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e-Invoice under GST

Ever since the concept of e-invoicing was approved by the GST council, the buzz around e-invoicing has gained importance among the business community. The introduction of e-invoicing was approved by the GST council at its 37th meeting held in the month of September,2019 with the key objective to ensure inter-operability of e-invoices across the GST eco-system.

Invoice being a key document and e-invoicing being a reform related to it, it is super important for businesses to understand it fully and accordingly prepare towards to it.

In this article, let’s discuss and understand everything about e-invoicing under GST.

What is e-invoice in GST?

e-Invoice known as ‘Electronic invoicing’ is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.

Post successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by IRP. Along with IRN, each invoice is digitally signed and added with a QR code. This process is collectively called e-invoicing under GST.


Why e-Invoicing is introduced?

In spite of invoices generated by each software look more or less the same, the computer system can’t understand it, though the business users can understand them fully. For example, an invoice generated by accounting Software “A” cannot be read by a machine that is using “B” accounting software.

Today, there are hundreds of accounting/billing software that generates invoices and all of them have their own formats to store the information. Owing to this, the GST system can’t read and understand these invoices, although the information in the invoice remains the same.

To cut the long story short, today the same information is presented in different invoice formats and there is no way a system can understand it.

Hence, a need was felt to standardize the format in which electronic data of an invoice will be shared with others to ensure there is interoperability of the data.


What are the benefits of e-Invoice system?


The basic aim behind the adoption of the e-invoice system is to pre-populate the returns and reduce the reconciliation challenges. This is achieved by the design of the IRP system which shares the invoice data to the GST system and e-way bill system. Thus, continuous uploading of invoices will ensure that most of the details required in returns as well in the e-way bill get auto-populated.

The following are some of the key benefits of e-invoicing:

  • Reduces reporting of same invoice details multiple times in different forms. It’s just a one-time upload and everything, as required, will get pre-populated.

  • Part-A of e-Way bill will be auto-captured and only transporter details are required to be updated.

  • On uploading of invoices, the B2B details will be auto-captured in GSTR-1 return.

  • Substantial reduction in input credit verification challenges as the same data will get reported to the tax department as well to the buyer in his inward supply (purchase) register (GSTR-2A).

  • On receipt of info from the GST System, a buyer can do a reconciliation with his Purchase register and accept/reject it on time under New Return.

  • A complete trail of B2B invoices and system-level matching of input credit and output tax helps to reduce tax evasion

  • Increase efficiency in tax administration by eliminating fake invoices.

How will e-invoicing curb tax evasion?


Many benefits of e-invoicing exist and one of them is its ability to curb tax evasion. With an e-invoice, the chances of editing invoices will be low because before any transaction is done, the invoice gets generated. Another reason why e-invoice system is helpful is that it ensures the authorities have information about all the transactions in real-time. E-invoicing greatly minimizes fake GST invoices and ensures that input tax credit is claimed on real GST invoices due to automation and thorough checks. If someone tries to claim a fake tax credit, then it is easy for GSTN to track them.


What are the mandatory fields of an e-invoice?


The following are the 30 mandatory fields of an e-invoice. Earlier, 50 fields were to be mandatorily filled by the taxpayer.


Field name


Description

Document Type Code

Every type of document has a code and this must be specified in this portion.

Supplier Legal Name

The name of the supplier according to the PAN card details.

Supplier GSTIN

The supplier GSTIN for e-invoice.

Supplier Address

The full address of the supplier including flat number, building no. etc.

Supplier Place

The city/village/town of the supplier must be specified here.

Supplier State Code

The state must be selected.

Supplier Pincode

The six-digit pin code of the supplier’s address.

Document Number

A unique invoice number that makes sense to the business. It has to be sequential for easy identification.

Preceding Invoice Reference and Date

The original invoice details are being edited using a document such as a credit note.

Document Date

The date on which the invoice was issued.

Recipient Legal Name

The name of the buyer is specified as per his PAN card.

Recipient’s GSTIN

The buyer’s GSTIN needs to be specified.

Recipient’s Address

The detailed address of the buyer has to be specified

Recipient’s State Code

The place of supply has to be specified.

Place of Supply State Code

The state of the recipient has to be selected.

Pincode

The location of the recipient has to be selected.

Recipient Place

The village/town/city of the recipient has to be specified.

Invoice Reference Number or IRN

The supplier leaves the field empty at the time of registration, and after that, GSTIN generates a unique number when the e-invoice is uploaded on the GSTN portal. As the e-invoice is accepted, acknowledgment is sent. Before the use of an e-invoice, the IRN has to be displayed on it.

Shipping To GSTIN

GSTIN of the person the item is being delivered to.

Shipping To State, Pincode and State Code

This field specifies the place where the goods and services are delivered.

Dispatch From Name, Address, Place, and Pincode

The name of the dispatching entity, along with the city/town/village specifics.

Is Service

If the supply of service has to be specified.

Supply Type Code

The type of supply and its responding code is specified. It can be supplied to SEZ, B2B, etc.

Item Description

The item’s description.

HSN Code

The particular code for the goods or services.

Item Price

The GST exclusive unit price prior to the item price discount being subtracted. This value must be positive.

Assessable Value

The item’s price excluding GST and after the item price discount has been subtracted.

GST Rate

The rate of the specific item for which the invoice has been generated.

IGST Value, CGST Value and SGST Value Separately

Every item must have IGST, SGST, and CGST.

Total Invoice Value

The total value, including GST.

What does the e-invoice look like?

The e-invoice format shared by the GSTN is the one that must be used by all businesses. The e-invoice must mandatorily have all the fields, both mandatory and non-mandatory details as specified. It must be noted that the mandatory fields have to be filled by all taxpayers. In cases where it applies, the non-mandatory fields are required to be filled by the taxpayer. An e-invoice looks like the following.


When will e-invoicing be introduced?


To ensure that businesses get enough time to adapt to the new system of electronic invoicing, the GST Council has approved the introduction of e-invoicing in a phased manner.

Annual turnover

New date of mandatory implementation of e-invoice

Exceeding 500 crore - 1st October 2020

Exceeding 100 crore - 1st January 2021

Exceeding 50 crore - 1st April 2021

Exceeding 20 crore - 1st April 2022

Exceeding 10 crore - 1st October 2022

Exceeding 5 crore - 1st August 2023

In the recent update, from 1st August 2023, e-Invoicing will be essential for all the registered persons whose aggregate turnover (based on PAN) in any prior fiscal year from 2017-18 onwards exceeds 5 crores.


What are the types of documents that are to be reported to the IRP?


The following documents will be covered under e-Invoicing for now:

  • Invoices by the Supplier

  • Credit Notes by the Supplier

  • Debit Notes by the Recipient

  • Any other document as required by law to be reported by the creator of the document

What is the workflow of e-invoice?

  • Step 1 – Generation of e-invoice:

The taxpayer will continue to generate invoices in the normal course of business. However, the reporting of these invoices electronically has criteria. It needs to be done as per the e-invoice schema, along with mandatory parameters. The mandatory fields of an invoice for the supply of goods are listed below:

  • Invoice type

  • Code for invoice type

  • Invoice Number

  • Invoice Date

  • Supplier details like Name, GSTIN of Supplier, and Supplier address (including place, pin code, and state)

  • Details of the buyer, such as name, GSTIN, state code, address, place, pin code, payee name, account number, payment mode, and IFSC code

  • Dispatch details

  • Invoice item being dispatched

  • Total tax amount paid amount, and payment due

  • Tax scheme (whether GST, Excise Custom, VAT)

  • ‘Shipping To’ details like Name, GSTIN, address, pin code, state, supply type, and transaction mode (whether regular, ‘bill to’ or ‘ship to’)

  • Details of goods like Sl. no., quantity, rate, assessable value, GST rate, amount of CGST/SGST/IGST, total invoice value, batch number/name

The seller has to ensure that his accounting/billing software is capable of generating a JSON of the final invoice. The seller can create a JSON following the e-invoice schema and mandatory parameters by using the following modes:

  • Accounting and billing system that offers this service

  • Utility to interact with either accounting/billing system, ERP, excel/word document, or a mobile app

  • Offline Tool to generate e-invoice by keying-in invoice data

  • Step 2 – Generation of unique IRN:

The supplier has the option to generate a ‘hash’ based on specific parameters, usually three of them, such as Supplier’s GSTIN, Supplier’s invoice number, Financial Year (YYYY-YY). The prescribed algorithm, such as SHA256 must be used for the hash generation. If the hash is validated, it will later become the Invoice Reference Number (IRN) of the e-invoice.

  • Step 3 – Uploading the JSON:

The following modes may be used to upload the JSON of the final invoice:


  • Directly on the IRP

  • Through GST Suvidha Provider (GSP)

  • Third-party provided apps (including through API)

  • The supplier can also upload the hash along with the JSON onto the IRP if generated by him

  • Step 4 – Hash generation/validation:

Hash will have to be generated by the IRP in respect of the invoices uploaded without the hash. In such a case, the hash generated by the IRP would become the IRN. Where the supplier has also uploaded the hash, a de-duplication check will be performed. It is done by validating the hash/IRN against the Central Registry of the GST System to ensure that the IRN is unique. Once validated, the hash/IRN is stored in the Central Registry. IRP will then generate a QR Code and digitally sign the invoice and make it available to the supplier. The IRP also sends the e-invoice via e-mail mentioned on the invoice to the buyer and seller.


How will the system of e-invoicing be integrated with GST Returns?

An e-Invoice will be uploaded into the relevant GST return only once it has been validated and registered by the invoice registration system. After the validation has been done, it will be visible to the recipient for viewing and taking action (in the new return system).

The main aim of the tax department is to enable the pre-population of GST returns, which will reduce reconciliation-related problems. Once e-Invoicing has been implemented, the data in the invoices can be pre-populated into the relevant tables of the tax returns without the need for fresh data entry.


What data will be included in an e-invoice?

As per the draft format generated by the GSTN, an e-Invoice will contain the following parts-

  • E-invoice schema: This part will consist of the technical field name and the description of each field. It will also specify if a field is mandatory or not and has a few sample values along with explanatory notes

  • Masters: Masters will specify the set of inputs for certain fields that are pre-defined by GSTN itself. It includes fields like UQC, State Code, invoice type, supply type, etc.

  • e-Invoice template: The template is as per the GST rules and enables the reader to correlate the terms used in other sheets. The mandatory fields are marked in green, and the optional fields are marked in yellow.

Amendment/cancellation of e-invoices

Can an e-invoice be canceled partially/fully?

An e-invoice cannot be partially canceled, it has to be canceled fully. Once you cancel an e-invoice, it has to be reported to the IRN within 24 hours. No cancellation post 24 hours of upload is allowed on the IRN and needs to be manually canceled on the GST portal before the returns are filed.

How can an e-invoice be amended?

All amendments to an e-invoice can be made only on the GST Portal.


What are the benefits of e-invoicing?

  • One-time reporting of B2B invoices while generation, which reduces reporting in multiple formats

  • Sales and Purchase Registers can be generated from this data, and GST returns can be kept ready for filing under the new return system

  • E-way bills can also be generated using e-Invoice data

  • There is minimal need for data reconciliation between the books, and GST returns filed

  • Real-time tracking of invoices prepared by a supplier can be enabled, along with the faster availability of input tax credits. It will also reduce input tax credit verification issues

  • Automation of the tax-filing process

  • Reduction in the number of frauds as the tax authorities will also have access to data in real-time

  • Elimination of fake GST invoices getting generated

Type of business to whom e-invoice will be applicable?


Electronic Invoicing will be applicable to all the businesses that are registered under GST and issuing B2B invoices in a phased manner as discussed above.

Who need not comply with e-Invoicing?


As per the latest mandate, from 1st August 2023, e-Invoicing will be essential for all the registered persons whose aggregate turnover (based on PAN) in any prior fiscal year from 2017-18 onwards exceeds 5 crores. As of now, businesses with a turnover less than the mandated amount don't need to comply with the e-invoicing norm.

What is the system in place for issuing invoices before e-invoicing?


At that time, businesses had the freedom to issue invoices using any third-party software of their choice. The invoice details than had to be uploaded by the business manually in the GSTR-1 return. When this was completed successfully, the information entered automatically reflected in the GSTR-2A form. This is a view-only form. The transporters had the responsibility of importing the invoices manually to generate e-way bills.


Who should upload the e-invoice?

Under the concept of e-invoice, the seller has to electronically upload the invoice to the IRP system and capture the QR code and IRN (Invoice Reference Number) in the physical copy of the invoice issued to the recipient.


What type of documents are to be reported to the GST system?

The following documents are covered under the concept of e-invoice. Meaning the creator of these documents needs to upload them to the IRP system.

  • Invoice by Supplier

  • Credit Note by Supplier

  • Debit Note by Supplier

  • Any other document as required by law to be reported by the creator of the document

How is e-invoice different from the current practice of invoicing?

E-invoice is a system in which the invoice needs to be electronically uploaded and authenticated with a unique invoice reference number (IRN) and digitally signed QR code. The change is that the seller needs to print the QR code and IRN number on the invoice before issuing it to the buyer.

Businesses using ERP/ business management software that seamlessly connects with the IRP system and automatically prints the QR code and IRN on the invoice will find it easy to manage e-invoice requirements without many changes to the business process.


What are the modes of generating e-Invoice?

Multiple modes will be made available so that the taxpayer can use the best mode based on his/her need. The following are different modes of generating e-Invoice.

  • Web-Based,

  • API Based,

  • SMS Based,

  • Mobile App

  • offline tool based and

  • GSP based

Read Articles

  • How to Generate e-Invoice in GST?

  • Generate e-Invoice Instantly in TallyPrime

  • Bulk Generation of e-Invoices in TallyPrime

FAQs on e-invoice

Can an e-invoice be canceled partially/fully?

You cannot cancel an e-invoice partially. If you must cancel the e-invoice, then it must be done completely or fully. When you do this, you must report it to the IRN within 24 hours of the cancellation. If you try to cancel an e-invoice after that period, then you cannot use the IRN. Instead, you need to use the GST portal for cancellation, and it must be done manually. This has to be done prior to filing the returns. When you cancel, you cannot re-use the invoice number, and a new one must be generated else the IRP will reject it.

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