e-Invoice under GST

e-invoice
|Updated on: November 17, 2022

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.

Best e-Invoicing Software Solution for Businesses in India Generate e-Invoice Instantly in TallyPrime

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

Know more on IRN, Format and process to generate it.

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?

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 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 supply of service has to be specified.

Supply Type Code

The type of supply and its responding code is specified. It can be supply 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.

e-invoice in TallyPrime

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

In the recent update, e-invoicing will be applicable for businesses with a turnover exceeding 10 crores from 1st October 2022. 

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 phased manner as discussed above. 

Who need not comply with e-Invoicing?

As per the latest mandate, all businesses with a turnover exceeding 10 crores are required to generate e-invoices starting from 1st October 2022. As of now, businesses with a turnover less than the mandated amount don't need to comply with the e-invoicing norm. However, from 1st January 2023, businesses with an annual turnover of 5 crore will also be required to generate e-invoice. 

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 then 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 GST system?

The 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

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 singed 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 IRP system and automatically prints the QR code and IRN on the invoice will find it easy to manage e-invoice requirements without much 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

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.

How e-invoice works?

e-Invoicing works in two parts - first is the interaction between the business and IRP and the second is the interaction between the IRP, the GST/E-Way Bill Systems, and the Buyer.

Why is e-invoicing needed?

E-invoicing helps organizations simplify their invoicing process, thus reducing paperwork and improving the time required for invoice processing.

Is e-way bill required for e-invoice?

Taxpayers have the option of generating an e-way bill when they generate an e-invoice. But they can choose to generate an e-way bill at a later time too. An e-invoice is needed along with an e-way bill to ensure the e-way bill is valid. Many assume that the e-way bill has become obsolete since the introduction of e-invoicing but that is not true. E-way bills are required for the transportation of goods is taking place and it is an important document.

Can we generate an e-invoice for an unregistered person?

 The customer, or the unregistered person, will not be claiming an ITC. Currently, there is no provision in place whereby e-invoicing is mandatory for B2C transactions. But a dynamic QR code must be generated for digital payments whereby B2C transactions are concerned. This is mandatory for taxpayers with an aggregate turnover of over Rs. 500 crores since 1st December 2020.

Who should register for e-invoicing?

e-Invoicing has been mandated for businesses with an annual turnover of Rs 10 crore and above from 1st October 2022, mandating all businesses under the said category to register for e-invoicing.

Where to register for e-invoicing?

All GST-registered taxpayers who are required to generate IRNs should register for e-invoicing using their GSTIN. Additionally, taxpayers who are registered on the e-way bill portal are not required to register on the e-invoice system; instead, they can use their EWB credentials to login. 

What is e-invoice registration form? 

e-Invoice registration form is the piece of document that you need to register in the e-invoice system.

Watch How to Set-up TallyPrime for e-invoice

Video on e-invoicing n TallyPrime

 

Know more about e-invoices in GST

e-invoicing Software e-Invoice in GST
GST Invoice How to Generate E-Invoice in GST
How to Transit to e-Invoice System Invoice Reference Number (IRN)
Who Should Issue an e-Invoice in GST Generate e-Invoice Instantly in TallyPrime
How to Generate Bulk e-Invoice in TallyPrime Working of e-Invoice System

 

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