E-invoicing under GST

In this article, we will understand everything there's to know about e-invoicing under GST

What is e-invoicing?

e-invoicing also called electronic invoicing, is a system in which all B2B invoices are electronically authenticated by GSTN for further use on the common GST portal.

After successful authentication, an identification number will be issued against each invoice by the invoice Registration Portal (IRP) managed by the IRP. With IRN, each invoice is digitally signed then linked with a QR code. This process itself is collectively called e-invoicing under GST.

Who should upload the e-invoice?

The seller has to upload the invoice electronically to the IRP system. And the recipient has to capture the QR code and IRN (Challan Reference Number) in the physical copy of the invoice issued.

To whom will the e-invoicing be applicable?

Electronic invoicing applies to all businesses that are registered under GST and issuing B2B invoices.

However, irrespective of turnover, e-challan will not apply to the following categories of registered persons for now, as notified in CBIC Notification No. 13/2020 - Central Tax:

1. A Goods Transport Agency (GTA)

2. An insurer or a banking company or a financial institution, including an NBFC

3. A registered person supplying passenger transportation services

4. A government department and Local authority (excluded via CBIC Notification No. 23/2021 – Central Tax)

5. An SEZ (Special Economic Zone) unit (excluded via CBIC Notification No. 61/2020 – Central Tax)

6. A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services

What type of documents have to be reported under the GST system?

• Invoice by Supplier

• Debit Note by Supplier

• Credit Note by Supplier

• Any other document as required by law to be reported by the creator of the document

The process to get an e-invoice

1. PEPPOL scheme - The taxpayer has to use the reconfigured ERP system as per the PEPPOL scheme. He may coordinate with the software service provider to incorporate the e-invoice scheme for the e-invoice and must have at least the mandatory parameters notified by CBIC.

2. Two options for IRN generation -

   1. The IP address of the computer system can be whitelisted on the e-invoicing portal for GST Suvidha Provider direct API integration or integration.

   2. You need to download the bulk generation tool so that you can upload the invoices in bulk. This tool will generate a JSON file that can be uploaded on the e-invoice portal for generating IRN in bulk.

3. Generate a simple Invoice - After this, you will have to generate a simple invoice on that software giving all the necessary details like billing name and address, GSTN of the supplier, transaction value, item rate, applicable GST rate, tax amount, etc.

4. Billing Software - Raise the invoice on the respective ERP software or billing software by selecting any of the options. Thereafter, upload the details of the Invoice specifically mandatory fields to IRP using JSON file or Application Service Provider or directly through API. And if you want to interact with IRP then there are many ways like SMS-based and mobile app-based.

5. IRP Invoice - IRP Invoice generates IRN, digitally signs the invoice, and generates a QR code in the output JSON for the supplier. On the other hand, the seller of the supply will get the intimation of the generation of the e-invoice through email.

6. IRP - The IRP sends the certified payload to the GST portal for the GST return. In addition, the details, if applicable, are sent to the e-way bill portal. The seller's GSTR-1 is auto-filed for the relevant tax period. In turn, this determines the tax liability.

7. IRP - The IRP will validate the key details of the B2B invoice, check for any duplication, and generate an invoice reference number for reference. It has four parameters based on which IRN is generated: Vendor GSTIN, Invoice Number, and YYYY-YY in FY) and Document Type (INV/DN/CN).

Benefits of e-invoicing

1. One-time upload - Multiple forms can reduce reporting of the same invoice details in different forms. It only has to be a one-time upload and everything will be pre-populated, as needed.

2. Part-A of E-way bill - Part-A of the e-way bill is auto-captured and only the transporter's details need to be updated.

3. Input credit verification - Substantial reduction in input credit verification challenges as the same data is communicated to the tax department as well as the buyer in his purchase GSTR-2A.

4. Increases efficiency in administration by eliminating fake invoices.

5. On uploading the invoice, the B2B details are auto-captured in the GSTR-1 return.

6. Complete trace of B2B invoices and system-level matching of input credit and output tax helps reduce tax evasion

7. A buyer on receipt of the information through the GST system can do a reconciliation with his purchase register and accept and reject the same on time under the new return.

Disclaimer: This article is intended for general consumption only. The information in the article was accurate at the time of publication, but it is subject to change due to changes in government rules and regulations. The contents of the blog may not be copied unless prior permission is obtained.

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