GST Advisories| Time Limit for generation of e-invoice| HSN-wise reporting in e-invoice

GST Department keeps on issuing advisory on various practical or technical issues faced by taxpayers to smooth the tax compliance processes. Recently the department has issued an advisory on various issues such as the Time limit imposed on the generation of e-invoices, HSN Wise reporting is made mandatory in e-invoices, GST registration by One Person Company, etc.

These advisories are analyzed below for ease of understanding:

A. E-Invoice to be generated within 7 days on reporting of old invoice for the entity with Aggregate turnover of 100 cr or more

E-invoice is an important move to capture transactions on a real-time basis and keep the GST portal updated on a regular basis instead of a monthly or quarterly basis. As of now, if you have forgotten to generate an e-invoice for any invoice or debit note, or credit note, you can easily create the missing e-invoice on any future date.

However, considering the sensitivity and importance of the e-invoice, the government has decided to impose a time limit of 7 days for the generation of e-invoice for taxpayers with Aggregate Turnover greater than or equal to INR 100 Crores.

As per the Advisory issued on the GST portal:

1. The government has decided to impose a time limit of 7 days on reporting of old invoices on the e-invoice IRP portals for taxpayers with AATO greater than or equal to 100 crores.
2. Therefore, above mentioned taxpayers are not allowed to report invoices older than 7 days on the date of reporting.

For example, if an invoice has a date of April 1, 2023, then an e-invoice for the same can’t be generated after April 8, 2023. The validation system built into the invoice registration portal will disallow the user from reporting the invoice after the 7-day window.

3. This restriction is applicable for all types of documents for which IRN is required. Thus, credit notes and debit notes also have to be reported within 7 days of issue.
4. It is essential for taxpayers to ensure that they report the invoice within the 7-day window provided by the new time limit.
5. Further, the department has clarified that there will be no such reporting restriction on taxpayers with AATO less than 100 crores, as of now. Therefore, they can generate missing e-invoices without any time limit restriction.
6. In order to provide sufficient time for taxpayers to comply with this requirement, this amendment will be implemented from 01.05.2023 onwards.

B. HSN Code Reporting in e-Invoice on IRPs Portal

1. As per notification no. 78/2020 – Central Tax dated 15th October 2020, It is mandatory to mention HSN Code on every invoice as per the following criteria:

Aggregate Turnover in the preceding Financial Year	Number of Digits of Harmonised System of Nomenclature Code (HSN Code)
Up to rupees five crores	4
more than rupees five crores	6

2. This requirement has already been implemented in the GST system. However, now the GST Department is working with their IRP (Invoice Reporting Portal) partner, a portal used to generate e-invoices, to implement the same at the IRPs portal.
3. Therefore, In case where valid 6 digit HSN code is not available, it is better to report a valid 8 digit HSN code instead of artificially creating 6 digit HSN code.
4. As per GST portal, this requirement may require changes to the systems of taxpayers. Therefore, GST portal will ensure that enough time is given to taxpayers and IRP partners to make the required changes and follow this requirement.
5. Exact date of implementation of this process will be intimated by GST authorities shortly.

C. Advisory on GST registration of “One Person Company” 

1. “One Person Company” is a company which has only one person as member.
2. It has been reported that while obtaining GST registration of “One Person Company”, in Part-B of GST REG-01, there is no option that appears under the constitution of business as “One Person Company”.
3. Goods and Services Tax Network (GSTN) has enabled the registration of One Person Company under the Goods and Services Tax (GST) regime on its portal.
4. Therefore, GSTN has advised that in the ‘Part B’ of GST Registration Form ‘REG-01’, applicants may select (Constitution of Business under ‘Business Details’ tab using the dropdown list) option “Others”, if the taxpayer wants to register for GST as “One Person Company”. 
5. After selecting the option as “Others”, the applicant shall also mention “One Person Company” in the text field and follow the steps for a normal registration application to complete the process.

D. Reporting of Negative Values in Table 4(A)- “ITC Available” of GSTR-3B

1. The Government has enabled certain changes in Table 4 (Eligible ITC) for correct reporting of correct information regarding ITC availed, ITC reversal and ineligible ITC in GSTR-3B. 
2. As per changes, the net ITC is to be reported in Table 4(A)- “ITC Available (whether in full or part)” and ITC reversal, if any, is to be reported in Table 4(B)- “ITC Reversed” of GSTR-3B.
3. Earlier, credit note (CN) was auto-populating in Table 4B(2) as ITC reversal. Now in view of the changes, ITC on Credit notes is adjusted in ITC Available and net amount is reported in Table 4(A) of GSTR-3B only. 
4. Accordingly following changes are made in GSTR-3B and have been made effective from January 2023 onwards.

• The impact of credit note & their amendments will now be auto-populated in Table 4(A) instead of Table 4(B) of GSTR-3B . 
• If the value of credit notes becomes higher than ITC available on invoices and debit notes put together, then the net ITC would become negative and the taxpayers will now be allowed to report negative values in Table-4A. 
• Also, taxpayers can now enter negative values in Table 4D(2) (Ineligible ITC under section 16(4) & ITC restricted due to PoS rules) of GSTR-3B.
• Consequent updates/modifications in form GSTR-2B, without any structural changes in form GSTR-2B summary or tables have also been done in GSTR-2B.