e-Invoicing system under GST will be implemented from 1st October 2020 for taxpayers with more than Rs 500 crore of aggregate turnover in 2019-20. The latest format of e-invooice schema was notified on 30th July 2020.
The GST Council had earlier approved the introduction of e-Invoicing from 1st January, 2020 on a voluntary basis, for reporting of business to business (B2B) invoices. The GST Council had approved the standard to be used for the e-Invoice in its 37th meeting that was held on the 20th of September, 2019 in Goa.
The article covers various FAQs on the e-Invoicing system under GST.
1. What is e-Invoicing?
Electronic invoicing or e-Invoicing is a system of raising invoices, under which invoices generated by one software can be read by any other software, eliminating the need for any fresh data entry or errors.
In simpler words, it is an invoice generated using a standardised format, where the electronic data of the invoice can be shared with others, thus ensuring interoperability of data.
2. How will the e-Invoicing model work?
Under the e-Invoicing model, businesses will continue to generate invoices on their respective ERPs just as was being done in the past. Only the standard, schema and format for the generation of invoices will be specified, to ensure a level of standardisation and the machine-readability of these invoices.
The generation of the Invoice will be the responsibility of the taxpayer. While generating, it needs to be reported to the Invoice Registration Portal (IRP) of GST. The IRP will generate a unique Invoice Reference Number (IRN) and adds the digital signature for the e-Invoice, along with the OR code. The QR Code will contain vital parameters of the e-Invoice and return the same to the taxpayer who generated the document in the first place. The IRP will also send the signed e-Invoice to the seller on the registered email ID .
3. What are the types of documents that are to be reported into the IRP?
The following documents will be covered under e-Invoicing-
- Invoices by the supplier
- Credit Notes by the supplier
- Debit Notes by the supplier
- Any other document as required by law to be reported by the creator of the document
The workflow of an e-Invoice involved two major parts-
- The first part is the interaction between the business/supplier and the Invoice Registration Portal (IRP).
- The second part is the interaction between the IRP and the GST/E-Way Bill Systems.
5. How do I create an electronic invoice?
The process to create e-invoice varies with the following four methods:
- Offline tool
- Using GST Suvidha Provider
- Through Direct Integration
- Via API integration with sister concern GSTIN
- Using E-way Bill API credentials
In case of bulk generation of IRN using offline too, download the offline tool available on the portal: https://einvoice1.gst.gov.in/. Enter the invoice details and validate the entries. Generate the JSON file and upload it after logging into the portal.
For the rest of the methods, taxpayer must register API by logging into the e-invoice portal and use the API credentials to connect and generate IRN and e-way bill.6. Is e invoicing mandatory?
e-Invoicing applies to certain taxpayers whose aggregate turnover during the FY 2019-20 is more than Rs 500 crore. For such class of taxpayers, generating e-invoice becomes mandatory for every invoice, debit note and credit note issued by them. However, there are some exceptions such as Special Economic Zones (SEZ) units, insurance, banking, financial institutions, NBFCs, GTA, passenger transportation service and sale of movie tickets.7. Are electronic invoices legal?
Since every electronic invoice is verified and authenticated by the IRP on behalf of GSTN, they are legally valid.8. When will e-Invoicing get implemented in India?
It has been notified that e-Invoicing will be implemented in India from 1st October 2020 onwards.
9. To whom will e-Invoicing apply?
Initially, e-Invoicing is mandated for taxpayers above an aggregate turnover of Rs 500 crore. Eventually, the objective is to bring all taxpayers under its gamut in a phase-wise manner.
It can be generated only by the supplier and not by the recipient or transporter.
10. How will the system of e-Invoicing be integrated with GST Returns?
An e-Invoice will be uploaded into the relevant GST return only once it has been validated and registered by the invoice registration system. After the validation has been done, it will be visible to the recipient for viewing and editing (in the GSTR-1).
The main aim of the tax department is to enable the pre-population of GST returns, which will reduce reconciliation-related problems. Once e-Invoicing has been implemented, the data in the invoices can be pre-populated into the relevant tables of the tax returns without the need for fresh data entry.
11. Which are the countries following the system of e-Invoicing?
Some of the countries who have already adopted the system of e-Invoicing are South Korea, Brazil, Chile, Mexico, Canada, Norway, Sweden, Turkey, Italy, Denmark, Peru, etc.
12. How will an e-Invoice format look like?
The e-Invoice format is exhaustive. It caters to different industries and businesses using a single format.Here is an example of an e-Invoice format.
13. What are the benefits of e-Invoicing?
Here are some of the e-Invoicing benefits:
- One-time reporting of B2B invoices while generation, which reduces reporting in multiple formats.
- Most of the data in form GSTR-1 can be kept ready for filing while using e-invoicing system.
- E-way bills can also be generated easily using e-Invoice data.
- There is minimal need for data reconciliation between the books and GST returns filed.
- Real-time tracking of invoices prepared by a supplier can be enabled, along with the faster availability of input tax credit. It will also reduce input tax credit verification issues.
- Better management and automation of the tax-filing process.
- Reduction in the number of frauds as the tax authorities will also have access to data in real-time.
- Elimination of fake GST invoices getting generated.
The GSTN, in partnership with the ICAI (Institute of Chartered Accountants of India), drafted the e-Invoice standard. This refers to PEPPOL (Pan European Public Procurement Online), which is based on the UBL (Universal Business Language) standard. This takes into account the requirement under tax laws and has features which are required for international trade.
Certain features which are made mandatory under the GST law have also been marked as mandatory fields in the e-invoice. Other features are marked as optional fields. Businesses may choose not to enter the optional fields.
15. What will be the data contained in an e-Invoice?
As per the draft format generated by the GSTN, an e-Invoice will contain the following parts-
- e-Invoice schema: This part will consist of the technical field name and the description of each field. It will also specify if a field is mandatory or not, and has a few sample values along with explanatory notes.
- Masters: Masters will specify the set of inputs for certain fields, that are pre-defined by GSTN itself. It includes fields like UQC, State Code, invoice type, supply type, etc.
- e-Invoice template: The template is as per the GST rules and enables the reader to correlate the terms used in other sheets. The mandatory fields are marked in green and optional fields are marked in yellow.
The standard of an e-invoice has been designed with certain mandatory fields which need to be filled in by all taxpayers, and certain optional fields which will depend on the specific needs of a business/enterprise.
17. Will there be a facility for invoice generation on the common GST portal?
No, invoices will continue to be generated on the individual ERP softwares that are currently in use by businesses.The invoice must conform to the e-Invoicing standard and include the mandatory parameters. The direct generation of invoices on a common portal will not happen.
18. What is the maximum number of line items supported by an e-Invoice?
The maximum number of line items allowed per e-Invoice is 100.
19. Does an e-Invoice need to be signed again by the supplier?
It is not mandatory for a supplier to sign the e-Invoice again. The e-invoice will be digitally signed by the IRP after it has been validated.
20. Can a business place their LOGO on the e-Invoice template?
No, there will be no place-holder provided in the e-Invoice scheme for a company’s logo. The company can provide for the same in its accounting/billing software, however, the logo will not get sent to the IRP.
21. Will the bulk-uploading of invoices be possible?
Yes, details of invoices can be entered in an excel based bulk convertor tool, available on the e-invoice portal. Thereafter, JSON file must be generated and uploaded on the e-invoice portal after logging into it. IRN and QR code shall be generated in the form of response JSON file.
22. What are the modes available for getting e-Invoices registered?
Multiple modes will be made available for getting e-Invoices registered on the Invoice Registration Portal (IRP). Some of the proposed modes are-
- Web based,
- API based,
- Offline tool based and
- GSP based.
On the IRP, the data will remain for only 24 hours. However, once an invoice has been registered and validated, it will be uploaded into the relevant GST return where it will be available for the entire financial year.
24. Can an e-Invoice be cancelled partially/fully?
An e-Invoice cannot be partially cancelled, it has to be cancelled fully. Once cancelled, it will need to be reported into the IRN within 24 hours. A cancellation done after 24 hours cannot be done on the IRN and needs to be manually cancelled on the GST portal before the returns are filed.
25. How can an e-Invoice be amended?
All amendments to an e-Invoice can be made only on the GST Portal.