Digital Signature for an E-invoice

From 1st October 2022, E-Invoicing has been made applicable to businesses that have exceeded an annual turnover of ₹10 Crores in any financial year from FY 2017-18 to FY 21-22, regardless of whether their current revenue exceeds that amount or not.

E-Invoicing is the process of electronic authentication of B2B invoices. All taxpayers (that fulfil the criteria mentioned above) are required to upload invoices for B2B transactions to the Invoice Registration Portal. After this data is verified and authenticated, it is then shared with other portals managed by the GST Network as well, which saves time and effort for the taxpayer, and also reduces errors.

In a move to increase the efficiency of the e-invoicing system, users are allowed to sign their invoices digitally, as opposed to the physical signatures that were required before e-invoicing was implemented.

In this article, we will look at what a digital signature is and how it is beneficial for e-invoicing. We will also show you how to use the digital signature for an e-invoice.

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What is a Digital Signature Certificate?

Digital Signature Certificate (DSC) is a digital document that contains a person’s digital signature, which is used to electronically sign documents and transactions. In the context of the Goods and Services Tax (GST), a DSC is used to authenticate the identity of a taxpayer who is filing their GST returns and other documents electronically.

Under GST, every taxpayer who is required to file their returns electronically must sign the documents using a DSC. The DSC ensures that the documents have not been tampered with or altered in any way, and that the person signing the documents is the authorised taxpayer.

To obtain a DSC, a taxpayer must apply to a certifying authority, who will verify the taxpayer’s identity and issue the digital certificate. A DSC is issued for a fixed validity period of either one or two years, after which it must be renewed.

Benefits of Using a Digital Signature Certificate

The benefits of using a digital signature certificate are:

1. Documents like Form 16, challans, contracts, statements, etc., are signed in bulk.
2. It saves time as the documents are not signed manually or individually. 
3. The documents can be searched, retrieved, or archived with ease. 
4. It is a procedure integrated into the system and works with the signing, sending, and processing of electronic documents.
5. It reduces the expense associated with the manual process by up to 70%.
6. It ensures that the data’s integrity and validity are well-protected.

Using a Digital Signature certificate in an E-Invoicing system

A provider must submit the JSON of the invoice to the Invoice Registration Portal as part of the e-invoicing system. The JSON must adhere to specific essential and optional parameters when reporting the bills. One of the optional elements in this scenario is the digital signature. If the JSON is considered authentic, the IRP will create the hash (Invoice Registration Number, or IRN) and then digitally sign the JSON using its private key. The e-invoice will become invalid, and the digital signature will not work if the signed JSON is altered.

The e-invoice will be legal for use by the seller in his business dealings once the IRP has signed it. Additionally, the IRP will send this electronically signed invoice to the GSTN and the e-way bill system. 

Why is a Digital Signature Certificate Required?

The invoice’s JSON file must be uploaded to the IRP, and one of the optional factors is a digital signature. The JSON will be digitally signed, and a QR code will be generated once the IRP has verified the invoice. The Invoice Reference Number (IRN) issued by the IRP, the QR Code, and the supplier’s digital signature must all be disclosed when the supplier gives the recipient a printed copy of his invoice. The supplier’s digital signature and QR code must be provided separately and are not interchangeable.

Steps to Attach a Digital Signature to an E-Invoice

Before connecting a digital signature to an E-Invoice, ensure the software required to read the DSC is installed and that the GST portal’s “emSigner” function is operational. Follow the steps mentioned below to attach a digital signature:

Step 1: There are numerous methods, such as offline tools, mobile apps, etc., for producing an invoice in the required JSON format. After that, we must access the IRP and attach the JSON.

Step 2: Select the “Verify using DSC” button. The available digital signatures will be displayed in a dialogue box that will appear.

Step 3: Choose the proper digital signature and press the “Sign” button. Verify that the Authorised Signatory shown on the GST portal is the one who owns the DSC. You could be asked to input the DSC password by the utility.

Step 4: If the attachment of the Digital Signature Certificate were successful, a success message would appear. Press OK or Continue.

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Conclusion

The use of digital signatures for e-invoicing provides a secure and efficient way to authenticate the identity of the sender and ensure the integrity of the invoice data. It helps in reducing the risk of fraudulent activities and errors, which ultimately leads to a smoother and more transparent invoicing process. With e-invoicing becoming applicable to more and more businesses, it is becoming increasingly important for taxpayers to be aware of how to efficiently use the system to save both time and effort.