Multi-Factor Authentication for E-Way Bill and E-Invoice
Starting April 1, 2025, Multi-Factor Authentication (MFA) will be mandatory for generating E-Way Bills and E-Invoices for all GST taxpayers. The phased rollout aims to improve security and reduce fraudulent activities.
MFA Rollout Timeline
The implementation of MFA will occur in phases based on the taxpayer’s Aggregate Annual Turnover (AATO):
- Since August 2023: Mandatory for taxpayers with an AATO exceeding ₹100 crore.
- January 1, 2025: Mandatory for taxpayers with an AATO exceeding ₹20 crore.
- February 1, 2025: Mandatory for taxpayers with an AATO exceeding ₹5 crore.
- April 1, 2025: Mandatory for all other taxpayers.
Why Multi-Factor Authentication (MFA)?
The introduction of MFA aims to:
- Enhance Security: Reduce the risk of unauthorized access to the E-Way Bill and E-Invoice portals.
- Prevent Fraud: Minimize instances of fake invoicing and tax evasion.
- Ensure Compliance: Align with global security best practices.
According to the GST Advisory, these changes are essential to protect taxpayers’ data and improve the overall integrity of the GST system.
Key Changes in E-Way Bill Regulations
In addition to MFA, new regulations will apply to E-Way Bill generation starting January 1, 2025:
- Document Validity:
- E-Way Bills can only be generated for documents dated within 180 days of the generation date.
- Example: Documents dated before July 5, 2024, will not be eligible for E-Way Bill generation from January 1, 2025.
- Extension Limit:
- E-Way Bill extensions will be capped at 360 days from the original generation date.
- Example: An E-Way Bill generated on January 1, 2025, can only be extended until December 25, 2025.
These measures aim to prevent backdating and forward-dating malpractices that contribute to tax evasion and misrepresentation of inventory.
Legal Perspective on the Updates
Rajat Mohan, Senior Partner at AMRG & Associates, highlights that these changes are significant for curbing fraud. He notes:
“Restricting E-Way Bill generation and extension ensures better transparency and compliance, addressing issues like delayed GST payments and fake transactions.”
Consequences of Non-Compliance
Failure to comply with MFA and E-Way Bill regulations could lead to:
- Invalid Invoices: Non-compliant invoices may result in the loss of Input Tax Credit (ITC).
- Penalties: As per Section 122 of the CGST Act, penalties may apply for incorrect invoicing and E-Way Bill violations.
Steps to Prepare for the Changes
- Update Systems: Ensure your billing and compliance systems are updated to support MFA.
- Train Staff: Educate your team on MFA procedures and E-Way Bill regulations.
- Timely Compliance: Avoid last-minute delays by adhering to document validity timelines.
Conclusion
The mandatory implementation of Multi-Factor Authentication for E-Way Bills and E-Invoices is a crucial step for securing the GST system and improving compliance. Businesses should proactively adapt to these changes to avoid penalties and maintain seamless operations.