E-Invoice Format: How to Create Compliant and Professional Digital Invoices?

What is an E-Invoice Format?

An E-Invoice Format is a standardized digital template used to issue, share, and process electronic invoices between businesses. Unlike traditional paper or PDF invoices, e-invoices are designed for automation and seamless integration with accounting or enterprise resource planning (ERP) systems.

The e-invoice system includes both mandatory and optional fields. Mandatory fields are required for an invoice to be considered valid under the e-invoice standard, while optional fields can be added based on specific business requirements. Each e-invoice system can include a maximum of 1,000 line items, though in exceptional cases, this limit can be increased to 5,000 line items upon request.

All mandatory fields must be completed to register an e-invoice on the IRP (Invoice Registration Portal). If a mandatory field is not applicable, it can be reported as NIL. The key mandatory sections include –

– Basic Details

– Supplier Information

– Recipient Information

– Invoice Item Details

– Document Total

Additionally, the mandatory annexures consist of –

– Invoice Item Details

– Document Total Details

Step-by-Step Guide on Creating a Compliant e-Invoice

Step 1: Enablement for e-invoicing

The purpose of enablement is to ensure that only eligible taxpayers can register, test, and report e-invoices through authorized portals.

Taxpayers who meet the government’s eligibility criteria are automatically enabled for e-invoicing. To check if they are enabled, they can visit https://einvoice.gst.gov.in. If not enabled, eligible taxpayers can self-enable by following the instructions on the portal.

Once enabled, taxpayers can start reporting e-invoices. However, enablement does not equate to a legal obligation for e-invoicing. It simply ensures that only those who meet specific turnover limits can register and report invoices.

Step 2: Register on an Authorized Invoice Registration Portal (IRP)

This step ensures that the taxpayer has access to one of the six authorized portals to report e-invoices.

Taxpayers must register on one of the six government-authorized Invoice Registration Portals (IRPs) before they can start reporting e-invoices. These portals are:

– https://einvoice1.gst.gov.in

– https://einvoice2.gst.gov.in

– https://einvoice3.gst.gov.in

– https://einvoice4.gst.gov.in

– https://einvoice5.gst.gov.in

– https://einvoice6.gst.gov.in

To complete the registration, the taxpayer must verify their registered mobile number and email through OTP verification. Upon successful verification, login credentials will be created, allowing the taxpayer to start reporting e-invoices.

Step 3: Reporting e-Invoice Data

The purpose of reporting e-invoice data is to generate a valid Invoice Reference Number (IRN) for the transaction.

To report e-invoices, taxpayers must use the INV-01 schema in JSON format, which is the prescribed template for e-invoice data. This data is uploaded to the chosen IRP portal. The reporting can be done via different methods: offline tools, online web tools, mobile apps, or API-based methods.

Once the data is uploaded, the portal will automatically perform validations to check for errors, such as duplicate reporting. Upon successful validation, the system generates a signed e-invoice with a unique IRN and a QR code.

Step 4: Auto-Population and Sharing of e-Invoice

This step ensures that the e-invoice is integrated into the GST system and shared with the buyer.

Once validated, the signed e-invoice containing the IRN and QR code is automatically transmitted to the GST system. This lets the e-invoice data auto-populate into the supplier’s GSTR-1 return. The e-invoice with IRN details is then issued to the buyer.

The e-invoice is successfully reported and processed, ensuring both compliance with regulatory requirements and smooth data flow to the buyer for their records and GST filing.

Common Mistakes to Avoid While Creating E-Invoices

• Overlooking Compliance Requirements: Not adhering to local and international regulations. Understand and comply with applicable tax, digital signature, data retention, and cross-border invoicing rules. Ensure your e-invoicing solution meets these standards.
• Ignoring System Integration: Using e-invoicing as a standalone system without linking it to existing financial and ERP systems. Integrate e-invoicing with your current systems to automate invoice generation, synchronize data, and streamline payments and reporting.
• Inaccurate Invoice Data: Enter incorrect details like item descriptions, quantities, or prices. Always double-check invoice data before submission. Automated systems are used for accuracy to prevent rejection and maintain smooth cash flow.

How BUSY Accounting Software Can Help?

BUSY, an e-invoice software, streamlines e-invoicing by ensuring compliance with regional regulations, integrating seamlessly with existing systems, and automating invoice generation. It helps maintain data security through advanced encryption and secure authentication while offering real-time updates and tailored reports, making interdepartmental coordination and regulatory compliance more efficient.