E-Invoice Under GST

What is e-invoice under GST?

E-invoicing or electronic invoicing under GST is the process that allows taxpayers to authenticate the B2B invoices and other documents online with the help of GSTN for further use on the GST portal. Earlier, it was introduced only for large enterprises and later expanded to cover mid-sized businesses and small businesses. Under e-invoicing, the invoices are not generated on the GST portal, but an already generated and authenticated invoice is uploaded on the e-invoice portal. This automates the multi-purpose reporting process by inputting the invoice details one time.

This is to bring uniformity in trade. This Invoice Registration Portal (IRP) will then generate a unique Invoice Reference Number (IRN) and a quick response code for every invoice. This e-invoice gets transferred from the IRP to both GST portal and the e-way bill portal in real-time. This makes it easy to file GSTR-1 returns and Part A of the e-way bill.

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E-invoicing Applicability and Limit

This system of e-invoicing is applicable only to those companies whose aggregate turnover is above the prescribed limit.

The basis on which the e-invoicing applicability can be determined are -

• Based on the Financial Year - The annual aggregate turnover in any preceding financial year from 2017-18 should be considered to ascertain the applicability of the e-invoicing mandate. The annual aggregate turnover is calculated based on the GST returns.
• Based on the Entity Type - E-invoice can only be generated by the regular and SEZ developers. E-commerce operators can also generate e-invoices on their platforms on behalf of the seller. However, e-invoices cannot be generated by recipients and transporters.

Here is the e invoice applicability -

The taxpayers are required to comply with e-invoicing if their e-invoicing limit exceeds the specified e-invoicing limit in any financial year between 2017-18 and 2021-22.

If the turnover in the last financial year was below the threshold but exceeds it in the current year, e-Invoicing will apply from the start of the following financial year, i.e., FY 2023-24.

For example, ABC Ltd.'s aggregate turnover was:

• FY 2017-18: Rs 15 crore
• FY 2018-19: Rs 17 crore
• FY 2019-20: Rs 24 crore
• FY 2020-21: Rs 19 crore
• FY 2021-22: Rs 18 crore

ABC Ltd. must mandatorily generate e-Invoices starting from 01.04.2022, regardless of the current year's aggregate turnover, as it exceeded the Rs 20 crore turnover limit in FY 2019-20.

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What are the Benefits of E-invoicing?

E-invoicing under GST has a number of benefits for businesses. Here are the benefits -

• Easy Reconciliation - The auto-population of invoices makes it easier to match the purchase data and the supplier’s returns in GSTR-2A.
• Easy Credit - With the easy consumability of invoice data, it becomes easier to get access to credit avenues like bill discounting or financing.
• Inter-operability - The IRN, QR code, and JSON response make the invoice data interoperable. E-invoices created on one software can be accessed by the other.
• Automation - GST filing is easier as most of the details get auto-populated.
• Real-time - The status of the e-invoices can be tracked in real-time.

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The GSTN’s e-invoicing contains the following parts

• India has adopted the SIMPoL standard for the flow of information during the e-invoicing generation process. It consists of the technical field name, description of each field, whether it is mandatory or not.
• There are some mandatory fields such as Invoice type, Invoice Number, date of invoice, the bill to state, GSTIN, state code, address, item, taxable value, advance adjusted, total invoice value, GST rate, and tax amount.
• There are optional fields also as supplier email, phone number, payee name, mode of payment, etc.

Here are the 30 mandatory fields of an e-invoice -

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Various documents to be reported to the GST system

Apart from the Invoice, a supplier provides various other documents to the recipients. Such documents are also to be reported in Invoice Registration Portal (IRP) Various types of other documents are Debit notes, Credit notes, Bill of supply, or any other such document which are required to be reported by the creator of the document i.e. the supplier.

Here are the documents required to be reported to the IRP -

• Invoices by the Supplier
• Credit notes by the supplier
• Debit notes by the recipient
• Other documents required by the law to be created by there.

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Process of Getting an E-invoice

Registered persons can create e-invoice through any of the following modes based on their preferences:

• First one is using the offline/excel tool
• Second one is using the API mode – directly or through GSPs.
• Further, there are two access mechanisms for the e-invoicing system.
  - Web-based access for generation of IRN using the offline/excel based tools.
  - API based access for generation of IRN using the APIs directly or through GSPs.

The Process of E-invoice creation goes as follows:-

Stage-1 – Generation of JSON through invoice

• Generation of the invoice by the seller in his own accounting or billing system (it can be any software utility/ERP that generates invoice).
• The invoice must conform to the e-invoice (standards). The supplier should have a feature in his ERP that will create an output of invoice data in JSON format.
• Those who do not use any accounting or billing software or any IT tool to generate the invoice will be provided with an offline tool to key in data of invoice and then submit the same.
• The supplier’s software should be capable to generate a JSON of the final invoice that is ready to be uploaded to the IRP. The IRP will only recognize JSON files.

Stage-2 – Uploading of JSON on Invoice Registration Portal (IRP)

• Seller to upload the JSON of the e-invoice into the IRP.
• The JSON may be uploaded directly on the IRP or through GSPs or through the third party provided Apps)

Stage-3 – Data validation/approval by IRP

• If IRN is not generated, then IRP will generate IRN, based on JSON uploaded.
• If IRN is generated, then IRP will validate the IRN, (Based on JSON uploaded) from the Central Registry of GST System to ensure that the same invoice from the same supplier pertaining to the same Financial Year is not being uploaded again.
• On receipt of confirmation from the Central Registry, IRP will add its signature on the invoice data as well as a QR code to the JSON.

Stage-4 – E-invoice generation and sharing

• Sharing the signed e-invoice data along with IRN to the seller.
• Sharing the signed e-invoice data along with IRN to the GST System as well as to the E-Way bill system will also update the ANX-1 of the seller and ANX-2 of the buyer.
• The IRP will sign the e-invoice and the e-invoice signed by the IRP will be a valid e-invoice and will be used by the GST/E-Waybill system.

Stage-5 – Providing digitally signed E-invoice back to the Taxpayer

• Returning the digitally signed JSON with IRN back to the seller along with a QR Code

The registered invoice will also be sent to the seller and buyer on their mail ids as provided in the invoice.

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How can E-invoicing Curb Tax Evasion?

E-invoicing can help curb tax evasion in the following ways -

• Tax authorities can get access to the transactions taking place in real time as they have to be compulsorily generated through the e-invoicing portal.
• There are fewer chances of invoice manipulation as it is generated before carrying out a transaction.
• It reduces the chances of fake GST invoices and only genuine ITC can be claimed as all invoices are generated to the GST portal. Since the input credit can be matched with output tax details, it becomes easy to track fake tax credit claims.

E-invoicing is a crucial step in automating the GST reporting and filing process and also curbing tax evasion. If you are a GST-registered taxpayer struggling with filing your GST returns on time or have any tax-related queries, don’t hesitate to reach out to our tax experts, who can not only help you file accurate GSTRs but also solve your tax-related problems. Book a tax expert now!

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