India’s Continuous Transaction Control e-invoicing model applies to both domestic and cross-border transactions
India E-Invoicing
Under the new Goods and Services Tax (GST) framework, the Indian e-invoicing system falls under the category of continuous transaction controls (CTCs). The invoice data reporting obligation to the governmental portal is a mandatory step before an invoice can be issued.
The legal validity of the invoice is conditional 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 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 e.g. associated eWaybills) according to the new system for all B2B, B2G or export transactions. India has made multiple changes to the initial regulation and future changes are inevitable.
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Mandate quick facts
- Invoice data should be transmitted to the IRP in JSON format.
- The IRN obtained from the IRP is a validity requirement for invoices.
- Invoices can be exchanged in JSON or PDF format as well as in paper form between the supplier and buyer.
- Archiving is mandated (storage period of eight years).
Mandate rollout dates
1 January 2020: Voluntary period for businesses with a turnover of Rs. 500 Crore or more.
1 February 2020: Voluntary period for businesses with a turnover of Rs. 100 Crore or more.
1 October 2020: Beginning of the mandatory 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 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 lowered to taxpayers with an annual threshold of Rs. 10 Crore.
Penalties
If an invoice is not registered on the IRP, it will be considered unissued and will result in penalties of at least 10,000 Rupees for each instance of noncompliance. Penalties under various sections of GST will be levied with interest.
Sovos Helps Companies Stay Compliant with India E-invoicing
By February 2021 the initial specifications published by the Indian tax authority in December 2019 had already been revised three times. Future changes are inevitable.
Our experts continually monitor, interpret, and codify these changes into our software, reducing the compliance burden on your tax and IT teams.
Find out how Sovos can help you to meet your clearance e-invoicing obligations in India.