No input tax credit if e-invoice not uploaded in GST portal within 30 days: New rule soon

Nov 7, 2024

Synopsis
Buyers will not be able to claim input tax credit (ITC) if specified sellers or suppliers do not upload the e-invoice within 30 days from the date of its generation. ​"From 1st April 2025, taxpayers with an AATO of Rs 10 crore and above would not be allowed to report e-invoices older than 30 days from the date of reporting on IRP portals."

The Goods and Services Tax Network (GSTN) has introduced a new rule disallowing upload of e-invoices older than 30 days on the invoice registration portal (IRP) from April 1, 2025, for a large category of GST taxpayers. Under GST law, businesses (suppliers/sellers) with a specified annual aggregate turnover (AATO) need to generate an electronic invoice (e-invoice) and upload it on the IRP portal which enables the buyer to claim input tax credit. Once uploaded an invoice reference number (IRN) and a QR code is generated.

"From 1st April 2025, taxpayers with an AATO of Rs 10 crore and above would not be allowed to report (means upload in portal) e-invoices older than 30 days from the date of reporting on IRP portals. This restriction would apply to all document types (Invoices/Credit Notes/Debit Notes) for which an IRN is to be generated," said GSTN in an advisory dated November 5, 2024.

Currently, this rule applies only to GST taxpayers with an AATO of Rs 100 crore and above. However, from April 1, 2025, it will apply to those with AATO of Rs 10 crore and above i.e. a much much larger number of GST taxpayers.

What happens if e-invoice is not uploaded on IRP portal

GSTN, in it's advisory, said that the GST portal will automatically reject the e-invoice if it is being uploaded after 30 days from the date of generation of the invoice.

"If an invoice is dated 1st April 2025, it cannot be reported after 30th April 2025. The validation built into the invoice registration portals (IRP) would disallow the user from reporting (i.e. uploading) the e-invoice after the 30-day window. Hence, it is essential for taxpayers to ensure that they report the e-invoice within the 30-day window provided by the new time limit," said GSTN in its advisory.

Experts say that failure to upload e-invoices within 30 days on the IRP portal may have severe consequences. "The invoice will not be considered valid, preventing the recipient from claiming input tax credit (ITC). This can also disrupt business operations as recipients and transporters may refuse goods without a valid e-invoice. Additionally, non-compliance can lead to penalties and increased scrutiny from tax authorities," says Divya Bhushan, Tax Partner, EY India.

Experts say that failure to upload e-invoices within 30 days on the IRP portal may have severe consequences. "The invoice will not be considered valid, preventing the recipient from claiming input tax credit (ITC). This can also disrupt business operations as recipients and transporters may refuse goods without a valid e-invoice. Additionally, non-compliance can lead to penalties and increased scrutiny from tax authorities," says Divya Bhushan, Tax Partner, EY India.

As per normal procedure, after an e-invoice is uploaded, the GSTN portal automatically informs the taxpayer if any GST is payable by the seller or input tax credit can be claimed by the buyer. If the e-invoice is not uploaded in time, it can lead to either the linked tax payment getting delayed (Seller is impacted) or disallowance of input tax credit (Buyer is impacted)- whichever is applicable in the specific case. In some cases where the transaction is GST exempt, neither tax would be payable nor input tax credit would be available. However, for the purpose of record, legitimacy and re-conciliation of accounts uploading invoice within time specified would still be necessary.

Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP explains the concept with an example. "Suppose Mr. A supplied some goods to Mr. B on April 1, 2025, and issued an invoice on this date. So Mr. A need to upload this e-invoice on the IRP portal within 30 days i.e. on or before April 30, 2025. Once the e-invoice is uploaded an invoice registration number and QR code will be generated. This QR code is used to verify the invoice's authenticity," says Jain.

"Non generating e-invoice would make invoice deficient resulting into non compliance with rule 46. Such deficiency would render invoices not uploaded as Invalid resulting into serious implications like non availability of ITC to the recipient," says Brijesh Gandhi, Partner, GST Advisory, NPV & Associates LLP.

Chartered Accountant Siddharth Surana shares a solution for those who miss the 30-day window. He, however, advises that this method should be the last resort as it involves payment of interest and penalty, etc.

"If a taxpayer fails to generate an e-invoice within 30 days from the document date, the portal will block e-invoice creation, leading to permanent non-compliance. This can result in imposition of penalties by GST officers. In such cases, the transaction and it's GST details must be manually reported in Form GSTR-1 for the same or following month. Alongwith this manual reporting, the tax has to be paid in Form GSTR-3B. If any tax payment is due and is delayed, interest at 18% per annum may also apply, along with a penalty. Taxpayers are advised to promptly report missed e-invoices manually in GST returns to avoid additional charges," says Surana.

Impact of this advisory on GST registered taxpayers

GSTN has clarified that there would be no such reporting restriction on taxpayers with an AATO of less than 10 crores as of now. ET Wealth Online has asked various experts about what the impact of this advisory might be for GST registered taxpayers. Here's what they said:

Divya Bhushan, Tax Partner, EY India: Lowering the e-invoice threshold limit to Rs. 10 crore is a strategic move to enhance tax efficiency and minimise leakage. By mandating real-time data capture and automating invoice processes it improves data accuracy, reduces manual errors, and strengthens compliance. This leads to a more streamlined tax system with increased visibility, reduced paperwork, and faster reconciliation. Ultimately, this benefits both businesses and the government by fostering a more transparent and efficient tax environment.

Brijesh Gandhi, Partner, GST Advisory, NPV & Associates LLP: It is pertinent to note that the facility to generate e-invoice post issuance of Tax Invoice is not conferred by the governing laws, instead it is facilitated by GST portal. This facility is a mechanism to regularise the process of issuance of e-invoice because a Tax Invoice issued under rule 46 is not valid until IRN is generated. The purpose of reduction of time limit is to bring in discipline amongst GST Taxpayers for Invoice generation.

Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP: I think this advisory aims to bring regularisation in uploading of e-invoices by taxpayers on a periodic basis in a phased manner. Earlier it was kept open ended, so delay in uploading e-invoice resulted in delayed ITC credit for the recipient. Now this problem is solved up to a certain extent. In an ideal scenario the e-invoice should be uploaded on the IRP portal the day it is generated. The responsibility is on the supplier to adhere to the timeline of invoice upload, otherwise the buyer will lose input tax credit.

Chartered Accountant Siddharth Surana: The main objective of bringing this time limit is to reduce the lag in issuing E- invoices and to avoid reconciliation issues between books and GST returns. Usually if a taxpayer delays in reporting the invoices in the GST returns there is a delay in remittance of GST and interest is levied on the delayed payment of GST. By bringing in the 30-day limit for reporting of e- invoice the interest amount can be easily recovered in situations where transactions are reported beyond 30 days. With this change, if the e-invoice generation is not done within the 30-day time frame, the transactions will be detected by tax authorities and will also allow for easier recovery of interest on delayed GST payments when reporting of transactions on the portal exceed the 30-day window.

For clarity, it needs to be mentioned that even currently, if GST payable on a transaction is delayed beyond 30 days, then interest is payable on the tax but this has been difficult for the government to track.

Apoorv Phillips, Senior Associate, Sirmacs Consultancy Services (Law Firm): This advisory aims to promote digital India by streamlining the process of invoice generation and upload on the IRP portal. It appears that the government aims to shift completely to digital transactions and has therefore started gradually decreasing this threshold. Previously, the time limit for raising an e-invoice for registered persons was 30 days in cases where the registered person's AATO was Rs 100 crore. In my view, however, this is not supported by law and is perverse.

As per Rule 48 of the Central Goods and Services Tax Rules, 2017, a notification has to be issued prescribing the manner and conditions of e-Invoicing. This, in my opinion, covers the time limit for generating the same. However, no such notification has been passed regarding the time limit. Hence, the advisory could be challenged in a court of law for not being backed by any law. (This is not a legal advice).

While GSTN has issued an 'advisory' regarding the change in the above procedure these 'advisories' in practice work as 'rules'.

[The Economic Times]