Declaration on E-Invoice

With the rapid digitization of India’s tax ecosystem, the introduction of e-invoicing under GST has become a landmark reform. Designed to curb tax evasion, standardize invoicing practices, and improve transparency, e-invoicing is no longer just a choice—it is a regulatory obligation for eligible businesses. One critical component of this compliance journey is the Declaration on E-Invoice for those entities that are exempt or not covered under the mandate.

In this blog, we’ll decode what a Declaration on E-Invoice means, who needs it, its format, and its implications in a GST-compliant business environment.

What is E-Invoicing under GST?

E-invoicing, or electronic invoicing, refers to the submission of invoices by a taxpayer to the Invoice Registration Portal (IRP) of the GST system, where each invoice is authenticated and assigned a unique Invoice Reference Number (IRN). It is mostly relevant to export invoices, credit/debit notes, and business-to-business invoicing. The IRP returns a digitally signed e-invoice with a QR code, ensuring authenticity and easy tracking.

Who Must Comply with E-Invoicing?

The e-invoicing system is applicable to registered taxpayers whose aggregate turnover exceeds the prescribed limit (currently ₹5 crore from August 1, 2023, as per the GST Notification). It applies to:

B2B Supplies
Exports
Credit and Debit Notes (related to B2B invoices)

Excluded categories include:

SEZ units
Banks and Financial Institutions
NBFCs
Goods Transport Agencies (GTAs)
Passenger transportation services
Cinematograph film exhibition

What is the Declaration on E-Invoice?

For businesses that are not mandated to generate e-invoices, it is necessary to issue a Declaration on E-Invoice at the bottom of the tax invoice to clarify their exemption. This declaration acts as a self-certification, ensuring transparency with customers, suppliers, and auditors.

Why is the Declaration Important?

Failure to generate e-invoices when required can lead to penalties and disallowance of input tax credit (ITC) for the buyer. Conversely, issuing a declaration on e-invoice helps businesses justify exemption and avoid scrutiny from tax authorities.

Suggested Format of Declaration on E-Invoice

A commonly accepted declaration format is:

“We hereby declare that the turnover of our entity is below the threshold limit notified under the provisions of Rule 48(4) of the CGST Rules, 2017. Hence, e-invoicing is not applicable to us for the period (Financial Year XXXX-XX).”

This declaration should be placed at the bottom of all tax invoices issued.

Scenarios When Declaration is Needed

1. Voluntary Registration Below Threshold

Businesses with a turnover below the mandate limit may still be registered under GST. This declaration clarifies for them why they are not eligible for electronic invoicing.

2. Exempt Entities

Even if turnover exceeds the threshold, some business sectors are excluded from e-invoicing (like NBFCs or passenger transport). These entities also need to declare their exemption.

3. Export Transactions by Exempt Units

Exporters below the turnover threshold need to mention this declaration for export invoices as well.

Consequences of Not Declaring

If a business fails to generate an e-invoice (where mandated) or doesn’t declare its exemption properly, it may face:

GST penalties (up to ₹25,000 per invoice)
Suspension of input tax credit for customers
Scrutiny and audit risk by GST officials
Rejection of invoices by large buyers

Best Practices for E-Invoice Declaration

Consistency: Use the declaration uniformly across all invoices.
Audit Trail: Maintain digital records of invoices with declarations for future audits.
Staff Training: Educate your finance and billing teams about when and where to apply the declaration.
System Automation: Include a footer in your ERP or billing software to auto-generate this note on every applicable invoice.

E-Invoicing and E-Way Bill Integration

For businesses above the threshold, failure to generate an e-invoice automatically blocks e-way bill generation, affecting goods transportation. For others, while the e-way bill is still mandatory, this declaration distinguishes non-e-invoicing from non-compliance.

Impact of E-Invoice Declaration on MSMEs and Startups

For MSMEs and startups, this declaration is a lifesaver. Most of these businesses operate below the ₹5 crore threshold and are often unsure about their invoicing obligations. A clear declaration protects them from misinterpretation and builds confidence with stakeholders.

Role of GSTN and Government Notifications

The GSTN (Goods and Services Tax Network) regularly updates the eligibility criteria, turnover thresholds, and sectoral applicability. Businesses must follow the latest GST notifications to determine whether they require e-invoicing or just the declaration.

You can verify applicability by checking your status on the e-invoice website with your GSTIN.

How Cretum Advisory Helps with E-Invoicing Compliance?

Our expertise at Cretum Advisory is GST compliance, which includes smooth e-invoice integration, assistance with implementation, and training support. Whether you’re a business above the threshold or exempt but looking for clarity, our team assists you in:

E-invoice system implementation
ERP integration with GSTN
Issuing correct declarations
Conducting mock audits for GST readiness
Updating systems in line with changing thresholds and policies

From startups to large enterprises, we ensure your digital compliance journey is effortless and audit-proof.

For expert guidance, write to us at 📩 info@cretumadvisory.com

The Final Thought

The Declaration on E-Invoice may seem like a small addition to your invoice format, but it carries significant weight in the realm of GST compliance. In a system moving rapidly towards automation and transparency, clarity in every document matters. Companies need to remain on the lookout for updates from the GSTN, make sure their invoicing systems accurately reflect their compliance status, and remain vigilant.

With the right guidance and tools, complying with e-invoicing regulations—including valid declarations—can help avoid penalties and improve business trust. Make sure your business is proactive, not reactive when it comes to e-invoicing mandates.

Frequently Asked Questions (FAQ)

1. What is a declaration on e-invoice under GST?

A declaration on e-invoice is a statement added to tax invoices by businesses not covered under the e-invoicing mandate. It confirms that the business is exempt from generating e-invoices as per current GST rules.

2. Who needs to add a declaration on e-invoice?

Any GST-registered business not required to issue e-invoices—such as those below the turnover threshold or in exempt categories—should include a declaration on their invoices.

3. What is the latest turnover limit for e-invoicing applicability?

As of August 1, 2023, businesses with an aggregate turnover exceeding ₹5 crore in any financial year from 2017–18 onwards are required to issue e-invoices for B2B supplies.

4. Where should the declaration appear on the invoice?

The e-invoice declaration should be placed at the bottom of the tax invoice in a clear and readable format.

5. What happens if a business fails to issue an e-invoice when required?

Failure to issue an e-invoice can lead to penalties, invoice rejection by recipients, denial of input tax credit (ITC), and issues with e-way bill generation.

6. Is the declaration mandatory for all invoices?

No, it is only required for businesses not required to generate e-invoices, to clarify their exempt status for auditors and stakeholders.