamless , successful processing of E-invoice API & response .

3. Cancellation option, which may be possible within 24hours of upload in IRP portal. E-invoice system may have to be incorporated in the ERP/Billing system and separate upload may be time consuming and not cost-efficient. If such process is implemented, then impact on revenue accounting & other dependent process such as collection, receivables, dispatches, etc. needs to be evaluated.

4. Archives of IRN and QR Code: It may also become necessary to archive IRN and QR code in the ERP system for printing in the invoices or for future references for which the requisite data should reside in the ERP system.

5. The actions to be taken in response to differences, if any, in the above scenarios and the determination of frequency reconciliation.

6. The E-invoice solutions/tools which can seamlessly manage this transformation layer without having to make any significant upgradation in existing ERP/ billing software.

7. Transaction as per ERP/billing system Vs transaction processed for E-invoice.

8. Line level reconciliation between GSTR/ANX 1 & transactions processed for E-invoice.

The options available to the Taxpayers are

1. Option 1 – Direct API integration with NIC IRP

2. Option 2 - Direct API integration with GSP

3. Option 3 – File based SFTP data connector with GSP’s E-invoice solution/tools

4. Option 4 – API based data connector (only if taxpayer ERP/billing software is capable to handle this) with GSP’s E-invoice solution/tool

5. Option 5 – Excel upload through GSP’s E-invoice solution/tool

6. Option 6 – Manual entry in GSP’s E-invoice solution/tool

7. Option 7 -Combination of above