E-Invoicing Under GST

The GST Council approved the standard of e-invoice in its 37th meeting held on 20th Sept 2019
and the same along with schema has been published on GST portal. e-Invoicing does not imply the generation of invoice on GST portal, Instead, e-Invoicing involves the submission of an already generated standard invoice on a common e-invoice portal. Thus it automates multi-purpose reporting with a one-time input of invoice details.

As per the latest notification, taxpayers having an aggregate turnover exceeding Rs.100 crore should implement e-Invoicing from 1st January 2021 and for all taxpayers by April 2021.

Need of E-Invoice :

  • Invoice generated by each software may look more or less same, however, they can’t be understood by another computer system even though business users understand them fully. For example, an Invoice generated by SAP system cannot be read by a machine which is using ‘Tally’ system.
  • Likewise there are hundreds of accounting/billing software which generate invoices but they all use their own formats to store information electronically and data on such invoices can’t be understood by the GST System if reported in their respective formats.
  • Hence a need was felt to standardize the format in which electronic data of an Invoice will be shared with others to ensure there is interoperability of the data.


Benefits of E-Invoice : 

  • Real-time tracking of invoices : E-invoicing allows real-time tracking of invoices prepared by a supplier. This allows for faster availability of input tax credit (ITC).
  • One-time reporting of B2B invoices : Under e-invoicing, a taxpayer has to report the invoices just once, and get it authenticated by the Invoice Registration Portal (IRP), which validates the invoice and issues the Invoice Reference Number (IRN). Upon authentication, the details will be auto-populated to the GSTR-1 return. This reduces the manual reporting process that was previously carried out.
  • Ease of generating E way bill : It facilitates the easy generation of the e-way bill as the taxpayer has to just update vehicle details. The details in Part-A of e-way bill will get auto-populated from e-invoice authenticated from the GST portal.
  • Ease of Reconciliation : E-invoicing helps you with data reconciliation and accuracy during manual data entry.
  • Multipurpose Reporting : Under the e-invoicing system, the invoice will be uploaded on the common portal, which will facilitate multipurpose reporting.
  • Reduction in data entry errors : Auto-population will eliminate the need for manual data entry while filing GST returns, and reduce data entry errors.
  • Allows interoperability: As the e-invoices are generated in a standardized format, the invoice generated from one software can be read by different software as well. This allows interoperability.
  • Curb tax evasion: Real-time access to data will lessen the scope of manipulation of invoices as the invoices will get generated before carrying out a transaction. This will further reduce the scope of fake GST invoices, and similarly, only genuine ITC can be claimed. As the input tax credit and output tax details are readily available, it becomes easier for the tax officials to track fake input credit.
  • QR code : By scanning this code, the assessee can generate the invoice any number of times in a PDF format.


Type of documents to be reported to GST System :

  • Invoices (B2B, B2G, Export Invoices)
  • Credit Notes
  • Debit Notes
  • Any other document as notified under GST law to be reported as e-invoice by the creator of the document


Steps to create an E-Invoice :

  1. Configuration of ERP as per PEPPOL(Pan European Public Procurement On-Line) standard. Incorporate the standard set for e-invoicing, i.e. e-invoice schema (standards) and It should be capable of generating the JSON file for multiple invoices together.
  2. Raise a normal invoice on the ERP with all the necessary details like billing name and address, GSTN of the supplier, transaction value, item rate, GST rate applicable, tax amount etc.
  3. Upload the details of invoice especially mandatory fields onto the IRP(Invoice Registration Portal) using the JSON file only.
  4. IRP will validate the key details of the B2B invoice, checks for any duplications and generates an IRN(Invoice Reference Number)
  5. IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. On the other hand, the seller of the supply will get intimated of the e-invoice generation through email.
  6. IRP will send the authenticated payload to GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. ANX-1 of seller and ANX-2 of the buyer gets auto-filled for the relevant tax period. In turn, it determines the tax liability.
  7. A taxpayer can continue to print his invoice as being done presently with logo. e-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.


Features of IRN :

  • IRN( Invoice Reference Number) is a number allotted by the Government to tag and identify valid e-invoice generated through Invoice Reference Portal (IRP).
  • It is a unique 64 characters hash based on 4 parameters which are supplier GSTIN + Fin. Year + Doc Type + Doc Number
  • IRN is different from Invoice Number
  • IRN needs to be generated before the issuance of the invoice or before the movement of the goods.
  • IRN generated remains on the IRP portal for 1 or 2 days
  • IRN generated by the IRP portal is stored in the GST Invoice Registry under GST Systems


E-Invoice Schema : The schema simply means format. E invoice schema is the standard format for electronic invoices. It is termed as GST-INV-1. The schema has mandatory and non-mandatory fields Mandatory field has to be filled by all the taxpayers. The non-mandatory field is optional for the business to choose from.

E-Invoice – Amendment : All the amendments to the e-invoice will be done on the GST portal only. JSON sent for the generation of e-invoice cannot be amended. IRN cannot be amended.

E-Invoice Cancellation : The e-invoice mechanism enables invoices to be cancelled. This will have to be reported to IRP within 24 hours. Data on IRP will be kept there only for 24 hours. Any cancellation after 24hrs could not be possible on IRP; however one can manually cancel the same on the GST portal before filing the returns.

Modes of Registering Invoice with IRP :

Multiple modes have been proposed for registering the invoice on the IRP:

  1. Web-based : The details of invoices can be entered into the website of the IRP for the purpose of registration/validation of the same.
  2. API based : This mode will allow big taxpayers and accounting software providers to interact with the Invoice Registration Portal through their own software. The IRN can be generated validated for invoices either one at a time or in bulk, similar to the E-Way Bill system.
  3. SMS based : This mode aims at allowing invoice details to be entered in a specific format and sent to the Invoice Registration Portal via SMS for processing.
  4. Mobile App based : IRP provides a mobile app which carries out some functions of the IRP.
  5. Offline tool based : The invoices can be uploaded in the standard format and the IRN can be generated in one go. Once the bulk upload request file has been prepared, the same needs to be uploaded in order to generate the IRNs. Once generated, the IRN form will all the details can be downloaded.
  6. GSP based : Taxpayers can also utilize the services of the GST Suvidha Provider (GSP) to carry out their e-invoice related compliances.


Major Challenges of E-invoicing Under GST :

  • If the invoice is found not registered on the IRP, such invoice will not be considered as a valid tax invoice for all GST related matters and hence a penalty of ₹ 10,000 will be incurred for each instance of non-compliance.
  • Transportation of goods without a valid tax invoice can be a reason for the detention of goods and vehicles and fines will be also imposed.
  • Customers may deny accepting and/or pay goods if a valid tax invoice is not available as this would affect the receiver’s eligibility to receive ITC benefits.
  • In addition, the government plans to implant a check that will prohibit the generation of an e-way bill if the IRN is absent.