e-Invoicing in GST: A Detailed Guide for Businesses

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

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

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. 

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. 

e-Invoice applicability for businesses

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. 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. 

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.

What does an 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.

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.

Types of documents 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

Workflow of an 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.

Source: last FAQ doc released by GSTN

e-Invoicing and GST 

Before, 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 was automatically reflected in the GSTR-2A, a view-only form. 

Under the e-Invoice system, all invoices need to be electronically uploaded and authenticated with a unique invoice reference number (IRN) and a 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. After the e-Invoice is validated, the details on the invoice is automatically fed to the relevant GSTR form by the GST portal. 

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.

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. 

Read Articles

• How to Generate e-Invoice in GST?
• Generate e-Invoice Instantly in TallyPrime
• Bulk Generation of e-Invoices in TallyPrime
• How does e-Invoice System Work
• How to amend or modify e-invoices?
• How to Transit to e-Invoice System?
• Things to consider while choosing an e-invoice solution

FAQs on e-invoice

Can an e-invoice be canceled partially/fully?

You cannot cancel an e-invoice partially. If you must cancel an e-invoice, then it must be done completely. 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 does e-invoice work?

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 exceeding Rs 10 crore from 1st October 2022, mandating all businesses under the said category to register for e-invoicing. And the businesses with an annual turnover exceeding Rs 5 crore will be mandated to issue e-invoices from 1st August 2023 in any preceding financial year from 2017-2018 onwards.

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.

How to generate e-invoice in the GST portal?

• Visit the e-invoice portal
• Click on the Registration button
• Click on e-Invoice Enablement
• Now, you need to enter the GSTIN of the company
• Post this; you'd need to get the OTP verification done
• Now, you need to enter the annual turnover details with the related financial year and submit
• Now you are registered for e-invoicing
• Now you can log in to the e-invoice portal and upload B2B invoices using a chosen mode to generate IRN

How to upload e-invoice in the GST portal?

• You need to login to your GST account
• Now, select the month for which you want to upload GST invoices
• Post this, select GSTR-1 Return and Click on Prepare Online
• Now you can select B2B invoices and enter details of the invoices one by one

How to print e-invoice in the GST portal?

• Enter invoice details
• preview and confirmation
• Validation and generation of JSON File
• Login to e-Invoice Portal
• Upload JSON file, and generate IRN, and download response file
• Import IRNs in GePP and push to history
• Print e-Invoice

How to modify e-invoice in gst portal?

Watch How to Set-up TallyPrime for e-invoice

Video guide - e-invoicing in TallyPrime

Know more about e-invoices in GST