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What is E-invoicing under GST? Its Applications & Procedure | Amazon Business

Learn What is E-invoicing under GST, its applications, advantages, procedures, & How to generate an E-Invoice. Read for E-Invoice applicability under GST.

Table of Content

What is E Invoicing under GST?

Why E invoice is required?

The current E Invoicing system

Major Challenges of E Invoicing Under GST

The link between an E Invoice and E Way bills?

Applicability and Non-applicability of E Invoice under GST

How Does E-Invoicing Work?

What is the process of generating an E Invoice?

The mandatory fields of an E Invoice

How does E Invoicing impact businesses?

Benefits of E-invoicing under GST

How will E Invoicing curb tax evasion?

Latest Update for E-Invoicing Under GST

FAQs

 

 

What is E invoicing under GST?

E-Invoicing is the introduction of a digital invoice at the government GST portal, for goods and services provided by business firms. The GST council in India set up a committee in May 2019 to discuss e-invoicing considering global implementations. Since then, several drafts of e-invoicing were issued and this was finally released in January 2020. The mandate went live from October 1, 2020 in a phased manner.

 

 

Why E invoice is required?

Tax fraud using fake invoices has been a bane that the government was fighting even before implementing GST. What E-Invoicing does in the Indian context is that it mandates authorization of each invoice from the government portal called IRP (invoice reference portal). Such real-time invoicing discourages fraudulent transactions. Other than plugging the holes in tax leakage, other benefits of e-invoicing under GST that benefits taxpayers include:

  • Real-time tracking of invoices
  • One-time reporting of all GST filings
  • Minimized invoice mismatches
  • Easy input tax claims
  • Better management and automation of the tax filing process

 

The current E Invoicing system

Previously, businesses used different software to generate invoices, which were later uploaded on the government portal at the time of filing GSTR-1 return. The current e-invoicing system has been automated after 1st October, 2020.

Now, instead of manually feeding the invoice data during GSTR-1 return filing, the business owners have to follow a specific format. The e-invoice will be generated by importing using the excel tool/JSON or via API integration, either directly or through a GST Suvidha Provider (GSP).

 

Major Challenges of E Invoicing Under GST

Any new system comes with a set of challenges. Although the promise of ease of compliance is always there, E-invoicing posed a number of challenges for the business owners.

  • Separating B2B invoices from the B2C invoices
  • Cancellation of amendment of e-invoices
  • Additional storage option to save the invoice data
  • Taking due diligence in reconciliation of e-invoice data across portals

 

The link between an E Invoice and E Way bills?

An e-way bill is generated when there is movement of goods in a vehicle whose value exceeds Rs. 50,000. A GST registered individual or business cannot transport goods that have value of more than Rs. 50,000 without an e-way bill. On generation of an e-way bill, a unique E-way Bill Number (EBN) is allocated that is available to the supplier, recipient, and the transporter.

 

E-way bills are directly integrated with the e-invoicing system. It is totally the taxpayer’s choice if they want to generate the E-way bill at the time of e-invoice generation or later by using the IRN as a reference. However, it should be noted that an e-waybill will be invalid without a valid e-invoice.

 

The government of India has also linked e-way bills to the GST return filing. E-way bill generation will be blocked for taxpayers who have two or more consecutive GST returns pending to be filed. This benefits businesses in the following ways:

  • Easy compliance for the taxpayers
  • Ensuring accuracy by automating the process
  • Benefits the government by ensuring reduced tax evasion
The link between an E Invoice and E Way bills

Applicability and Non-applicability of E invoice under GST

E-invoicing became mandatory October 1, 2020, to all businesses that have an aggregate turnover of more than Rs. 500 crores. From January 1, 2021, e-invoicing became applicable to all businesses exceeding Rs. 100 crores in turnover, finally extending it to businesses with total turnover of more than Rs. 50 crores from April 1, 2021.

 

On the basis of entity, GST e-invoices can be generated only by suppliers, not by recipients or transporters. However, e-commerce platforms can generate e-invoices for the sellers selling products on their platform.

 

However, it should be noted that e-invoicing is not applicable to the following categories:

  • Banking companies, financial institutions, NBFC, insurance companies
  • Goods transporting agencies
  • Registered individuals supplying passenger transportation services
  • Registered individuals involved in the service of exhibition of cinematographic films in multiplex services
  • Special economic zone (SEZ) units

 

How does E-invoicing work?

As per the regulations, e-invoices have to be issued to the IRP. The IRP then carries out the validation of the e-invoice to provide the supplier with a response message. If the IRP response is positive, the invoice gets a digital signature, and the IRP assigns it a unique number. A QR code is also generated for both the buyer and the seller to confirm its authenticity and to prove that it has been registered in the GST system, finally making the document available to both parties in the portal. However, if the response is negative, a message detailing the reason for rejection is sent.

 

The below fields get validated by the IRP system

  • Document details: type, number, and date.
  •  Item-related details like service/ goods, total amount, GST rate, HSN code, total item value.
  • Supplier details like legal name, GSTN address including location, PIN code, and state code.
  • Buyer details like legal name, GSTN number including, address, location, PIN code, and state code.
  • Transaction details like tax scheme and supplier type
  • Dispatch from address details
  • Billing and Shipping details
  • Invoice details include tax exclusive value, tax value and the total invoice value

 

 

What is the process of generating an E Invoice?

Generating an e-invoice under GST is done through three stages –

  • Generating an E Invoice
  • Creating a unique IRN   
  • Updating the invoice to the GST and E Way bill systems

 

To generate e-invoices, businesses must register to the Invoice Registration Portal (IRP). They have to log in or signup to this portal. If they are already registered on the e-way bill portal, then they can use the same credentials to log in to the IRP.

 

  • Once logged in as a registered tax payer, click on the “Registration” tab in the IRP home page
  • Fill the registration form, enter the GSTIN and the captcha code
  • Details such as name, address, trade name, and contact details will be auto-populated based on GSTIN
  • Check and verify the details or click “Update from GST common portal” if it needs to be updated
  • Click on “Send OTP”, OTP will be received on the registered mobile number
  • Enter OTP to validate and provide a unique username
  • Once username is validated, create password to access the IRP account
Registration Process

The mandatory fields of an E Invoice

Since the idea behind e-invoice under GST was to centralize the invoice data, there is a specific schema or format in place. All businesses and enterprises eligible under GST filing has to follow this format.

 

Sl. No.

Description

Nature

Total

Mandatory

Optional

1

Basic Detail

Mandatory

8

6

2

2

Invoice Period

Optional

2

2

0

3

Order and Sales References

Optional

 

 

 

3.1

Preceding Document References

Optional

3

2

1

3.2

Receipt/ Contract References

Optional

8

0

8

4

Supplier information

Mandatory

10

6

4

5

Buyer Information

Mandatory

12

6

6

6

Payee Information

Optional

9

0

9

 

Here is how the e-invoice looks like –

GST Bill

How does E Invoicing impact businesses?

Businesses will have to make provisions for real-time upload of invoice data and printing of QR code. For this to happen, they will need to have the right technology that assists these provisions without having to change the invoicing process. Businesses using software that integrates with the IRP portal will find it smoother to manage the e-invoicing requirements. Furthermore, the entire behavior of businesses will change since the buyer will drive the supplier to upload invoices to the government-monitored IRP portal, as this will confirm his eligible input tax credit. This means that buyers will be more inclined to do business with those sellers who understand the necessity of quick and correct uploading of invoices.

 

Benefits of E-invoicing under GST

E-invoicing offers a lot of benefits to all parties involves in B2B transactions. Some of the most important ones are:

 

  • E-invoicing cuts out a number of steps in the invoicing process thereby saving time for the buyer and the seller
  • With e-invoicing, the cost for paper or postal fees is saved
  • E-invoicing encourages automation, thereby reducing errors and mistakes that are common with manual input
  • Using e-invoicing software, it is easy to ascertain when an invoice has been sent, viewed and paid and keep track of the invoices
  • Since the authenticity of GST e-invoices is automatically validated, it reduces the risk of fraudulent bills
  • Easier for tax officials to trace fake input credit due to real-time access to data
  • E-invoices are saved on one platform and can be accessed from anywhere, thereby providing a higher degree of control into the invoicing process
  • E-invoicing allows real-time tracking of invoices, thus allowing faster availability of input tax credit
  • Helps buyers reconcile their purchase order with the GST e-invoice and accept or reject the invoice in real-time

 

How will E Invoicing curb tax evasion?

Most of the invoicing frauds happen in B2C transactions. Instead of gathering the B2C invoice data, e-invoicing under GST covers the B2B transactions. However, the GST council introduced the e-invoicing under GST to curb tax evasion, and gradually through phasing, it will cover the entire business space. For now,

  • The government will have access to transactions as they take place in real-time
  • As the GST invoices gets generated in real-time, even before the transactions are carried out, there will be less scope for manipulation
  • It will substantially reduce the number of fake GST invoices as the business owners has to maintain uniformity of information in ITC, GSTR-1, and e-invoicing

 

Latest Update for E-Invoicing Under GST

Here are the latest updates on e-invoicing under GST –

 

1. APIs (AUTHENTICATION API & Master API) have certain changes in the request and response structures and hence are made available in a new version - 1.04. However old version (V1.03) will continue to work on production for couple of weeks along with new version. You are requested to migrate to new version at the earliest, if not done yet. The withdrawal of the old version will be informed separately

 

2. The eicore (IRN) and eiewb (E-WAY BILL) APIs are improved with few new validations and some fixes. It may be noted that there are no change in the structure or format of the request and response payloads. These APIs will continue with version no. 1.03

 

3. The Validation improvements in IRN generation API are

 

a) IRNs can be generated only if the Supplier GSTNs is 'Active'. IRN cannot be generated if the status of Supplier GSTINs is 'Suspended' or ‘Provisional’ or ‘Inactive’ or ‘Cancelled’. However, IRN can be generated if the Recipient GSTIN is 'Active' or 'Suspended' but not 'Provisional' or 'Inactive' or 'Cancelled'

 

b) IRN generation is allowed for the CANCELLED recipient GSTIN, if the document date of invoice is between date of registration and date of deregistration of the recipient

 

c) Supply type 'SEZWP' or 'SEZWOP' is allowed only if the tax payer type of the recipient GSTIN is 'SEZ Unit' or 'SEZ Developer'

 

d) Reverse charge is applicable for the e-invoices where the 'IGST on Intra' is set as 'YES'.

 

e) 'Over Dimension Cargo' type is allowed for the transportation type as SHIP for e-way bill movement

 

4. It is to highlight that majority of the IRN and E-WAY BILL generation, presently happening, will not be affected by these validations

 

5. If the above validation points 3a, 3b and 3c are failing for genuine invoices while generating IRN, please get the GSTIN masters updated on the e-invoice using the following option. Visit the E Invoice portal (https://einvoice1.gst.gov.in/), and search the GSTIN under 'Search' -> 'Tax Payer / GSTIN' and click on 'Update from GST Common Portal' to update the data in E Invoice System from GST Common Portal

 

6. Improvements in e-Invoice Print have been done

 

7. API Users of e-Invoice system can update status of their user-id as ‘Transporter’ by logging into e-Invoice system, so that; they can generate eWay Bills for other GSTINs using the same user-id

FAQs

  • Businesses can generate e-invoices through ERP or through their own accounting and billing systems.

  • All businesses have to use the same e invoice format. They have to fill the mandatory fields, other optional fields can be chosen by the business according to their requirements.

     

  • Yes, the specification for each field has been mentioned with its length and characters that have to be entered.

  • The maximum number is 100.

  • Yes, it is allowed to link multiple invoices in such cases.

  • The generated invoices can be cancelled fully, not partially, but it should be reported to the IRP within 24 hours.

     

  • Yes, the e-invoice scheme has provision for export invoices as well.

  • Here is the list of documents one needs at the time of e-invoicing under GST –

    • Invoices issued by the supplier
    • Credit notes issued by the supplier
    • Debit notes issued by the recipient
    • Documents as notified under GST law to be reported as an e-invoice by the creator of the document
  • The purpose behind e-invoicing under GST is to auto-populate the GST invoice data from the businesses. Once the business owner generates the e-invoicing on IRP, the invoice data is fed to the GST portal to expedite the GST return process later. It auto-fills the mandatory fields, making the compliance easier for the business and enterprises.

  • Other than India, there are 38 other countries including Canada, Japan, Mexico, Singapore, and the USA that practice e-invoicing.

     

  • One can generate e-invoice using any of the following tools / platforms –

    • Website
    • API
    • SMS
    • Mobile app
    • Offline tool
    • GST Suvidha Provider (GSP)
  • Editing e-invoice is not allowed. If you make a mistake, cancel the e-invoice and generate a new one on IRP.

Product Updates

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