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With the e-invoice concept being introduced from 1St October 2020 and the 3rd phase to be implemented from 1st April, 2021, how does e-invoice system work is the question of the hour.
In simple words, e-invoicing is a system through which business to business (B2B) transactions are authenticated electronically by the IRP portal for further use on the common GSTN portal.
In the e-invoice system, the moment you create an invoice for your customer, it should be uploaded to IRP (Invoice Registration Portal) where the validation will be done, and a unique number called IRN (Invoice Reference Number) along with the QR code will be issued.
An invoice remains valid only if it has IRN and QR code that is authenticated by the IRP (Invoice Registration Portal). Here, IRP is a designated portal designed to accept, validate and authenticate the invoice.
Know more on IRN, Format and ways to generate it
In contrast to the current system of GST which requires only the details of invoice to be uploaded periodically in GSTR-1, the e-invoice system requires you to upload and get the invoice authenticated by the IRP system. Without further ado, let’s understand how e-invoice system works?
For us to understand the workflow of the e-invoice system, it is important to know the participants of the system. The key participants of e-way bill system are represented in the below diagram along with their interactions.
As depicted in the above diagram, the workflow of the e-invoice system can be categorized into 2 parts. First is the interaction between the business (supplier in case of invoice) and the Invoice Registration Portal (IRP). The second part is the interaction between the IRP and the GST/E-Way Bill Systems and the Buyer. Let’s now understand the e-invoice system in detail.
The above illustrative diagram of e-invoice system is explained below
With e-invoice already been implemented for bigger businesses and nearing deadline of implementing e-invoicing for 50 crores and above businesses, it is a necessity for the business to have an accounting or ERP software which will help you seamlessly generate e-invoice without impacting the way you use to operate your business. While the applicability of the e-invoice is for the business more than 50 crores from 1st April,21, the long-term vision of the council is to implement the new e-invoicing system for all taxpayers irrespective of the turnover threshold.
Know More about 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, Date of implementing e-invoicing in GST, Generate e-Invoice Instantly in TallyPrime, How to Generate Bulk e-Invoice in TallyPrime
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