Non-compliance with e-invoicing is no more an option for taxpayers who are covered under the e-invoicing mandate. The CGST Rule 48 lays down the foundation of e-invoicing rules. The penalties could be encumbering for cashflows as well as the reputation of a business. Failure to comply with the rules of e-invoicing under GST can lead to serious consequences and penalties for a business.
The beginning of the financial year of 2022-23 witnessed a new mandate for e-invoicing. Every business with a turnover of over 10 crores is required to register all of its B2B and export invoices with the Invoice Registration Portal (IRP). With this new mandate, the total number of businesses raising e-invoices will cross 4 lacs. Starting October 2022, GST Notification No. 17/2022 extended its applicability to businesses turning over 10 crores in revenue and soon taxpayers with an AATO of Rs. 5 Cr. will also be covered.
Consequences of Non-Compliance with
- Incorrect Tax Invoice
As per Rule 46 (r), a QR code must be mentioned on the invoice. The QR code is received upon the generation of the Invoice Reference Number (IRN). If the invoice is not registered on the Invoice Registration Portal (IRP) like IRIS IRP, then it is invalid and liable to a penalty. An incorrect invoice will be penalized for Rs. 25,000.
- Not Generation an e-Invoice
According to Rule 48(5), if an IRN is not generated and the invoice remains unissued, it leads to a penalty of Rs. 10,000 or 100% of the tax due - whichever is higher.
- Detention of Goods
According to Section 129 of CGST Act 2017, if any goods are being transported without a valid invoice or one without a QR code, the goods and/or the vehicles may be confiscated. It also makes you liable for penalties for non-compliance with E-way bills.
- Input Tax Credit (ITC) Claim
Section 16 of the CGST Act 2017 states that an ITC cannot be claimed without a tax invoice. And if you have crossed the e-invoice turnover limit and are not generating IRN for your tax invoices, then your invoices are not considered valid as per the e-invoicing mandate. Further, your counterparty will not be able to claim ITC on such invalid invoices. And due to your non-compliance, you may lose your customers.
- E-way Billing
Since e-invoicing is now linked with e-way billing, the e-way bill will be considered invalid without a valid invoice. It can lead to the detention of the goods being transported.
What is an incorrect or invalid invoice?
There are several reasons why an invoice is considered invalid. Some of them are listed below:
- GSTIN of the Supplier or recipient is inactive or invalid.
- A duplicate e-invoice is generated earlier for which an IRN had been generated.
- The standard format or e-invoice schema has not been followed.
For the above cases, taxpayers will not be able to generate IRN. If the invoice is incorrect in one of the above-stated ways and is used regardless for the transportation of goods OR for e-way bill generation then it is an offence. It may lead to major consequences and penalties.
What are the common mistakes to avoid to comply with the e-invoice mandate?
- To generate an e-invoice under GST, out of 132 data fields, 28 are mandatory and 18 are conditional mandatory fields. Hence, mandatory fields need to be compulsorily filled out and conditional mandatory fields based on situations like ship to, dispatch from etc. Before sending the invoice to get an IRN, it is crucial to verify the validity of the data entered.
- Cancelling an invoice can be precarious. While an e-invoice is allowed to be cancelled within 24 hours, there is a condition. If the e-way bill is already active corresponding to the invoice, then it cannot be cancelled. So, ensure that the e-way bill is cancelled before the invoice.
- Validation may also fail in some business-specific scenarios. Make sure the conditions are discussed before raising the e-invoice.
What is the solution?
For a business that earns over 10 crores a year, maintaining all the invoices, registering them on the IRP, and linking them with e-way billing can be excruciating to get done manually. So, it is recommended to adopt a smart e-invoicing solution that is scalable and fast.
Non-compliance with e-invoicing can be avoided by ensuring the formats are up-to-date and there are pre-built validations as well, in the process.
With IRIS IRP, you can prepare a single e-invoice via our tool or bulk generate IRN through the excel utility, pull IRN in your ERP via API Integration or custom print invoices using an awesome cloud platform!
If you are a small business owner (MSME/SME): IRIS IRP helps you to jumpstart your e-invoicing using the offline excel utility tool i.e. MS Excel interface. You can send Invoice Data to IRP in bulk and generate e-invoices real-time! Also, get to generate e-invoices and e-way bills on a single platform.
If you are a large business owner: IRIS GST E-invoicing is the best option for you - It is the fastest and easiest way to generate e-invoice. There are multiple options to generate IRN via IRIS E-invoicing. You can use APIs, and get a bulk upload facility or you can even go with SFTP or manual upload of invoices.
If you are a solution provider yourself: IRIS IRP calls all ERP providers and system integrators to design a seamless user journey for your customers using IRIS IRP to build a robust and error-proof e-invoice compliance. We offer Core and Enhanced APIs for e-invoice generation.