The Central Board of Indirect Taxes and Customs (CBIC) has recently issued GST Circular 198/10/2023 dated July 17, 2023, providing valuable clarification on the topic of e-invoices. This circular aims to address concerns raised by taxpayers regarding the applicability of e-invoicing under Rule 48(4) of the CGST Rules for supplies made to Government Departments, establishments, agencies, local authorities and PSUs registered solely for tax deduction (TDS) purposes as per Section 51 of the CGST Act.
Understanding the Concern
Many registered individuals with turnovers exceeding the prescribed threshold for generating e-invoices have sought clarification from CBIC regarding their obligations when supplying to Government entities mentioned above. The main question revolves around whether e-invoicing is mandatory for such transactions.
CBIC’s Clarification
To ensure consistency and uniform implementation of the law across different field formations, CBIC, empowered by Section 168(1) of the CGST Act, has provided the following clarifications:
Issue: Applicability of e-invoicing for supplies to Government Departments, establishments, agencies, local authorities and PSUs registered solely for tax deduction (TDS) purposes as per Section 51 of the CGST Act.
Clarification: Government Departments, establishments, agencies, local authorities and PSUs that are required to deduct tax at source (TDS) as per Section 51 of the CGST/SGST Act must obtain compulsory registration under Section 24(vi) of the CGST Act. Consequently, these entities fall within the definition of “registered persons” under Clause (94) of Section 2 of the CGST Act. Therefore, registered individuals with turnovers exceeding the prescribed threshold for e-invoicing are obliged to issue e-invoices for supplies made to such Government entities, following the guidelines stated in Rule 48(4) of the CGST Rules.
CBIC GST Circular 198/10/2023 dated 17/07/2023: Clarification on E-Invoice Rules for Supplies to Government Entities
Conclusion
The CBIC’s recent clarification on the issue of e-invoice applicability brings much-needed clarity to taxpayers who provide supplies to Government entities. It emphasizes the obligation of registered individuals with turnovers exceeding the prescribed threshold to issue e-invoices for such transactions. By adhering to the guidelines laid out in Rule 48(4) of the CGST Rules, taxpayers can ensure compliance with the GST law when invoicing Government Departments, establishments, agencies, local authorities, and PSUs registered solely for tax deduction purposes. Stay informed and updated with the latest regulatory developments to streamline your tax-related processes effectively.
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Disclaimer: While reasonable efforts have been made to ensure the accuracy and reliability of the information presented in this article, it should not be considered as professional advice or guidance. For compliance, the readers are advised to directly refer to the relevant laws, regulations and notifications issued by the appropriate authorities. |
CA Abhinav Aggarwal is a qualified Chartered Accountant and ICAI member since 2010. He holds vast experience in Audit, Income Tax & GST and is a passionate writer on the CA profession and related topics.