E-Invoicing system under GST was implemented & was applicable from 1st October 2020, to specific categories of persons. E-Invoicing system under GST was introduced to systematize the generation of B2B invoices across the country.
Topics Covered –
- What is E-Invoicing system under GST?
- Who are applicable for GST E-Invoicing System?
- Who are exempted from GST E-Invoice System?
- How E-Invoice is prepared and what is its content?
- What is the role of IRP (Invoice Registration Portal) Under GST E-invoicing?
- What are the documents required for reporting in IRP?
- What is the process of generating GST E-Invoice?
- What are the Benefits of the GST E-Invoicing system?
- What would be major challenges in following the E-Invoice system under GST for a businessman?
- Is it possible to amend or cancel E-Invoice?
E-Invoice stands for the Electronic Invoice, which can be alternatively called a digital invoice. A digital invoice can be viewed and processed digitally. It contains data from the supplier in a structured format that the buyer’s financial system can automatically recognize, without requiring manual data input from the administrator.
GST e-invoice is generated at the government GST portal and data for the generation of e-invoice in respect of the goods and services are provided by the business organizations.
What is the E-Invoicing system under GST?
Under the ‘E-invoicing’ system a specific class of person (As of now business having turnover more than 50 Crore)** have to prepare an invoice. They will upload specified particulars of the invoice on the Invoice Registration Portal (IRP) and will obtain an Invoice Reference Number (IRN).
The invoice copy containing such IRN issued by the supplier to the buyer is known as ‘E-Invoice’ under GST.
‘E-invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. All invoice information will be transferred from this portal to both the GST portal and the e-way bill portal in real-time. Consequently, it will eliminate the need for manual data entry while filing GSTR-1 return as well as generation of part – A of the E-way bills.
Who are applicable for GST E-Invoicing System?
Initially, E-invoicing was implemented from 1st January 2020 on a voluntary basis for GST registered businesses in India. It was expected that it would mandatorily applicable from 1st April 2020. However, it was mandatorily applicable from 1st October 2020 & it was applicable on businesses having a turnover of more than Rs. 500 Crore for B2B transactions.
Further, from January 1, 2021, E-Invoicing was applicable to businesses having a turnover of more than Rs. 100 Crore for B2B transactions.
**Now, Government stated in a notification on March 8, 2021, that GST E-Invoicing will become mandatory for businesses having a turnover of more than Rs. 50 Crore from April 1, 2021, for Business to Business transactions.
Who are exempted from GST E-Invoice System?
As per Notifications No.13/2020 – Central Tax, dated the 21st March 2020 and Notification No. 61/2020–Central Tax dated: 30th July 2020 following organizations is exempt from the implementation of e-invoicing:
- An Insurer, Banking Company, or Financial Institution including NBFC.
- Goods Transport Agency (GTA).
- Passenger Transport Service.
- Admission to the exhibition of Cinematograph Films in Multiplex Screens i.e. PVR.
- SEZ UNIT
How E-Invoice prepared and what is its content?
The government has launched the GST E-Invoicing trial version. It will provide multiple categories under which the taxpayer will fill the same as per the applicable criteria.
A GST E-Invoice contains the following information-
- E-invoice schema: Schema stands for format. In the 37th GST Council meeting held on 20th September 2019, the GST council approved the standard of e-invoice, which has been published on the GST portal. The assessee will fill the technical field name and the description of each field in the E-invoice schema. The E-Invoice schema has mandatory and non-mandatory fields.
- Masters: Masters will specify the set of inputs for certain fields that are pre-defined by GSTN itself.
- E-invoice template: A complete standard format for raising e-invoice that consists of both mandatory and non-mandatory fields have been provided at GST Portal.
What is the role of IRP (Invoice Registration Portal) Under GST E-invoicing?
The IRP under GST is a portal that allots IRN and QR codes to each invoice. The same will help in authenticating the e-invoices generated at the portal.
Currently, NIC (National Informatics Centre) is the only available portal for this.
As per this e-invoicing system, only an “E-Invoice” having approved Invoice Reference Number (IRN) is a valid invoice.
What are the documents required for reporting in IRP?
The list of documents which are require to be upload for reporting the e-invoice to IRP is as under:
- Invoice of the Supplier.
- Credit Note of the Supplier.
- Debit Note of the Supplier.
- Other documents (if required by Law)
What is the process of generating GST E-Invoice?
GST e-invoice will be generated in the same way as the e-way bill is generated at portal https://ewaybill.nic.in/
- With the help of available software, an E-Invoice will be created in the prescribed format.
- The supplier will generate a unique IRN, which is optional. As IRP system of government will generate the same, if not generated by the supplier.
- The IRP will validate the generated IRN attached with JSON (if uploaded). Otherwise, it will generate an IRN and authenticate it.
- The invoice will be updated with IRP’s digital signature and a QR code will be added to that JSON file.
- This detail/data would be shared by IRP with the E-way bill and GST system, which will be used for the auto-population of GST Return.
- Ultimately, the supplier will get digitally signed JSON along with IRN and QR code at his registered e-mail ID.
Note: The IRN would be the “unique identity” of the E-invoice for the one complete financial year.
What are the Benefits of the GST E-Invoicing system?
Major benefits of GST E-Invoicing System are as under:
- It simplified GST compliance.
- More Accuracy.
- Cost Efficient.
- Paperless work.
- Faster availability of genuine input tax credit.
- Real-time tracking of invoices.
- Slighter reconciliation errors.
- The effective functioning of capital performance.
- Improvement in business efficiency.
- Lesser probability of audits and surveys by the tax authorities as the information they require is available at a transaction level.
- The real-time reporting of transaction invoices will ultimately remove the probabilities of hassles that happen due to pendency.
What would be major challenges in following the E-Invoice system under GST for a businessman?
Major challenges of GST E-Invoicing System are as under:
- Responsibility for supplier relationships.
- Different compliance requirements internationally.
- Internal resistance to change.
Is it possible to amend or cancel E-Invoice?
Amendment of E-Invoice – Yes it is possible to amend the e-invoice and all the amendments would be done only at the GST portal. However, JSON sent for the generation of e-invoice & IRN cannot be amended.
Cancellation of E-Invoice –Yes E-invoice generated can be canceled if needed. The same is needs to be reported to IRP within 24 hours as data on IRP remains only for 24 hours. However, an amended invoice cannot be canceled even within 24 hours and will be kept for audit trail. Any cancellation after 24 hours is not possible on IRP.
Though one has an option for manual cancellation on the GST portal before the filing of the returns but E-invoice cannot be partially canceled. Moreover, it cannot be canceled if a valid e-waybill exists for that IRN as goods are in movement.
GST e-invoice, a new concept under GST, which is introduced after multiple levels of discussions and feedback sessions on a trial run.
“If GST was a path-breaking reform, e-invoicing is set to overhaul how India does business. E-Invoicing is not just a migration from paper to e-invoices that are authenticated and digitally stamped through a government portal. E-invoicing will transform the relationship between a business and its suppliers, its customers, and also with the tax administration.
So, it won’t be incorrect to say that with e-invoicing, doing business has to be reimagined. Several challenges may lie ahead, but the potential benefits from this far outweigh the costs.
How to File GST Return Online in India?