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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. Introduction of e-Invoice was approved by GST council in 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.
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
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.
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:
The e-invoice under GST was originally planned to be implemented on 1st April 2020. However, as per the 39th GST Council meeting held on 14th March,2020, the new date for introducing e-invoicing is 1st October,2020.
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. This will be introduced on a voluntary basis, to begin with.
*The new of date of e-invoicing is updated as per 39th GST Council Meeting.
Electronic Invoicing will be applicable to all the business whose aggregate turnover in a financial year exceeds “One Hundred Crore Rupees’
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.
Following documents are covered under the concept of e-invoice. Meaning the creator of these document needs to upload it to the IRP system.
E-invoice is a system in which the invoice needs to be electronically uploaded and authenticated with a unique invoice reference number (IRN). This will no way impact the current practice of issuing physical invoice (printed) or electronic (ex.pdf version) invoice.
The users would continue to see the physical or electronic (PDF/Excel) output of the invoices in the same manner as it existed before the incorporation of e-Invoice standard in the software.
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?
Know more on IRN, Format and process to generate it
Payment Declaration Form – GST PMT – 08: Definition, Format and Rules