What is e-invoicing under GST?
‘e-Invoicing’ or ‘electronic invoicing’ is a
system in which B2B invoices are authenticated electronically by GSTN for
further use on the common GST portal. Under the electronic invoicing system, an
identification number will be issued against every invoice by the Invoice
Registration Portal (IRP), managed
by the GST Network (GSTN). The
National Informatics Centre launched the first IRP at einvoice1.gst.gov.in.
The
taxpayers must comply with e-invoicing if the turnover exceeds the specified
limit in any financial year from 2017-18 to
2021-22. Also, the aggregate
turnover will include the turnover of all GSTINs under a single PAN across
India.
Suppose ABC ltd aggregate turnover was as follows:
FY
2017-18: Rs 15 crore
FY
2018-19: Rs 17 crore
FY
2019-20: Rs 24 crore
FY
2020-21: Rs 19 crore
FY
2021-22: Rs 18 crore (till date)
The ABC ltd shall mandatorily generate
e-invoices from 01.04.2022 irrespective of current year aggregate turnover as
it has crossed the Rs 20 crore turnover limit in FY 2019-20.
However,
irrespective of the turnover, e-Invoicing shall not be
applicable to the following categories of registered persons for now, as
notified in CBIC Notification No.13/2020 – Central Tax:
- An insurer
or a banking company or a financial institution, including an NBFC
- A Goods
Transport Agency (GTA)
- A
registered person supplying passenger transportation services
- A
registered person supplying services by way of admission to the exhibition
of cinematographic films in multiplex services
- An SEZ unit
(excluded via CBIC Notification No. 61/2020 – Central Tax)
- A
government department and Local authority (excluded via CBIC Notification
No. 23/2021 – Central Tax)
What is the
process of getting an e-invoice?
The
following are the stages involved in generating or raising an e-invoice.
- The
taxpayer has to ensure to use the reconfigured ERP system as per PEPPOL
standards. He could coordinate with the software service provider to
incorporate the standard set for e-invoicing, i.e. e-invoice schema
(standards) and must have the mandatory parameters notified by the CBIC,
at least.
- Any
taxpayer has got primarily two options for IRN generation:
- The IP
address of the computer system can be whitelisted on the e-invoice portal
for a direct API integration or integration via GST Suvidha Provider
(GSP) such as ClearTax.
- Download
the bulk generation tool to bulk upload invoices. It will generate a JSON
file that can be uploaded on the e-invoice portal to generate IRNs in
bulk.
- The
taxpayer must thereafter raise a regular invoice on that software. He must
give all the necessary details like billing name and address, GSTN of the
supplier, transaction value, item rate, GST rate applicable, tax amount,
etc.
- Once either
of the above options is chosen, raise the invoice on the respective ERP
software or billing
software. Thereafter,
upload the details of the invoice, especially mandatory fields, onto the
IRP using the JSON file or via an application service provider (app or
through GSP) or through direct API. The IRP will act as the central
registrar for e-invoicing and its authentication. There are several other
modes of interacting with IRP, such as SMS-based and mobile app-based.
- IRP will
validate the key details of the B2B invoice, check for any duplications
and generate an invoice reference number (hash) for reference. There are
four parameters based on which IRN is generated: Seller GSTIN, invoice
number, FY in YYYY-YY, and document type (INV/DN/CN).
- IRP
generates the invoice reference number (IRN), digitally signs the invoice
and creates a QR code in Output JSON for the supplier. On the other hand,
the seller of the supply will get intimated of the e-invoice generation
through email (if provided in the invoice).
- IRP will
send the authenticated payload to the GST portal for GST returns.
Additionally, details will be forwarded to the e-way bill portal, if
applicable. The GSTR-1 of the seller gets auto-filled for the relevant tax
period. In turn, it determines the tax liability.
A
taxpayer can continue to print his invoice as being done presently with a logo.
The e-invoicing system only mandates all taxpayers to report invoices on IRP in
electronic format.
How will
e-invoicing benefit businesses?
Businesses
will have the following benefits by using e-invoice initiated by GSTN:
- e-Invoice
resolves and plugs a major gap in data reconciliation under GST to reduce
mismatch errors.
- e-Invoices
created on one software can be read by another, allowing interoperability
and help reduce data entry errors.
- Real-time
tracking of invoices prepared by the supplier is enabled by e-invoice.
- Backward
integration and automation of the tax return filing process – the relevant
details of the invoices would be auto-populated in the various returns,
especially for generating the part-A of e-way bills.
- Faster
availability of genuine input tax credit.
- Lesser
possibility of audits/surveys by the tax authorities since the information
they require is available at a transaction level.
How will
e-invoicing curb tax evasion?
It will
help in curbing tax evasion in the following ways:
- Tax
authorities will have access to transactions as they take place in
real-time since the e-invoice will have to be compulsorily generated
through the GST portal.
- There will
be less scope for manipulating invoices since the invoice gets generated
before carrying out a transaction.
- It will
reduce the chances of fake GST invoices, and the only genuine input tax
credit can be claimed as all invoices need to be generated through the GST
portal. Since the input credit can be matched with output tax details, it
becomes easier for GSTN to track fake tax credit claims.
What are the
mandatory fields of an e-invoice?
- 12 sections
(mandatory + optional) and six annexures consisting of a total of 138
fields.
- Out of the
12 sections, five are mandatory, and seven are optional. Two annexures are
mandatory.
- The five
mandatory sections are basic details, supplier information, recipient
information, invoice item details, and document total. The two mandatory
annexures are details of the items and the document total.
FAQs
on e-invoicing
To whom will e-invoicing apply
The
e-invoicing system applies to the GST registered persons whose aggregate turnover
in the financial year exceeds Rs.50 crore. From 1st April 2022, it shall apply
to those with a turnover of more than Rs.20 crore. However, exceptions include
Special Economic Zones (SEZ) units, insurance, banking, financial institutions,
NBFCs, GTA, passenger transportation service, and sale of movie tickets.
However, exceptions include Special Economic Zones (SEZ) units, insurance,
banking, financial institutions, NBFCs, GTA, passenger transportation service,
and sale of movie tickets.
Can an e-invoice be cancelled partially/fully?
An e-invoice cannot be
cancelled partially but can be cancelled wholly. On cancellation, it must be
reported to the IRN within 24 hours. Any attempt to cancel thereafter cannot be
done on the IRN and must be manually cancelled on the GST portal before the
returns are filed.
Will the bulk uploading of invoices for the
generation of IRN be possible?
No, invoices must be
uploaded one at a time into the IRP. The ERP of a business will need to be
designed to place the request for the upload of individual invoices.
Will there be a facility for e-invoice generation
on the common GST portal?
No, invoices will continue
to be generated on the individual ERP software currently in use by businesses.
The invoice must adhere to the e-invoicing standard format and include the
mandatory parameters. The direct generation of invoices on a common portal is
not being planned at the moment.
What are the types of documents that are to be
reported into the IRP?
The
documents that will be covered under the e-invoicing system are as follows-
- Invoices by
the supplier
- Credit
notes by the supplier
- Debit notes
by the recipient
- Any other
document as notified under GST law to be reported as an e-invoice by the
creator of the document
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