From Monday, come May 01, big GST assesses will have to be extra careful as the new invoicing rule is coming into effect. Under this, every assesses with a turnover of ₹100 crore or more is prohibited from reporting invoices that are more than 7 days old on the date of reporting.
Experts say the new mechanism will help in moving almost real-time tracking of economic activities. Also, not following the advisory would attract penal consequences under the GST law
An advisory issued by GSTN, the IT backbone of the indirect tax system, says the old invoices can be reported on e-invoice IRP (Invoice Registration Portal). It also said this will apply to the all-document types for which IRN is to be generated. Also, the credit/debit note will have to be reported within 7 days of issue. For example, if an invoice has a date of May 1, 2023, it cannot be reported after May 8, 2023. The validation system built into the invoice registration portal will disallow the user from reporting the invoice after the seven-day window. It was also said that there will be no such reporting restriction on taxpayers with an annual turnover of less than ₹100 crores, as of now.
Shilpa Dhobale, Head, Product and Strategy (IRISGST), at IRIS Business Services, says “With the new 7-day time limit for generation of e-invoices, we are moving towards near real-time recording of economic activities in the country.” Industries, where batch processing for e-invoices is followed, should definitely evaluate the impact of the permissible time gap between invoice issuance and its IRN.
Now what an assessee will need to do?
According to Vivek Jalan, Partner with Tax Connect Advisory, consider a case where an e-invoice is not made due to tech glitches on May 31 and the taxpayer comes to know this only on June 11, 2023, while filing GSTR-1. In this situation, a CN or credit note (with IRN) also has to be generated on June 11, 2023, to reverse this transaction. Then a new e-invoice needs to be generated for a transaction, which took place on May 31 2023. “This new post-dated e-invoice shall be liable to interest for 11 days. A general penalty of ₹20,000 may be applicable and the recipient of the e-invoice can take ITC only in the next month of generation of the e-invoice,” he explained.
Dhobale further explained that adjustments during book closures at month-end or year-end are a common phenomenon and have a direct impact on the invoicing cycle. Here, businesses need to be mindful of the 7-days window for e-invoicing. Businesses with turnover above ₹100cr to whom the new rule applies have been generating e-invoices for over 2 years now. “It is recommended that businesses should implement additional checks and balances to ensure IRNs are generated within the time frame. Integrated solutions that provide visibility from IRN generation to its population in GST returns shall prove useful in the upcoming days,” she said.
Jalan says, it is mandatory for taxpayers to do an invoice vs IRN reconciliation by the 7th of every month and generate e-invoice incase not generated in the last month.