­­­­­­­­­­­E-Invoice : Concept

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Electronic invoicing or e-Invoicing is a system of raising invoices, under underneath that invoices generated by one software can be read by any other software, eliminating the need for any recent data entry. In simpler words, it is an invoice generated using a standardised format, wherever the electronic information of the invoice can be shared with others, therefore guaranteeing the interoperability of data.

As per Rule 48(4) of CGST Rules, notified class of registered persons (whose combination turnover in any preceding financial year from 2017-18 ahead, is quite prescribed limit) got to prepare invoice by uploading specified particulars of invoice (in FORM GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).

After following above ‘e-invoicing’ method, the invoice copy containing inter alia, the IRN (with QR Code) issued by the notified provider to buyer is usually noted  as ‘e-invoice’.

As per Rule 48(5), any invoice issued by a notified person in any manner other than the manner specified in Rule 48(4), the same shall not be treated as an invoice.

A standard format for e-invoice was notified as ‘INV-01’. This format (called ‘schema’) facilitates seamless exchange of invoices between accounting systems of providers and buyers in an integrated electronic format.

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How it began

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The first committee was set-up in May 2019 to discuss the usability of E-Invoicing and prepare an e-invoicing implementation plan for India considering global implementations. Since the committee gave its recommendations, many drafts of E-invoicing specification were issued and eventually the E-Invoice Schema was released in January 2020. The mandate was supposed to go LIVE from 1st April 2020. However, the mandate was pushed to 1st October 2020 vide 39th GST council meeting happened on 14h March 2020. The mandate finally went LIVE from 1st October 2020 during a phased manner.

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To whom is e-invoicing applicable?

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The CBIC notified a collection of common portals to prepare e-invoices via Notification No.69/2019-Central Tax.The first phase of e-invoicing was implemented from 1st October 2020 for taxpayers with an aggregate turnover exceeding Rs.500 crore as per Notification No 61/2020-Central Tax and 71/2020-Central Tax.

In the next phase, the e-invoicing has been extended to businesses with an aggregated turnover exceeding Rs.100 crore from 1st January 2021 as per Notification No. 88/2020.

Later, the CBIC notified via Notification No. 5/2021 that e-invoicing are applicable from 1st April 2021 for businesses with a turnover of more than Rs.50 crore.

The taxpayers should accommodates e-invoicing if the turnover exceeds the required limit in any financial year from 2017-18 to 2019-20. Also, the aggregate turnover will include the turnover of all GSTINs under a single PAN across India.

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Sectors Exempted:

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However, regardless of the turnover, e-Invoicing shall not be applicable to the following categories of registered persons for currently, as notified in CBIC Notification No.13/2020 – Central Tax:

•    An underwriter or a banking company or a financial institution, including an NBFC

•    A Goods Transport Agency (GTA)

•    A registered person supply passenger transportation services

•    A registered person supply services by method of admission to the exhibition of cinematographic films in multiplex services

•    An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)

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

 

Major Challenges of E-invoicing Under GST:

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•    If the invoice is found not registered on the IRP, such invoice wont be considered as a valid tax invoice for all GST connected matters and therefore a penalty of ₹ 10,000 will be incurred for every instance of non-compliance

•    Transportation of goods without a valid tax invoice may 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 isn't offered as this may have an effect on 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

 

Documents to be according to GST System under E-Invoicing:

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The taxpayers need to report the following documents to the e-invoice system.

•    Invoice by Supplier/ Provider

•    Credit Note by Supplier/ Provider

•    Debit Note by Supplier/ Provider

Thus, Bill of Supply and Delivery Challan/Job Work Challan need not be reported under E-Invoicing.

 

How to generate e-invoice under GST

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The flow of a GST e-invoice system has two parts:

•    Communication between the business and also the Invoice Registration Portal (IRP)

•    Interaction between the IRP, the GST/ e-Way Bill systems, and the buyer.

 

Generating an e-invoice

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Taxpayers can generate invoices like they normally do, except reporting will now be done electronically. Taxpayers will have to follow the e-invoice schema and submit mandatory details accordingly. Here is a list of mandatory and optional parameters:

•    Transaction details like tax scheme, supplier type

•    Document details: type, number and date

•    Supplier information like legal name, GSTN address, location, PIN code and state code.

•    Buyer information like legal name, GSTN number, address, location, state code and PIN code

•    Dispatch from address details (mandatory if it is completely different from supplier details)

•    Shipping details (mandatory if it is completely different from buyer address)

•    Item connected details like service/ goods, HSN code, total amount, GST rate, Assess able amount, total item value.

•    If the items are being moved in batches, then add batch number.

•    Invoice details include assess able values and total invoice value.

 

Besides the mandatory parameters, the Council also listed optional parameters, which are subject to change based on the requirement of the business. Once the invoice fields are finalised, a tax payer must decide if the accounting or billing software is capable of creating a JSON file, which can then be upload to the IRP.

 

Generating a GST e-invoice is typically the responsibility of a taxpayer who reports to the IRP in GST. Next, the IRP will generate a unique IRN and a QR code. The taxpayer are ready to scan this QR code, extract the IRN, and fetch invoice details. 

 

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Here are some benefits of e-invoicing for businesses:

•    E-invoicing helps you with data reconciliation and accuracy during manual data entry.

•    It allows interoperability across businesses.

•    Documents become tax compliant and you'll be able to track the e-invoices in period of time

•    The e-invoice details are auto-populated on tax return forms and e-way bills, creating the tax return process easy.

•    All transaction details will be available online at all times. This could eliminate the need for frequent audits and surveys. Differences in data can be caught by comparing input credit and output tax.

•    This initiative also will build efficiency within the tax administration by helping to identify fake invoices.

 

Latest Updates:

30th June 2021

The CBIC has issued a notification seeking to waive the penalty imposed on non-compliance of dynamic QR code provisions for B2C invoices between 1st December 2020 and 30th September 2021.

1st June 2021

CBIC has notified vide Central Tax Notification no.23 dated 1st June 2021 that the e-invoicing system shall not apply to a government department and local authority.

 

 

DISCLAIMER-These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the author and are not individual legal advice.

It is understood that each case is fact specific and that the appropriate solution in any case will vary. Finally, the owner will not be accountable for any loses injuries or damages from the exposures or usage of this information.

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