All about E-Invoicing
The GST Council approved introduction of ‘E-Invoicing’ or ‘Electronic Invoicing’ in a phased manner for reporting of business to business (B2B) invoices to GST System, starting from 1st January 2020 on voluntary basis. This move by the government aims to improve the ease of doing business and streamline GST collection.
The decision taken in the 35th GST council meeting requires businesses to submit invoices that they generate on to the GST common portal. E-Invoicing does not mean creating new invoices. Rather, it eliminates the need for manual data entry of invoice details into the GSTN every time. This automates the process and saves time and effort for the businesses. It also makes submission of invoices from ERP platforms easier and convenient.
1. What is E-Invoicing?
E-Invoicing is the process of authenticating B2B invoices automatically by the GST portal. This authentication will eliminate the need for manually entering invoice details while filing the various GST returns.
E-Invoicing can be broadly referred to electronically generated bills digitally with/without compliance component. Does this mean that an invoice generated from a service provider such as Oracle would fall under the category of an E-Invoice? No, not necessarily. There are certain GST council guidelines that need to be met for an invoice to be considered compliant – or E-Invoice for GST purposes.
2. Is E-Invoicing mandatory?
E-Invoicing is mandatory for all businesses with an annual aggregate turnover of Rs.100 crores or more.
3. What is the implementation date for E-Invoicing?
The E-Invoicing becomes mandatory from 1 April 2020 (However, as per the latest GST council meeting and decision taken therein, the date has been changed to 1st October 2020) for all businesses with an annual aggregate turnover of Rs.100 crores. However, businesses can join the system starting from 1 February 2020. As of now, electronic invoicing is applicable only for businesses that have an annual turnover of over Rs.100 crore under a single PAN.
4. What are the systems requirements for E-Invoicing?
There are 3 components to the E-Invoicing system – the ERP/accounting software used to create the E-Invoices, the Invoice Registration Portal (IRP) and the GST Network (GSTN). When an invoice is uploaded, the IRP provides an identification number. This is integrated with the GST portal and the e-way bill system in real-time, thus eliminating the need for manual entry in these systems for generating and filing GST returns and ANX-1.
To adopt to the new guidelines and for compliance reasons it is imperative to use a GSP (GST Suvidha Provider) that can seamlessly integrate with existing accounting software and generate e-invoices efficiently.
5.How is E-Invoicing different from the current system?
Currently, there are hundreds of accounting software that generate-invoices in different formats, without interoperability. Most systems could not automatically ‘read’ the-invoices generated by the other systems, leading to time and money spent on formatting, printing, and reconciling invoices. This created a need for standardisation and automation of invoices across the country. Currently,
- Each invoice detail had to be manually updated in the GSTR1 returns
- This information can be reviewed in GSTR-2A by view only option
- Each level of process is in some form or other redundant resulting in wasted time and energy, and most importantly manual errors.
With an aim to standardise invoicing and initiatives focussing on digitalization of the economy, the GST Council in its 37th meeting approved E-Invoicing.
The E-Invoicing format developed by GSTN in association with the ICAI is applicable to all kinds of businesses. Depending on the business type, certain fields in the format becomes mandatory. Automatic configuration by the GSPs and ERPs is possible.
The new format is based on the PEPPOL (Pan European Public Procurement Online) standard, which works on Universal Business Language (UBL) version of electronic XML and is the most widely used global standard for invoicing.
6. Is E-Invoicing beneficial for businesses or just another added compliance?
E-Invoicing is not just another compliance burden. It can potentially help businesses reduce money, time, and effort in complying with GST requirements.
E-Invoicing eliminates the need for multiple manual entries. This leads to lesser errors, better levels of accuracy, and lesser time spend in reconciliation
Standardisation of format:
E-Invoicing creates a standard and uniform format that not only benefits the GST portal but also businesses by saving the time spent on formatting and reconciliation
With E-Invoicing, there is an elimination of paper invoices thereby leading to a cost reduction in printing and staff for maintaining records. The cost of handling invoices and the manpower required to do so is drastically reduced
As E-Invoices are reported and approved by the government, they are completely inter-operable eliminating transcription and other errors
Improves business credibility:
E-Invoices updated on the government portal enhances business reputation, which is essential for trade finance and funding requirements
Eliminates tax evasion:
E-Invoices lead to a better tax administration system by eliminating fake-invoices
7.What is the process of E-Invoicing?
The flow of the e-invoice generation, its registration, and receipt of confirmation are divided into two major parts:
- Part 1: The first part is the interaction between the business and the Invoice Registration Portal (IRP):
- Seller generates invoices in his own accounting or billing system that complies with E-Invoice schema and fulfils mandatory parameters
- Next, the seller uploads the JSON of the e-invoice to the IRP
- The IRP then generates the IRN and on receipt of confirmation from Central Registry, IRP will add its signature on the-invoice data as well as a QR code to the JSON. An important aspect to note here is that the hash computed by IRP will become the IRN (Invoice Reference Number) of the e-invoice. The digitally signed JSON will be returned to the seller along with a QR code by the IRN
- Part 2: The second part is the interaction between the IRP and the GST/E-Way Bill Systems and the Buyer:
- Seller generates invoices in his own accounting or billing system that complies with e-invoice schema and fulfils mandatory parameters
- The signed and authenticated e-invoice data along with IRN will be sent to the GST System as well as to E-Way Bill System.
- The GST System will update the ANX-1 of the seller and ANX-2 of the buyer, which in turn will determine liability and ITC. The E-Way bill system will create the e-way bill according to the e-invoice schema.
8. Methods used for registering E-Invoices
Taxpayers can avail of the 4 methods based on number of transactions and ease of use under the proposed system for e-invoice, through the IRP:
- API based
- Mobile app based
- Offline tool based and
- GSP based
The GSP based method is a preferred option for large businesses with various categories of inventories primarily for accurate reporting, disclosure and analysis.
9. What are the mandatory fields in an E-Invoice?
|Sl. no||Name of the field||Remarks|
|1||Invoice Type||Can be one of the following: Reg/SEZP/SEZWP/EXP/EXPWP/DEXP Denotation for regular, SEZ supplies with payment, SEZ supplies without payment, deemed exports, sale from the bonded warehouse, export without payment of tax, export with payment of tax|
|2||InvoiceType Code||A subcode may also be automatically added by the GSTN Will be auto-generated by GSTIN based on the invoice type specified by the user|
|3||Supplier_GSTIN||GSTIN of the supplier raising the E-Invoice|
|4||Invoice Number||For unique identification of the invoice, a sequential number is required within the business context, time-frame, operating systems and records of the supplier. No identification scheme is to be used|
|5||Preceeding_Invoice_Reference||Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes and other documents required under GST|
|6||Invoice Date||The date when the invoice was issued. However, the format under explanatory notes refers to ‘YYYY-MM-DD’. Further clarity will be required|
|7||Reverse Charge||Mention whether or not the particular supply is subject to reverse charge mechanism|
|8||GSTIN||The GSTIN of the buyer to be declared here|
|9||State Code||The place of supply state code to be declared here|
|10||Place||The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any|
|11||Pincode||The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any|
|12||Unique Identification Number||A unique number will be generated by GSTN after uploading the e-invoice on the GSTN portal. An acknowledgement will be sent back to the supplier after the successful acceptance of the e-invoice by the portal|
|13||ShippingTo_GSTIN||GSTIN of the buyer himself or the person to whom the particular item is being delivered to|
|14||Shipping To_Sta||State pertaining to the place to which the goods and services invoiced were or are delivered|
|15||Supply Type||It can be either interstate or intrastate supply. Further, it can be outward or inward supply Moreover, the supply can further be classified as import, export, job work, for own use, return, sales return, others, SKD/CKD/Lots, line sales, recipients not known, exhibition or fairs|
|16||Transaction Mode||A combination of a ‘Bill To Ship To’ and ‘Bill From Dispatch From’ is also allowed The schema specifies that the field can have either of regular/bill to/ship to|
|17||Item Description||Simply put, the relevant description generally used for the item in the trade. However, more clarity is needed on how it needs to be described for every two or more items belonging to the same HSN code The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’|
|18||Quantity||The number of items (goods or services) that is charged on the invoice as a line item|
|19||Rate||The unit price, exclusive of GST, before subtracting item price discount, can not be negative|
|20||Assessable Value||The price of an item, exclusive of GST, after subtracting item price discount. Hence, Gross price (-) Discount = Net price item, if any cash discount is provided at the time of sale|
|21||GST Rate||The GST rate represented as a percentage that is applicable to the item being invoiced|
|22||IGST Value, CGST Value and SGST Value Separately||For each individual item, IGST, CGST and SGST amounts have to be specified|
|23||Total Invoice Value||The total amount of the Invoice with GST. Must be rounded to a maximum of 2 decimals|
10. E-Invoice Format
FAQ for E-Invoicing Solution
Is E-Invoicing mandatory?
From 1st January, e-invoicing has been rolled out in a phased manner for reporting of business to business (B2B) invoices to GST System on a voluntary basis.
What is an Invoice Registration Portal (IRP)?
IRP or the Invoice Registration Portal validates the genuineness of the-invoices used in the GST ecosystem. Based on the validation of the e-Invoice schema, the IRP generates the IRN, digitally signs the e-Invoice, and generates an e-Invoice QR Code with high-level details of the-invoice.
What validations are conducted by IRP?
IRP will validate for GSTIN correctness and whether the invoice already exists in the system
Do importers have required to generate IRN
E-invoicing / IRN generation is only applicable to creator of an invoice/document and hence, Bill of Entry will not be required to obtain an IRN
What is an ASP?
ASPs are software service providers who route their GST traffic through GSPs. Any software provider of financial services in the indirect tax domain can push data to the GST system through GSPs.
What is a GSP?
A GSP or GST Suvidha Provider are entities authorized by the GSTN to develop a platform to enable the taxpayer to be GST compliant. APIs are the ones that enable all GST system functionalities such as Registration, Return filing, Payment of taxes, Invoice uploads.
Is Vayana an authorized GSP?
Yes, Vayana is authorised by the GSTN since 2017
It is mandatorily applicable to all enterprises with annual aggregate turnover of more than Rs. 100 under a single PAN.
No. The E-Invoice schema that will be used by all kinds of businesses will be the same.
|Taxpayers with an aggregate turnover above Rs 500 Crores in previous Financial Year||From 1st Jan 2020 or as notified||Voluntary|
|Taxpayers with an aggregate turnover above Rs 100 Crores in previous Financial Year||From 1st Feb 2020 or as notified||Voluntary|
|Taxpayers with an aggregate turnover above Rs 100 Crores in previous Financial Year||From 1st April 2020 or as notified||Mandatory|
a. Invoice by Supplier
b. Credit Note by Supplier
c. Debit Note by Recipient
d. Any other document as required by law to be reported
E-Invoice can’t be partially cancelled, only a full cancellation can be done. Cancellation has to be done as per process defined under Accounting Standards. The E-Invoice cancellation will have to be triggered through the IRP, by using the cancel API.
Amendments to the e-invoice will be allowed on the GST portal as per provisions of GST law. All amendments to the e-invoice will be done on the GST portal only.
No, IRP will only return signed JSON to the supplier. JSONs / PDFs copy will not be shared or mailed by IRP to respective buyers and sellers. PDF copy of invoice can be generated by supplier using QR code that is returned by IRP
IRP will validate the e-invoice and will reject it if wrong GSTIN or duplicate invoice number is found. It will return the invoice with relevant error codes without registering
A single format of E-Invoice applies to all businesses. The mandatory fields differ from business to business.
No, the details will be stored in IRP for 24 hours and then the same can be available in GSTN in ANX-1
Yes, Supplier is also allowed to distribute JSON as well as PDF. Further, suppliers are also free to share/distribute business invoice to the buyer (having multiple fields as per the business needs). However, it needs to ensure that business invoice is having all the mandatory fields as prescribed in e-invoice schema.
If the invoice is printed by the Company, it needs to contain the QR code returned by IRP. QR code will also contain IRN
ISD invoice and ISD Credit note will be issued by an Input Service Distributor and IRN will be required on the same. Further, exporter also has to issue tax invoice and would require to generate IRN
E-Invoice reported to IRP can be amended through GSTN and no amendment is permitted through IRP. In case of cancellation of invoice it can be done by uploading the IRN or following:
- Document type
- Document number
- Document date
Once cancelled the same number cannot be used for any other invoice “
Yes, Transporter ID parameter will be created in E-Invoice and Part A of EWB will be auto-populated from E-Invoice itself
The matter has been taken up with the Government to generate invoices on behalf of the sellers provided the sellers explicitly authorize them to do so
Relevant changes will be notified by the Government
In long run, this will be allowed
No, with machine readability the need for printing will be eliminated. Moreover OR code will enable to validate contents of an E-Invoice
No, Bill of supply and Delivery Challan will not be required to generate an IRN
Yes, the IRP will push the data to GSTN and will populate in GST – ANX – 1 and ANX – 2 of the Seller and Buyer respectively
Both the versions will be kept and available on the GSTN
Invoice is issued by the supplier and not the e-commerce operator and therefore TCS is not a part of e-commerce operator invoice.
Yes, but seller needs to properly annotate them to clarify which QR code represents which invoice.