E-Invoicing Under GST: Applicability, Implementation, Benefits, and Process

What is an E-invoice?

E-Invoicing, or electronic invoicing, is a system that electronically authenticates B2B invoices and certain other documents for use on the common GST portal by the GSTN (Goods and Services Tax Network).

In its 35th meeting, the GST Council decided to implement e-Invoicing, initially targeting large enterprises and later expanding to include mid-sized and small businesses.

E-Invoicing does not involve generating invoices on the GST portal; instead, it requires submitting pre-generated standard invoices on a common e-invoice portal. This streamlines reporting by automating the process with a one-time input of invoice details. The CBIC (Central Board of Indirect Taxes and Customs) notified a set of common portals for e-invoice preparation through Notification No.69/2019 – Central Tax.

Under the electronic invoicing system, an identification number is issued for each invoice by the Invoice Registration Portal (IRP), managed by the GSTN. The first IRP was launched by the National Informatics Centre at einvoice1.gst.gov.in.

All invoice information is transferred in real-time from the IRP to both the GST portal and the e-way bill portal. This eliminates the need for manual data entry when filing GSTR-1 returns and generating part-A of e-way bills, as the IRP directly provides the information to the GST portal.

System Before and After E-invoicing

Prior to the implementation of e-invoicing, businesses used various software to generate invoices, and the details of these invoices had to be manually uploaded in the GSTR-1 return or entered through ERP systems.

Once the suppliers filed the GSTR-1, the invoice information would be reflected in GSTR-2B for the recipients. In addition, consignors or transporters had to generate e-way bills by manually importing the invoice data in Excel or JSON format or through ERP systems.

With the introduction of the e-invoicing system, the process of generating and uploading invoice details remains the same. Businesses can import the data using Excel tools, JSON format, or through API integration, either directly or with the assistance of a GST Suvidha Provider (GSP). The e-invoicing system ensures seamless flow of data for GSTR-1 preparation and e-way bill generation. It serves as a crucial tool for enabling this streamlined process.

Who Needs to Generate an E-invoice?

The applicability of e-invoicing is determined based on the aggregate turnover of taxpayers. The applicability is divided into different phases, with each phase specifying a minimum aggregate turnover threshold and an applicable date.

Starting from the financial year 2022-23 and onwards, taxpayers are required to comply with e-invoicing if their turnover or e-invoice limit exceeds the specified threshold within any financial year from 2017-18 to 2021-22. It’s important to note that the aggregate turnover should encompass the turnover of all GSTINs associated with a single PAN across India.

For example, let’s consider the aggregate turnover of two companies, ABC Ltd and QPR Ltd, for the given financial years.

ABC Ltd:

• FY 2017-18: Rs 15 crore
• FY 2018-19: Rs 17 crore
• FY 2019-20: Rs 24 crore
• FY 2020-21: Rs 19 crore
• FY 2021-22: Rs 18 crore

Based on the above information, ABC Ltd’s aggregate turnover crossed the threshold limit of Rs. 20 crore in FY 2019-20. Therefore, regardless of the current year’s aggregate turnover, ABC Ltd is required to generate e-invoices from 01.04.2022.

QPR Ltd:

• FY 2019-20: Rs 4 crore
• FY 2020-21: Rs 17 crore
• FY 2021-22: Rs 11 crore

As QPR Ltd’s previous year’s (FY 2021-22) annual turnover exceeds Rs. 10 crore, they should comply with e-invoicing starting from 1st October 2022.

In summary, ABC Ltd needs to implement e-invoicing from 01.04.2022, while QPR Ltd should start e-invoicing from 1st October 2022.

Who Need Not Comply With E-invoicing?

There are certain categories of registered persons for whom e-invoicing will not be applicable at the moment, regardless of their turnover. These exemptions have been notified in CBIC Notification No.13/2020 – Central Tax, which has been amended periodically:

• E-invoicing requirements do not apply to insurers, banking companies, or financial institutions, including Non-Banking Financial Companies (NBFCs).
• Goods Transport Agencies (GTAs) are also exempted from the requirements of e-invoicing. GTAs, which provide transportation services for goods, are not obligated to implement e-invoicing as per the applicable regulations.
• A registered person engaged in providing passenger transportation services is also exempt from the requirement of implementing e-invoicing.
• A registered person who supplies services by way of admission to the exhibition of cinematographic films in multiplex services is also exempt from the obligation of implementing e-invoicing.
• An SEZ (Special Economic Zone) unit is exempt from the requirement of implementing e-invoicing, as specified in CBIC Notification No. 61/2020 – Central Tax.
• Government departments and local authorities are exempt from the obligation of implementing e-invoicing, as specified in CBIC Notification No. 23/2021 – Central Tax.

Benefits of E-invoicing to Businesses

The implementation of e-invoicing initiated by GSTN brings several benefits to businesses, including:

• Data reconciliation: e-Invoicing reduces mismatch errors and resolves gaps in data reconciliation under GST, leading to more accurate reporting.
• Interoperability: e-Invoices generated on one software can be read by another, promoting interoperability and reducing data entry errors when invoices are exchanged between different systems.
• Real-time tracking: With e-invoicing, businesses can track invoices prepared by suppliers in real-time, enabling better visibility and control over the invoicing process.
• Automation of return filing: e-Invoicing facilitates backward integration and automation of the GST return filing process. Invoice details are auto-populated in various returns, simplifying the generation of part-A of e-way bills and streamlining compliance.
• Faster availability of input tax credit: e-Invoicing expedites the availability of genuine input tax credit, allowing businesses to claim credits more efficiently and quickly.
• Reduced possibility of audits/surveys: Since transaction-level information is readily available through e-invoicing, there is a reduced likelihood of audits or surveys by tax authorities as the required information is already captured in a standardized format.
• Access to credit routes: e-Invoicing enables faster and easier access to formal credit routes, such as invoice discounting or financing, particularly beneficial for small businesses seeking working capital solutions.
• Improved customer relations: e-Invoicing enhances customer relations, especially for small businesses, by ensuring compliance with large enterprises’ invoicing requirements, thus increasing opportunities for business growth.

E-Invoice Generation Process

The process of generating or raising an e-invoice involves the following stages:

• Taxpayers must reconfigure their ERP systems to meet PEPPOL standards for e-invoicing. They should work with their software service provider to incorporate the required e-invoice schema and mandatory parameters set by the CBIC for compliance.
• Taxpayers have two options for generating IRNs: whitelist their IP address for direct API integration or integrate through a GST Suvidha Provider (GSP).
• To generate IRNs in bulk, taxpayers can use the bulk generation tool, which involves uploading a batch of invoices as a JSON file to the e-invoice portal.
• After configuring the software, the taxpayer should proceed to raise a regular invoice. It is crucial to include all the necessary details, such as the billing name and address, GSTN (Goods and Services Tax Identification Number) of the supplier, transaction value, item rate, applicable GST rate, tax amount, and other relevant information. Ensuring the accuracy and completeness of these details is essential for proper invoicing and compliance with regulations.
• Choose an option from above and raise the invoice on your ERP or billing software. Upload the invoice details to the IRP using a JSON file, app/GSP, or direct API. The IRP acts as the central registrar for e-invoicing and offers various interaction modes like SMS and mobile app.
• The IRP validates crucial details of the B2B invoice, checks for duplications, and generates a unique invoice reference number (hash) for reference. Four parameters determine the generation of IRN: the Seller GSTIN, invoice number, financial year in YYYY-YY format, and document type (INV/DN/CN).
• The IRP generates the invoice reference number (IRN), digitally signs the invoice, and creates a QR code in the Output JSON for the supplier. Simultaneously, the seller of the supply receives an email notification (if an email address is provided in the invoice) informing them about the generation of the e-invoice.
• The IRP sends the authenticated payload to the GST portal for GST returns. If applicable, the details are also forwarded to the e-way bill portal. As a result, the GSTR-1 of the seller is auto-filled for the corresponding tax period, which determines the tax liability based on the e-invoice details.

Time Limit to Generate E-Invoice

Until April 30, 2023, there is no specific time limit set by the GST systems or the GST law for generating e-invoices. However, starting from May 1, 2023, taxpayers with an Annual Aggregate Turnover (AATO) equal to or exceeding INR 100 crore must generate e-invoices for tax invoices and credit-debit notes within 7 days from the date of the invoice. Failure to comply will result in such invoices and CDNs being considered non-compliant.

For other applicable taxpayers, there is no defined time limit or period for generating e-invoices. However, it is advised for them to create e-invoices preferably a week before filing GSTR-1 returns, as it takes T+3 days for the e-invoice details to be auto-populated into GSTR-1.

On May 6, 2023, the department deferred the 7-day time limit to report old e-invoices on the IRP portals by three months. The new implementation date is yet to be announced by the department.

Documents Required for E-invoicing

The concept of e-invoice encompasses the following documents, which need to be uploaded to the IRP system by their creators:

• Invoice by Supplier
• Credit Note by Supplier
• Debit Note by Supplier
• Any other legally required document must be uploaded to the IRP system by its creator.

How to Register for an E-invoicing System?

Electronic invoicing (e-invoicing) has become an essential tool for businesses to streamline their billing processes, enhance efficiency, and contribute to a greener environment. If you’re looking to adopt this modern invoicing method, you’ve come to the right place. Here’s the simple and straightforward steps to register for an e-invoicing system.

Key Benefits of E-Invoicing:

Before diving into the registration process, let’s briefly discuss some of the compelling advantages of adopting e-invoicing:

• Time and Cost Efficiency: E-invoicing significantly reduces the time and effort spent on manual invoicing, printing, and mailing, saving both time and money.
• Error Reduction: Automation minimises the risk of human errors, leading to accurate and error-free invoices.
• Faster Payments: E-invoicing expedites the invoicing cycle, resulting in quicker payment processing.
• Environmental Impact: By reducing paper usage, e-invoicing contributes to a more sustainable and eco-friendly business practice.

Now, let’s get started with the registration process:

• Step 1: Choose a Reliable E-Invoicing Service Provider

Select a reputable e-invoicing service provider that aligns with your business needs and complies with relevant regulations. Research and compare different providers, considering factors such as pricing, features, customer reviews, and integration capabilities.

• Step 2: Gather Required Information

To streamline the registration process, gather the necessary information beforehand. This typically includes your business details, tax identification numbers, banking information, and any other relevant documents.

• Step 3: Create an Account

Visit the chosen e-invoicing service provider’s website and navigate to the registration or sign-up page. Fill in the required details accurately to create your account. Remember to choose a strong password and keep your login credentials secure.

• Step 4: Verify Your Identity

Once you’ve created an account, the provider may require you to verify your identity. This could involve providing additional documentation or undergoing a verification process. Follow the instructions provided by the service provider to complete this step.

• Step 5: Set Up Your Profile

Log in to your newly created account and proceed to set up your business profile. Enter your company’s information, including your business name, address, contact details, and tax-related information.

• Step 6: Configure Integration (if applicable)

If your e-invoicing system needs to integrate with your accounting or ERP software, follow the instructions provided by the service provider to establish a seamless connection.

• Step 7: Start E-Invoicing

With your profile set up and any necessary integrations in place, you’re now ready to start sending and receiving e-invoices. Explore the features and functionalities of the e-invoicing platform to optimise your invoicing process.

How does BUSY’s E-invoicing System Help?

Embracing technological advancements is key to staying competitive and efficient. BUSY’s cutting-edge e-Invoicing system is here to transform the way you manage your invoices. Here’s how BUSY’s e-Invoicing system can significantly enhance your business processes and contribute to your success.

• Streamlined Invoicing Process: BUSY’s e-Invoicing system streamlines the entire invoicing process, from creation to delivery. Say goodbye to manual data entry and the risk of human errors. With the system’s automation, you can create accurate invoices quickly and effortlessly, ensuring a seamless billing experience for both you and your clients.
• Real-Time Connectivity: Connectivity is the cornerstone of modern business operations, and BUSY’s e-Invoicing system excels in this regard. It allows you to instantly share invoices with your clients and receive payments faster. This real-time connectivity minimises delays, ensuring a swift and efficient cash flow for your business.
• Enhanced Accuracy and Compliance: Ensuring compliance with tax regulations and business standards is non-negotiable. BUSY’s e-Invoicing system is designed to generate invoices that adhere to the latest regulatory requirements, reducing the risk of errors and non-compliance. This meticulous attention to detail safeguards your business reputation and financial standing.
• Seamless Integration: Worried about integrating e-Invoicing into your existing systems? BUSY’s solution seamlessly integrates with your current accounting software and ERP systems, eliminating any disruption to your workflow. This integration ensures a hassle-free transition to e-Invoicing, allowing you to focus on what truly matters – growing your business.
• Effortless Monitoring and Reporting: Understanding your financial health is crucial for strategic decision-making. BUSY’s e-Invoicing system provides comprehensive monitoring and reporting features. You can track the status of your invoices, monitor payment timelines, and gain valuable insights into your cash flow. This data-driven approach empowers you to make informed business choices.
• Environmentally Friendly Practices: Contributing to a sustainable environment is a responsibility that modern businesses must embrace. By adopting BUSY’s e-Invoicing system, you’re reducing paper usage and minimising your carbon footprint. Embracing digital invoicing aligns with your commitment to eco-friendly practices, showcasing your dedication to corporate social responsibility.

Incorporating BUSY’s e-Invoicing system into your business operations is a strategic move towards efficiency, accuracy, and growth. With streamlined processes, real-time connectivity, compliance assurance, and seamless integration, this innovative solution empowers you to navigate the modern business landscape with confidence. Embrace BUSY’s e-Invoicing system today and unlock a future of streamlined success.