India: New Taxpayers to Comply with E-invoicing Rules

Selin Adler Ring
August 2, 2022

As previously predicted by Sovos, the threshold for implementing mandatory e-invoicing has been lowered by the Indian authorities. According to the Central Board of Indirect Taxes and Customs Notification No. 17/2022 – Central Tax, from 1 October 2022 compliance with the e-invoicing rules will be mandatory for taxpayers with an annual threshold of 10 Cr. rupees (approximately 1.270.000 USD) or more.

Recap of India’s e-invoicing requirements

The Indian e-invoicing system falls under the category of continuous transaction controls (CTCs) under the Goods and Services Tax (GST) framework. The legal validity of the invoice is conditional based on the Invoice Registration Portal (IRP) digitally signing the invoice and providing an Invoice Registration Number (IRN). If the IRN is not included in an invoice, the invoice will not be legally valid.

The scope covers both domestic and cross-border transactions. The IRP clearance process is mandatory for B2B, B2G and export transactions. So, taxpayers in scope must issue their invoices (as well as other documents that need an IRN) according to the new system for all B2B, B2G or export transactions.

Taxpayers in scope of e-invoicing must generate e-waybills through the e-invoicing system. It is not possible to voluntarily adhere to the e-invoicing system. This means that taxpayers not satisfying the threshold limit cannot adopt CTC invoicing.

Implementation timeline

Before the initial introduction, the e-invoicing plan was announced by the Indian authorities as early as 2018. Afterwards, the evolvement of the plan has been as follows:

1 January 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.500 Crore or more

1 February 2020: Voluntary period of e-invoicing for businesses with a turnover of Rs.100 Crore or more

1 October 2020: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.500 Crore or more (six months later than previously intended). For the first 30 days, there was a grace period during which invoices could be reported after they had been issued.

1 January 2021: Beginning of the mandatory e-invoicing period for businesses with a turnover of Rs.100 Crore or more.

1 April 2021: Threshold for mandatory e-invoicing lowered to taxpayers with turnover between Rs. 100 Crore to Rs. 50 Crore.

1 April 2022: Threshold lowered from Rs. 50 Crore to Rs. 20 Crore. Taxpayers above Rs. 20 Crore must implement e-invoicing.

1 October 2022: Threshold will be lowered from Rs. 20 Crore to Rs. 10 Crore. Taxpayers above Rs. 10 Crore must implement e-invoicing.

What’s next for e-invoicing in India?

Some changes concerning the e-invoicing workflow are expected. Currently, there is a single platform (IRP) for the clearance process but multiple IRPs will be introduced soon. The Indian Authorities have already approved new IRPs, demonstrating that the authorities wish to have an interoperable e-invoicing market and are moving ahead with their plans to realise their goals.

Additionally, B2C invoices are not currently covered by the IRP clearance, yet the authorities have announced their intention to include those in scope of their CTC system.

India is a challenging jurisdiction for many taxpayers; businesses must have smart digitization and maintenance strategies to stay compliant. The benefits of digitization can be realised through a global strategy that businesses might put in place.

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Selin Adler Ring

Selin is Regulatory Counsel at Sovos. Based in Stockholm and originally from Turkey, Selin’s background is in corporate and commercial law, and currently specializes in global e-invoicing compliance. Selin earned a Law degree in her home country and has a master’s degree in Law and Economics. She speaks Russian, Arabic, English and Turkish.
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