GSTN, the IT backbone of the indirect tax system, said in a communication to businesses that a functionality to report 'e-invoice exemption' has now been added to the designated e-invoice portal. This is for the benefit of businesses that are exempted from e-invoicing under CGST rules. It is for the business to make use of this option by referring to government notifications dealing with the exemption given to certain entities.

E-invoicing is compulsory for businesses with sales of ₹5 crore and above with effect from 1 August. This requirement was first introduced in October 2020 for businesses with sales of more than ₹500 crores. In phases, the threshold has been lowered.

Companies have to generate these e-invoices from the portals of either the government-owned National Informatics Centre or from the portals run by private agencies. The transaction data will then feed automatically into other tax documents like e-way bills needed for goods shipment and the GST returns. This helps in automating the GST return filing process too, leaving little scope for businesses to under-report their sales.

Experts said that irrespective of the turnover, e-invoicing does not apply to certain agencies.

"This is a welcome tool which enables SEZ units, insurers, banks, financial institutions, goods transport agencies, passenger transportation service agencies, and multiplex cinemas to inform GSTN about the exemption from e-invoicing," said Rajat Mohan, senior partner at accounting firm AMRG & Associates.

"This is a non-mandatory self-declaration, which businesses may opt for based on specific tax exemption notifications," said Mohan.