E-Invoicing Under GST: Definitive Guide

What is e-Invoicing ?

e-Invoice is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. Under the electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).

All invoice information is transferred from einvoice1.gst.gov.in portal to both the GST portal and e-way bill portal in real-time. Therefore, it eliminates the need for manual data entry while filing GSTR-1 return as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to GST portal.

Businesses have the following benefits by using e-invoice initiated by GSTN

  • E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
  • E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
  • Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
  • Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
  • Faster availability of genuine input tax credit.
  • Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

Process of e-invoicing System

Supplier Invoice Registration Portal GST System Buyer
Seller will prepare Tax Invoice with its accounting software Validates Invoice data Rules out the existence of same IRN in GST System Buyer can view the Invoice details in GSTR-2A
Upload JSON file on the IRP system Generates IRN Auto Populate Invoice details in GSTR-1/2A Auto populate With QR Code on Invoice Copy he can check the authenticity of e-invoice by uploading the json sent by supplier
  Sends Invoice pay loads to GST System    
  Sends details to e-way bill system    

Who Must Generate E-Invoices?

Phase Applicable to taxpayers having an aggregate turnover of more than Applicable date Notification number
I Rs 500 crore 01.10.2020 61/2020 – Central Tax and 70/2020 – Central Tax
II Rs 100 crore 01.01.2021 88/2020 – Central Tax
III Rs 50 crore 01.04.2021
5/2021 – Central Tax
IV Rs 20 crore 01.04.2022 1/2022 – Central Tax
V Rs 10 crore 01.10.2022 17/2022 – Central Tax

How Can e-invoicing Curb Tax Evasion?

It will help in curbing tax evasion in the following ways-

  1. Tax authorities will have access to transactions as they take place in real-time since the e-invoice will have to be compulsorily generated through the GST portal.
  2. There will be less scope for manipulating invoices since the invoice gets generated before carrying out a transaction.
  3. It will reduce the chances of fake GST invoices, and the only genuine input tax credit can be claimed as all invoices need to be generated through the GST portal. Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.

The GST compensation cess period has been extended till March 2026.

The GST compensation cess period has already been extended till March 2026.

The Union Minister was responding to a question about Karnataka Chief Minister Basavaraj Bommai’s statement seeking that the GST compensation period, which expires in June, be extended.

Union Finance Minister Nirmala Sitharaman said on Wednesday that the GST compensation cess term has already been extended to March 2026, allowing the Centre to repay loans incurred to compensate the states for the fiscal year 2020.

During a press conference here, she stated, “It’s not simply for me to answer the phone. It is up to the GST council to make a decision, and we have discussed it.”

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The Union Minister was responding to a question about Karnataka Chief Minister Basavaraj Bommai’s statement seeking that the GST compensation period, which expires in June, be extended.

Sitharaman went on to say that the GST council had already voted to extend the compensatory cess period till March 2026.

“It has already been extended to pay off the loan that was taken for all states to cover compensation that could not be paid in 2020. And, once again, which could not be partially, if not entirely, paid in 2021, “added the Finance Minister. Concerning the GST amount due to the states between 2020 and 2021, with compounded interest of 14% per year, she stated that in light of this, the central government made a conscious decision at the GST council meeting to borrow back-to-back and distribute it to the states.

How to decrease tax liability by planning your income tax.

“Both the loan and the repayment, as well as the interest, will need the extension of the compensation cess until March 2026, which we have done. As a result, the proceeds from the extended cess collection would be used to repay the compensation amount borrowed as well as the interest on it “The FM elaborated. In response to the impact of the Ukraine crisis on the import of edible oil into the country, Sitharaman stated that India is searching for alternatives. “Edible oil is also an area where we have issues, and we need to figure out how to address it,” she said.

India is encouraging farmers in the north-eastern region to cultivate palm because the climate is similar to that of Malaysia and Indonesia. We have taken up the palm mission and are assisting farmers in producing palm oil in locations where palm can be grown, because we import massive amounts of palm oil, both crude and refined, she noted.

Amendments to the GST Act made retroactively in the Finance Bill of 2022

  • 25 Feb 2022
  • GST
  • Comments Off on Amendments to the GST Act made retroactively in the Finance Bill of 2022

Amendments to the GST Act made retroactively in the Finance Bill of 2022

Through clauses 99 to 123 of the Finance Bill 2022, certain amendments to the Goods and Services Tax legislation have been proposed. While these amendments will take effect on a notified date following the enactment of the Finance Bill, 2022, there are specific proposals that, upon enactment, will take effect with retrospective effect or date as specified, and will be treated as if the amended provisions or notifications were in effect on that date.

Interest liability for incorrect ITC under GST: Retrospective relief: Finance Bill, 2022

  • A taxable person who makes an excessive or excess claim of input tax credit under section 42(10) or an undue or excess reduction in output tax liability under section 43(10) must pay interest on the undue or excess claim or reduction, according to section 50(3) of the CGST Act, 2017.

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  • The Finance Bill of 2022 proposes to retroactively replace new sub-section 50(3) with effect from July 1, 2017, to provide for the levy of interest on input tax credits that have been wrongfully claimed and utilised, as well as to prescribe the method of calculating interest in such circumstances.
  • As a result of this change, the following would happen:
  1. If you’re mistaken, there’s no interest to be had. ITC was available, but it was not used.
  2. Interest will be charged only if the ITC is both available and used.
  3. There is no new litigation on this subject.
  4. The guidelines will specify how interest will be calculated.
  • From 1.7.2017, the amendment will take effect retroactively.

GST Portal in One Place

  • Clause 114 of the Finance Bill, 2022 seeks to alter Notification No. 9/2018-CT dated 23.01.2018 issued under section 146 of the CGST Act, 2017 / under section 20 of the IGST Act, 2017 issued under section 146 of the CGST Act, 2017.
  • As a result of the modification, such notification shall be regarded to have retroactive effect as of June 22, 2017.
  • gst.gov.in has been designated as a common electronic portal. Notification No. 4/2017-CT, issued June 19, 2017, with effect from June 22, 2017.
  • Thus, starting June 22, 2017, www.gst.gov.in will be the common goods and services tax electronic site for all functions offered under the CGST Rules, 2017 (save for e-way bills and e-invoice production) (for these, there are separate portals)
  • This modification will take effect on June 22, 2017, and will be retroactive.

Interest Rates Revised with Retroactive Effect

  • Clause 115 seeks to retroactively change Notification No. 13/2017-CT dated June 28, 2017, Notification No. 6/2017-Integrated Tax dated June 28, 2017, and Notification No. 10/2017-UT dated June 28, 2017. (i.e., from 1.7.2017). Sections 50(1, 3), 54(12), and 56 of the CGST Act, 2017 were used to issue these Notifications.
  • Under section 50(3) of the CGST Act, 2017, the rate of interest would be 18 percent instead of 24 percent with effect from 1.7.2017.
  • Also, in relation to IGST and UTGST, clauses 118 and 121 of the Finance Bill notify that the rate of interest will be 18 percent instead of 24 percent with effect from 1.7.2017.
  • This interest is charged for incorrectly claiming and using input tax credits.
  • The current misunderstanding and dispute will be resolved with a retrospective modification.

Supply of fish meal-related trash is exempt from GST retroactively.

  • Clause 116 of the Finance Bill of 2022 provides a retrospective exemption from the duty or collection of the Central Tax (CGST) on supplies of unexpected waste generated during the production of fish meal (except for fish oil).
  • Clause 119 proposes to give a retrospective integrated tax (IGST) exemption for supplies of unexpected waste generated during the processing of fish meal (heading 2301), except for fish oil, from July 1, 2017 to September 30, 2019. (both days inclusive).
finance bill
  • Clause 122 proposes to give a retrospective exemption from Union territory tax (UTGST) in respect of the supply of unintentional waste generated during the production of fish meal (coming under category 2301), save for fish oil, from July 1, 2017 to September 30, 2019. (both days inclusive).
  • Clause 116 intends to offer a retrospective exemption from central tax for supplies of unexpected waste generated during the production of fish meal (heading 2301), except for fish oil, from July 1, 2017 to September 30, 2019. (both days inclusive).

Tax deductions & exemptions are no longer available under the new tax regime.

  • Thus, throughout the period from 01.07.2017 to 30.09.2019, no CGST should be imposed or collected in respect of supply of unintentional waste generated during the manufacturing of fish meal, notwithstanding anything contained in Notification No. 01/2017-CT(Rate) dated 28.06.2017.
  • Clause 119 of the Finance Bill proposes a similar retrospective adjustment in relation to Notification 1/2017-IT (Rate) dated 28.06.2017.
  • Clause 122 of the Finance Bill proposes a similar retrospective adjustment in relation to Notification 1/2017-UTT (Rate) dated 28.06.2017. However, any tax that has already been collected will not be refunded.

GST exemption for liquor licencing fees retroactively

  • Clause 117 proposes to provide retroactive effect to the Government of India’s notice number G.S.R. 746(E) in the Ministry of Finance (Department of Revenue) dated September 30, 2019, with effect from July 1, 2017.
  • Clause 120 proposes to provide retroactive effect to the Government of India’s notice number G.S.R. 745(E) in the Ministry of Finance (Department of Revenue) dated September 30, 2019, with effect from July 1, 2017.
  • Clause 123 proposes to provide retroactive effect to the Government of India’s notice number G.S.R. 747(E) in the Ministry of Finance (Department of Revenue) dated September 30, 2019, with effect from July 1, 2017.
  • As a result, Notification No. 25/2019-CT (Rate) dated 30.09.2019 will take effect on July 1, 2017. “Services by way of grant of alcoholic liquor licence against consideration in the form of licence fee or application fee or by whatever name it is called” shall not be treated as supply of goods or supply of services, according to Notification No. 25/2019-CT (Rate) dated 30.09.2019.
  • Clause 120 of the Finance Bill proposes a similar retrospective change in relation to Notification 24/2019-IT(Rate) dated 30.09.2019.
  • Clause 123 of the Finance Bill proposes a similar retrospective adjustment in relation to Notification 25/2019-UTT (Rate) dated 30.09.2019.
  • However, no refunds would be given for any taxes that have been collected but would not have been if the notification had been in effect during the relevant time.
  • It means that tax collected or paid between July 1, 2017 and September 30, 2019, will not be reimbursed now, i.e., those who have already paid will not receive a refund, but those who have not yet paid will not be required to do so.