Electronic Invoicing under GST: E-invoicing

By: Diptika Jadhav - 5th February, 2021

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What is e-Invoicing under GST?

E-invoice does not mean the generation of invoices from a central portal of the GST department. It is a standard format of the invoice. Under this system, an identification number will be issued against every invoice sent for registration to the Invoice Registration Portal (IRP). All invoice information will be authenticated electronically by GSTN and transferred from this portal to both the GST portal and e-way bill portal in real-time.

To whom is e-Invoicing applicable?

E-Invoicing has been made applicable from 1st October 2020 to all businesses whose aggregate turnover has exceeded Rs.500 crore limit in any of the preceding financial years from 2017-18 to 2019-20. Notification No.61/2020 – Central Tax prescribed the turnover limit for the implementation of e-Invoicing from 1st October 2020. Notification No.71/2020 – Central Tax prescribes the time period considered for determining eligibility under e-Invoicing.

Further, from 1st January 2021, e-Invoicing will be applicable to businesses exceeding the Rs. 100 crore turnover limit in any of the financial years between 2017-18 to 2019-20, as intimated in Notification No.88/2020 – Central Tax.

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)
Who can generate an e-Invoicing?

E-invoice can be generated only by the suppliers. The recipients and transporters cannot generate E-Invoice. The recipient liable to pay tax under RCM also cannot generate E-Invoice. It is the supplier, supplying the goods and /or services under RCM who is liable to generate E-Invoice.

Taxpayer having an annual aggregate turnover of more than INR 500 crores and having B2C supplies as well, cannot issue e-invoice for B2C. The access to the taxpayer will be blocked if continuous requests with B2C transactions are fired.

Also, the Taxpayers issuing both taxable as well as exempt supply under single invoice would be troublesome and would be required to issue e-invoice only in respect of taxable supplies.

Moreover, taxpayers having an annual aggregate turnover of less than INR 500 crores cannot opt for e-invoicing voluntarily.

Steps to generate an E-Invoice

E-invoicing mechanism is the process wherein details of the invoices have to be sent for registration on the Invoice Reference Portal (IRP) in a standard format for which e-schema has been notified, in return of which supplier gets an Invoice Reference Number (IRN), a digitally signed invoice by IRP and a QR Code in JSON

  1. The supplier will upload the JSON of the invoice into the IRP (Invoice Reference Portal). The JSON may be uploaded directly on the IRP or through GSPs or third party provided Apps.
  2. The IRP will generate the Hash. The hash generated by IRP will become the IRN (Invoice Reference Number) of the e-invoice. This shall be unique to each invoice and hence be the unique identifier for each invoice for the entire financial year in the entire GST system for a taxpayer.
  3. The IRP will check the IRN from the central registry of the GST system to ensure its uniqueness. On receipt of confirmation from Central Registry, IRP will authenticate and add its signature on the Invoice data as well as a QR code to the JSON. After that Invoice Reference Number (IRN) will be generated by the IRP.
  4. IRP will return the digitally signed JSON with IRN back to the seller along with a QR code.
  5. IRP will share the signed e-invoice data along within IRN (same as that has been returned to the supplier) to the GST system as well as to E-Way Bill System.

GSTR 1, GSTR 2A, and GSTR 6A will get auto-populated along-with the facility to directly generate E-waybill thereby reducing duplication work. Table 4A, 4B, 4C, 6A, 6B, 6C, 9B, and 12 of GSTR 1 will be auto-populated i.e., B2B, exports, Registered DN, Registered CN, and HSN

Can the Recipient Verify the E-Invoice?

An e-invoice portal has been developed by the government which provides facility / an App to the recipient or any third person to check the correctness/validity of e-invoice issued to them. Anyone can verify the authenticity or the correctness of e-invoice by uploading the signed JSON file or Signed QR Code into the e-invoice system. The option 'Verify Signed Invoice' under the Search option can be selected and the signed JSON file can be uploaded and verified. Similarly, the QR Code Verify app may be downloaded and used to verify the QR Code printed on the Invoice.

Documents required while reporting in IRP

Below is the list of documents which are to be provided by the taxpayer while reporting the einvoices to IRP:

  • Supplier side invoices
  • Supplier's Credit Notes
  • Recipient's Debit Notes
  • Other documents except once mentioned above (if required by law).
How will Electronic invoicing benefit businesses?

Businesses will have the following benefits by using e-invoice initiated by GSTN:

  1. E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
  2. E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
  3. Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
  4. 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.
  5. Faster availability of genuine input tax credit.
  6. Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

By Diptika Jadhav and Nikita Noronha


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