All About GST E-Invoiceing in India

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 QR code. This process is collectively called as e-invoicing under GST

Why is 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 which is using “B” accounting software.

Today, there are hundreds of accounting/billing software which generate 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 format 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?

The basic aim behind the adoption of the e-invoice system by tax departments is the ability to pre-populate the returns and to 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, one-time uploading of invoice 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 the same invoice details multiple time in different forms. It’s just 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 invoices, Sales and purchase register (ANX-1 and ANX-2) are pre-populated and from this data, the main Return (RET-1 or Sugam) are almost ready for filing under New GST Return.
  • Substantial reduction in input credit verification challenges as same data will get reported to the tax department as well to buyer in his inward supply (purchase) register.
  • On receipt of info thru GST System, a buyer can do reconciliation with his Purchase register and accept/reject it on time under New Return.
  • 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 invoice.

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

Electronic Invoicing will be applicable to all the business whose aggregate turnover in a financial year exceeds “One Hundred Crore Rupees’

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 IRN (Invoice Reference Number) in the physical copy of the invoice issued to the recipient.

Also, the IRP system is designed to e-mail the digitally signed e-invoice with QR code to the supplier as well as the recipient.

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

Following documents are covered under the concept of e-invoice. Meaning the creator of these document needs to upload it 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

Requirements for submission of e-invoices

According to the new rules, e-invoices must be issued to the IRP in JSON format. The document can include an e-signature but it is not required.
Once the e-document is submitted, the IRP will carry out the validation of the e-invoice in order to provide the supplier with a response message. Validation of the document is based on the following parameters:

  • Completion of data in all mandatory fields;
  • Validity of supplier GSTIN (Goods and Services Tax Identification Number);
  • Validity of buyer GSTIN;
  • Validity of invoice number and financial year;
  • Whether the invoice already exists in the GST system.

If the IRP response is positive, the invoice will be digitally signed and assigned a unique number by the IRP. A QR code will also be generated in order for the supplier and buyer to confirm authenticity of the e-invoice and proof that it has been registered in the GST system. The IRP will then make the document available to both parties in the GST portal.

If the response is negative, an error message will be sent detailing the reason for rejection.

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 mode of generating e-Invoice?

  • Web-Based,
  • API Based,
  • SMS Based,
  • Mobile App
  • offline tool based and
  • GSP based

Latest Update for E-invoicing Under GST

The 39th GST council meeting has also decided to implement the GST e-invoicing of bills under the GST scheme and applicability of QR codes to start from 1st October 2020 in the view of currently held coronavirus pandemic.