Guide to applicability of E-invoicing in India
E-invoicing under GST
In this post, we will discuss in detail on E-invoicing in Goods and Services Tax (GST) and its implementation.
We will cover the following topics in this post:
- What is E-Invoicing in GST?
- Current Invoicing system
- Exemptions in E-Invoice generation
- Implementing E-Invoicing under GST
- Documents needed for E-Invoicing
- Benefits of E-Invoicing under GST
- Points to remember
What is E-Invoicing in GST?
E-invoicing under Goods and Services Tax (GST) came into effect on 1st October 2020 as per the 39th GST Council meeting. Initially, the 35th GST Council meeting decided to implement an E-invoicing system in India to avoid GST evasion. E-invoice is mandatory for all registered taxpayers with an aggregate turnover above 100Cr in an FY.
E-invoicing/ electronic invoicing is the electronic validation of invoices by GSTN on the common GST portal. As a result, Invoice Registration Portal (IRP) will issue an Invoice Reference Number (IRN), QR code, and digitally sign the uploaded invoice.
All invoice information will be auto-populated from IRP to both the GST portal and E-way bill portal. Therefore, there will be no manual data entry while GST returns filling as well as e-way bill generation.
Suppliers can only generate E-invoices, the recipients and transporters cannot generate E-Invoice. E-commerce operators can also generate e-invoices on sellers’ behalf on their e-platforms.
You can find more information on E-invoicing for E-commerce operators Here.
Note: E-invoice details are available for the taxpayers on the GST portal and E-way bill (EWB) portal, simultaneously.
What is E-Invoicing in GST?
Current Invoicing system
Invoices now lack a common schema, as it is generated in different schema by software programs. Thus, makes it impossible for GST systems to identify and verify the invoice. New entry needs to be done every time for reporting details to the GST system.
Now on, Form GST ANX-1 will replace the GSTR-1 return. The process of generating and uploading invoice details will remain the same. You can import the invoice using the Excel tool/JSON or by the online data entry.
So, E-invoicing under GST creates a seamless flow of information while generating the e-way bill.
Exemptions in E-Invoice generation
The following contains the list who are excluded from generating E-invoice under GST:
- Insurance company
- Banking company
- Financial Institution
- Non-bank Financial Companies (NBFCs)
- Goods Transport Agency (GTA)
- Supplier of passenger transportation services
- Supplier of admission services to the exhibition of films in multiplex
- Special Economic Zones (SEZs) Units (exclusion is for SEZ Units and not for SEZ Developers)
Implementing E-Invoicing under GST
The E-invoicing system has 2 main parts of implementation:
- Invoice generation in a standard format
- E-invoice reporting to a Central system
i. Invoice generation in a standard format
The taxpayer needs to generate an invoice in his/her accounting/billing system. He/she can use any software utility like or Excel-based utility to generate an invoice.
While generating an invoice, it must conform to some parameters and E-invoice schema as per the GST. We use PEPPOL (Pan European Public Procurement Online) standard for invoice generation in this new system.
The supplier’s software will generate a JSON file of the invoices to be uploaded to the IRP of GSTN.
All GST Registered taxpayers with annual turnover above 500Cr can voluntarily generate E-invoice from 1st January 2020. Also, from 1st April 2020, if they generate a B2C invoice, it will have a QR code on the invoice.
ii. E-invoice reporting to a Central system
The Invoice Registration portal (IRP) will check with the Central Registry of the GST system. Therefore, you cannot upload the same invoice from the supplier in the same FY again.
If IRP confirms the invoice, it generates a unique Invoice Reference Number (IRN), a unique QR Code with a digital signature. The portal will return the E-invoice to the taxpayer who generated the document. The IRP will also send the digitally signed E-invoice to the recipient.
GST system will use this E-invoice data for the generation of the E-way bill (Part 1) and updating Form GST ANX-1 of the seller and Form GST ANX-2 of the buyer.
The QR code in the E-invoice contains the seller’s GSTN, buyer invoice number, invoice date, number of line items, HSN of major commodities.
Documents needed for E-Invoicing
The taxpayers report the following list of documents to the e-invoice system.
- Supplier’s Invoice
- Credit Note by Supplier
- Debit Note by Supplier
Note: Bill of Supply and Delivery Challan/Job Work Challan is not reported under E-Invoicing.
Benefits of E-Invoicing under GST
- Elimination of fake invoice generation.
- Reduction in issues in input tax credit verification.
- One-time reporting of invoicing details for all your GST filings
- No GST reporting in multiple formats (for GST ANX-1 and for the e-way bill).
- Easy generation of E-way Bill with Part A and Part B slip.
- The standard invoicing system is compatible with multiple software programs.
- Real-time tracking of invoices prepared by the supplier.
- Automatic preparation of GST Returns (ANX 1 and ANX 2).
- Auto-match your input credit liability with output tax.
- Saves time and also avoids major reconciliation issue
Points to remember
- E-Invoicing is only for B2B Business to Business (including B2G –Business to Government) transactions.
- B2B Supplies include domestic supplies and exports (including Deemed Exports), Supplies to SEZ, B2B Reverse Charge Invoices and Supplies through E-commerce.
- You cannot partially cancel an e-invoice, but it can be fully cancelled. The cancelled invoice is reported to IRP within 24 hrs of cancellation and also manually cancel it on the GST portal before you file your returns.
- You can make changes in the e-invoice for only the details uploaded in GST returns.
With that, we have come to an end of this post on E-invoicing under GST.
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