E-Invoicing under GST
E-invoicing, under the Goods and Services Tax (GST) law, involves businesses reporting details of B2B invoices (between a seller and a buyer) to a government-notified portal to obtain a unique reference number.
Every invoice issued under the electronic invoicing system will receive an identification number from the GST Network-managed Invoice Registration Portal (IRP). GSTN electronically validates B2B invoices under the "e-Invoicing" or "electronic invoicing" system before being used on the public GST portal.
All invoice data will instantly be sent from this portal to the GST and e-way bill portals. Since the data is transmitted directly from the IRP to the GST site, it will also eliminate the requirement for manual data entry for filing GSTR-1 returns and creating part-A of the e-way invoices.
Generating E-Invoices can be cumbersome as it requires moving back and forth between your accounting software and the GST portal. However, using an E-Invoicing Software like Busy, one can auto-generate E-Invoices without needing to use the GST Portal.
How to Register for E-Invoicing?
The steps to register on an e-invoicing system are discussed below:
Step 1: Log in to the invoice registration portal. A taxpayer registered on the e-way bill portal can log in to the e-invoice site using the same login information. If a taxpayer does not have an account on the e-way bill portal, they should nevertheless have a registered mobile number and GSTIN.
Step 2: Select the Registration tab. By selecting the e-invoice registration tab, which opens the e-invoice registration form, a new GSTIN can register. The user must provide their GSTIN and the presented captcha code before clicking Go to submit the request. The user will be routed to the e-invoice registration form when the request has been made.
STEP 3: The applicant's information will be presented in accordance with the registered GSTIN, including the applicant's name, trade name, address, mobile number, email address, etc.
By selecting Send OTP, the user must confirm these details. On the registered mobile number, a one-time password will be sent. The user must input this OTP and press the Verify OTP button on the registration form.
STEP 4: The system prompts the user to input a user name of choice (6–15 characters) and a password after the OTP has been successfully validated. The user must then re-type the password for confirmation and click Save.
Thus, The created credentials can now be used by the user to access the e-invoice system.
How to Generate E-Invoices?
There are various modes of generating an e-invoice. Taxpayers can avail of the following methods according to their needs:
The process of generating an e-invoice is discussed in the following steps:
Step 1: Create an invoice using billing or ERP software following the format prescribed.
Step 2: A JSON file for each B2B invoice and the IRN are uploaded on the invoice registration portal.
Step 3: The invoice registration portal will validate the uploaded JSON file and generate an IRN and a QR code.
Step 4: Once the verification is successful, the invoice will be updated with the IRP’s digital signature and a QR code.
Step 5: The data will be transmitted to the e-way bill portal and the GST system to access the data's auto-filling.
Step 6: The portal will forward the digitally signed JSON file, including the IRN and QR code, to the supplier.
Step 7: The invoice will also be forwarded to the buyer on their registered email ID.
Eligibility for E-Invoicing
The following people are exempted from e-invoicing:
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An NBFC, a bank, a financial institution, a goods transport agency (GTA), or a registered individual offering passenger transportation services.
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Registered individual offering admission to showing motion pictures in theatres as a service.
Documents required for E-Invoicing
Under the category of "e-invoice," the following documents are included. Consequently, the IRP system must get these documents from its creator.
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Invoice from the Supplier
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Credit Note from the Supplier
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Supplier's Debit Note
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Any document that the document's creator must disclose per the law.
Structure of Invoice Reference Number (IRN)
IRN consists of the following information:
The system will generate a 64-digit alphanumeric IRN based on the above information.
Mandatory fields under E-Invoicing
Under e-invoicing, the following fields must be filled in:
| Sr. No. |
Field |
Specifications |
| 1. |
General |
Version number (Tax schema), Invoice reference number, Code for invoice type, Invoice number, and Invoice date |
| 2. |
Supplier |
Legal name (Name appearing in PAN), GST number, Address, State name, Pin code |
| 3. |
Buyer |
Legal name, GST number, State code, Address, State name, Pin code |
| 4. |
Payment |
Payee name, Account number, Payment mode, IFSC code |
| 5. |
Delivery |
Company name, Address, State name, Pin code (Applicable in case of stock transfer/ sale of goods) |
| 6. |
Goods Invoice |
Serial number, Quantity, Item rate, Net Amount, GST rate, GST Amount, and the Batch number for manufacturers |
| 7. |
Document title |
Total invoice value, Total tax amount, Amount paid in advance, Amount due |
| 8. |
Extra |
Tax Scheme |
| 9. |
Ship to |
Company name, GST number, Address, Pin code, State name, Supply Type, and Transaction mode |
How to Amend or Modify an E-Invoice?
The IRP cannot be modified, but essential modifications to the invoice details reported on the IRP can be made while filing GSTR-1 on the GST portal. Since the IRP systems and the GST system are integrated, as soon as an e-invoice is issued, the invoice details are automatically filled out in GSTR-1 and are editable.
Cancellation of an E-Invoice
E-invoice cancellation is possible by utilising various methods, including those offered by the e-invoice portal, ERP/Accounting software, and business management tools that employ APIs to communicate directly with the portal.
Let's start by discussing how to cancel an e-invoice from the portal. You must log in to the e-invoice site and then follow the instructions below to cancel the e-invoice:
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Access https://einvoice1.gst.gov.in and log in.
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Choose E-Invoice from the top menu.
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Choose the cancel option from the e-invoice menu.
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Choose the e-invoice ack.no or IRN option.
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Following mentioned, select Go.
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The system will then show you the e-invoice you wish to cancel.
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Select the reasons for cancellation, add a comment, and submit.
The e-invoice will thus be cancelled.
To Whom is E-Invoicing Applicable?
According to the latest update, from 1st October 2022, organisations having a revenue of more than Rs. 10 crores are required to use e-invoicing.
The GST Council approved the implementation of e-invoices during its 37th meeting, which was held in September 2019, with the primary goal of ensuring the interoperability of e-invoices throughout the GST ecosystem. The turnover shall be computed by aggregating all GSTINs registered under a single PAN in India.
Who Does Not Need to Comply with E-invoicing?
Regardless of turnover, the following registered persons are not currently eligible for e-Invoicing, as stated in CBIC Notification No.13/2020 - Central Tax, as amended:
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An insurance provider, bank, or other financial organisation, such as an NBFC, A Goods Transport Agency (GTA).
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A registered individual offering passenger transportation services.
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A registered individual offering services for admission to the screening of motion pictures at theatres.
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An SEZ unit that has been exempted by CBIC Notification No. 61/2020 - Central Tax.
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A government agency and a local government (exempted pursuant to CBIC Notification No. 23/2021 - Central Tax).
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Individuals registered under Rule 14 of the CGST Rules (OIDAR).
How is Tax Fraud reduced with E-Invoicing?
E-invoicing has several advantages, one of which is that it can prevent tax evasion. The likelihood of amending an e-invoice is limited because the invoice is prepared before any transaction occurs. Another benefit of using an electronic invoice is that it gives the authorities access to real-time data on all transactions.
Due to automation and extensive checks, e-invoicing significantly reduces the number of fraudulent GST invoices and assures that input tax credit is claimed on actual GST invoices. The GSTN can quickly identify anyone who attempts to submit a false tax credit claim.
Benefits of E-Invoicing
There are many benefits of Electronic Invoice Software. Some of these are mentioned below:
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With Electronic Invoicing, tracking invoices in real time is possible. This includes tracking invoices created by suppliers. Input tax credits can now become available more quickly.
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B2B invoices only need to be reported once under e-invoicing. The Invoice Registration Portal (IRP), which validates the invoice and issues the Invoice Reference Number, will authenticate it. The information will automatically populate the GSTR-1 return following login. The manual reporting method that was previously used is reduced as a result.
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E-way bills are easily created. E-invoicing makes it simple to create an e-way bill because all the taxpayer needs to do is update the vehicle information. When an e-invoice is authorised using the GST portal, the information in Part-A of the e-way bill will automatically be filled in.
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Aids consumers: Once the e-invoice has been posted to the GST site for verification, it will also be sent to the buyer at the email address he provided on the e-invoice. This will enable the customer to instantly approve or reject the invoice and reconcile his purchase order with the electronic invoice.
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Reduction in frauds: Real-time data sharing between tax authorities and taxpayers will result in a decline in scams.
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Data entry errors are decreased because the e-invoicing system uploads the invoice to a central portal, allowing for multipurpose reporting. All invoices would be instantly transferred after authentication to the e-way bill and GST portals. When filing GST returns, this auto-population will eliminate the need for manual data entry and cut down on data entry errors.
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Interoperability is possible. Because e-invoices are created in a standardised format, an invoice created using one software can also be read by another.
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Prevent tax evasion. Since invoices will be generated before a transaction is completed, real-time data access will reduce the possibility of invoice manipulation. This will further limit the use of fraudulent GST invoices, and only legitimate ITC may be claimed. The specifics of the output tax and input tax credit are easily accessible, making it simpler for the tax authorities to identify bogus input credits.
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A QR code. The GST invoices are necessary to determine the ITC amount. An assessee can need extra copies of an invoice they already received or misplace an invoice they had received. The QR code will be quite beneficial in these circumstances. The assessee can produce the invoice as many times as necessary in one day by scanning this code.
Disadvantages of E-Invoicing
Non-Reporting of B2C Transactions: Currently, only B2B transactions are subject to the obligation for electronic invoicing. As a result, this system cannot provide a comprehensive picture of all transactions and complete automation.
Non-Tracing of ITC in B2C Transactions: Since most frauds involve B2C invoices and are not concerned with ITC, the fundamental benefit of e-invoicing can only be realised with full adoption across all forms of invoicing.
Data Security: Organisations would have to upload every invoice to the GSTN portal, which could increase the risk to data security and the likelihood that the entity's private information will be hacked.
Conclusion
Therefore, e-invoicing, which has its benefits and drawbacks, is implemented to guarantee invoice interoperability under the GST system.
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