E-invoicing is an invoicing method that uses digital technology to generate, send, receive, and process invoices. As businesses transition to this digital invoicing method, questions about its implementation and use often arise. In this article, some of the most common questions about e-invoicing include what it is, how it works, its benefits, and how it differs from traditional invoicing methods. Additionally, businesses may also ask about legal requirements and compliance standards associated with e-invoicing.
Here are some frequently asked questions (FAQs) about e-invoicing, a digital method of generating, sending, receiving, and processing invoices. These FAQs aim to clarify various aspects of e-invoicing, including its definition, benefits, implementation, and legal requirements.
All companies with a combined yearly turnover of Rs.10 crores would be required to use electronic invoicing. However, the government has exempted some enterprises from using electronic invoicing, including SEZ Units & Developers, Insurance Companies, Banking Companies, Financial Institutes, Passenger Transportation services, etc. E-Invoicing applies to export, RCM, B2B, and B2G invoices, credit notes, and debit notes.
Without evidence of the exchange being made available to the government, a transaction is carried out directly between the supplier and beneficiary. The e-invoicing system specifies the standard, schema, and format for invoice production, with the businesses continuing to generate invoices on their separate ERPs as they have in the past. This guarantees that the invoices are accurate and readable by machines.
The taxpayer is responsible for generating the invoice and must record it on the GST Invoice Registration Portal (IRP) at the time of generation. Once the invoice is reported to the IRP system, a specific Invoice Reference Number (IRN), a digital signature for the e-Invoice, and a QR code are added. The QR code contains essential information from the e-invoice and is returned to the taxpayer who reported the transaction. Additionally, the IRP will provide the seller’s registered email ID with the signed e-invoice.
The IRP, or Invoice Registration Portal, is where taxpayers must create e-invoices. Other ways to generate an e-Invoice using APIs through ASPs and GSPs have also been made available by the government. You can also produce an e-Invoice directly from your ERP using these APIs
Currently, e-Invoicing applies to
No. It must be cancelled entirely. Invoice cancellation is subject to accounting standards and any other laws or regulations that may be in effect.
The workflow of an e-invoice has two main components. The interaction between the company/supplier and invoice registration portal in the first phase (IRP). Invoices are created by the supplier, submitting a JSON file to the IRP. Before sending the invoice back to the supplier, the IRP verifies the data, creates an IRN and QR code, and digitally signs the document.
The second part of the process involves the interaction between the GST/E-Way Bill and IRP systems. Once the e-invoice data is transmitted to the GST system, the GSTR-1 return is automatically filled out. The e-invoice data is also sent to the e-way bill system, which generates Part A of the e-way bill. If transporter information is provided, Part B is also generated; otherwise, it can be produced later. This streamlined process has eliminated the need for repetitive data entries and has made the workflow for taxpayers much more efficient.
In addition to their primary location, businesses often operate from multiple locations. When there are several business points, it may be challenging for organisations to generate & operate e-invoices. GSTIN has made it possible to set up sub-users who can generate and manage e-invoices from multiple locations using the same login credentials. The administrator may give sub-users authority to carry out tasks at their discretion.
An e-Invoice will only be included in the relevant GST return after it has been verified and registered by the invoice registration system. Once the validation is complete, the taxpayer can review and change the GSTR-1 return. As appropriate, the recipient’s GSTR-2A/2B/4A or 6A will automatically populate the data from the supplier’s GSTR-1 return.
The tax department’s main objective is to enable the pre-population of GST returns, which will reduce reconciliation issues. With the implementation of e-Invoicing, the information contained in invoices can be pre-populated into the relevant tables of the tax returns, eliminating the need for additional data entry.
The government has made it possible to create e-invoices using a uniform format that will apply to all business and transaction kinds. Specific fields in the SCHEMA format are required, while others are optional. As the IRP will check the e-Invoice for these fields, taxpayers must ensure that they adhere to this structure and fill out all required data. There are 12 sections in the SCHEMA format, of which taxpayers must fill out 5 and 7 are optional.
According to the GSTN’s draft format, an e-Invoice will have the following components:
E-Invoice SCHEMA: The names and descriptions of each technical field are included in this section of the e-invoice. It will also state whether a field is required or not, and it consists of some sample values and explanations.
Masters: Masters will define the set of inputs for a few predefined fields in GSTN. Such fields as UQC, State Code, Invoice Type, Supply Type, and others are included.
E-Invoice Template: The template allows the reader to correlate the terminology used in other sheets and is in accordance with the GST laws. Green indicates required fields; yellow indicates optional fields.
If your account becomes inactive on the e-invoice site, your registration has been cancelled, or your GSTIN has been deactivated on the GST common portal. A taxpayer should go to the GST Common Portal and use the ‘Search Taxpayer’ tab to see the current status of his GSTIN.
The techniques listed below have a different approaches to creating an e-invoice:
Download the offline tool from the portal at https://einvoice1.gst.gov.in if you want to generate IRNs in bulk while offline. Enter the invoice information and check your entries. Creating the JSON file, then uploading it after entering the portal. The taxpayer must register his APIs for the remaining methods by logging into the e-invoice site, then connect and generate IRN and e-way bills using the API credentials. You can also generate e-invoices with busy software.
B2C invoices are not eligible for e-Invoicing, and taxpayers should avoid validating them because the IRP will reject them. Businesses must, however, self-generate QR Codes for B2C Invoices beginning in December 2020. For recipients to scan and pay, these QR Codes will include the information from the e-Invoice and a payment reference link.
By uploading the signed JSON into the electronic invoice system and using the “Verify Signed Invoice” option from the list of search options, anyone can confirm the accuracy of an e-invoice. The QR code printed on the invoice can also be verified by downloading the QR Code Verify app.
The relevant taxpayer is responsible for fulfilling the requirements of Rule 48(4) before issuing an electronic invoice. However, as a convenience measure, starting with FY 2017–18, taxpayers who have exceeded the required turnover in any fiscal year are now eligible to disclose bills to the IRP.
By selecting “Search” > “e-invoice status of the taxpayer” on the e-invoice site, one can look up the enablement status of a GSTIN. This list of GSTINs is solely based on GSTR-3B turnover information provided to the GSTN. Additionally, it can include exempt entities or entities for whom e-invoicing is inappropriate for various reasons. As a result, having an enabling status does not automatically entail that the taxpayer must provide electronic invoices. Users can also view a taxpayer’s turnover slab by selecting the “Search Taxpayer” or “Know Your Supplier” tab on the GST portal.
E-invoicing offers businesses a faster, more efficient, and more secure invoicing process that can help them save time and money. By understanding the common questions and concerns surrounding e-invoicing, businesses can successfully implement this digital invoicing method and reap its numerous benefits.