e-Invoicing software
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The e-Invoicing system under GST was implemented from 1st October 2020 for taxpayers with an aggregate turnover exceeding Rs.500 crore. E-invoicing will be extended to businesses with an aggregate turnover exceeding Rs.100 crore from 1st January 2021. The government plans to bring all businesses under the purview of e-invoicing from 1st April 2021. Aggregate turnover for e-invoicing will include the turnover of all GSTINs under a single PAN across India. This article covers various FAQs on the e-invoicing system under GST.

1. Basics of e-invoicing

  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.  
  1. Is e-invoicing mandatory? To whom will e-invoicing apply?
E-invoicing is mandatory from 1st October 2020 to all businesses whose aggregate turnover has exceeded the Rs.500 crore limit in any of the previous financial years from 2017-18 to 2019-20. From 1st January 2021, e-invoicing will be applicable to businesses exceeding the Rs.100 crore turnover limit in any of the financial years between 2017-18 to 2019-20. However, e-invoicing shall not be applicable to the following categories of registered persons, irrespective of the turnover, as notified in the CBIC Notification No.13/2020 – Central Tax:
  • An insurer or a banking company or a financial institution, including an NBFC
  • A Goods Transport Agency (GTA)
  • A registered person supplying passenger transportation services
  • A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services
  • An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)
  1. What are the benefits of e-Invoicing?
Here are some of the e-Invoicing benefits:
  1. One-time reporting of B2B invoices while generation, which reduces reporting in multiple formats.
  2. Most of the data in form GSTR-1 can be kept ready for filing while using e-invoicing system.
  3. E-way bills can also be generated easily using e-Invoice data.
  4. There is minimal need for data reconciliation between the books and GST returns filed.
  5. 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.
  6. Better management and automation of the tax-filing process.
  7. Reduction in the number of frauds as the tax authorities will also have access to data in real-time.
  8. Elimination of fake GST invoices getting generated.
  1. Does the e-invoice schema apply to reverse charge mechanism (RCM) transactions?
Yes, the e-invoice scheme applies to reverse charge mechanism (RCM) transactions as well.

2. E-invoicing workflow

1. 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.  
  1. What will the workflow of e-Invoice be like?
The workflow of an e-Invoice involved two major parts-
  1. The first part is the interaction between the business/supplier and the Invoice Registration Portal (IRP). 
  2. The second part is the interaction between the IRP and the GST/E-Way Bill Systems.e-invoice workflow
  1. How do I create an electronic invoice?
The process to create e-invoice varies with the following four methods:
  1. Offline tool
  2. Using GST Suvidha Provider
  3. Through Direct Integration
  4. Via API integration with sister concern GSTIN
  5. 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, the taxpayer must register his APIs by logging into the e-invoice portal and use the API credentials to connect and generate IRN and e-way bill.

3. E-invoice format and schema

  1. 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.  
  1. 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-
  1. 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.
  2. 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.
  3. 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.
  1. Will the e-Invoice format be the same for all categories of taxpayers?
All businesses need to issue e-invoices using the same e-invoice schema laid down by the GSTN. The schema has mandatory and non-mandatory fields. All taxpayers are required to fill mandatory fields. Specific businesses can use non-mandatory fields as per their requirement.  
  1. 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.  
  1. Does an e-Invoice need to be signed again by the supplier?
The provisions of Rule 46 of the Central Goods and Services (CGST) Rules, 2017 apply here. According to Rule 46, the signature/digital signature of the supplier or his authorised representative is required while issuing invoices. However, a proviso to Rule 46 states that the signature/digital signature shall not be required in the case of issuance of an electronic invoice that is in accordance with the provisions of the InformationTechnology Act, 2000. Hence, it has been interpreted that in the case of e-invoices, a supplier will not be required to sign/digitally sign the document.  
  1. 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.  
  1. Is it mandatory to print the invoice registration number on the invoice?
No, it is optional. The IRN is already embedded in the QR code printed on the e-invoice.

4. Reporting of e-invoices

  1. What are the types of documents that are to be reported into the IRP?
The following documents will be covered under e-Invoicing-
  1. Invoices by the supplier
  2. Credit Notes by the supplier
  3. Debit Notes by the supplier
  4. Any other document as required by law to be reported by the creator of the document 
  1. 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-
    1. Web based, 
    2. API based, 
    3. Offline tool based and 
    4. GSP based.
  1. What are the prerequisites to generate e-invoice?
Here are the prerequisites for the generation of e-invoices:
  1. The person generating an e-invoice should be registered on the GST portal and e-invoice or e-way bill portal.
  2. There should be a valid document to report, such as an invoice, debit note, or credit note available with him.
  3. If the taxpayer is generating e-invoices in bulk, then he should have a valid JSON file as per the e-invoice schema, or should have integrated his ERP system with APIs. 
  1. How can one verify the authenticity of an e-invoice?
Anyone can verify the correctness of an e-invoice by uploading the signed JSON into the e-invoice system, by selecting the option ‘Verify Signed Invoice’ under the ‘Search’ option. One can also download the QR Code Verify app and verify the QR code printed on the invoice.  
  1. Can more than one IRN be generated for the same invoice?
No, the e-invoice system checks in the Central Registry of the GST system to ensure that the same invoice from the same supplier belonging to the same financial year is not being uploaded again for generating more than one IRN. The IRP will reject such invoices.  
  1. Can a cancelled e-invoice number be used again?
No, once an IRN is cancelled, the same invoice number cannot be used again to generate another invoice. If used again, the IRP will reject the same.  

5. Amendment / cancellation of e-invoices

  1. 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.  
  1. How can an e-Invoice be amended?
All amendments to an e-invoice can be made only on the GST Portal.  

6. E-invoicing integration with GST returns / e-way bills

  1. 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 taxpayer for viewing and editing in the GSTR-1 return.  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.   
  1. 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.

7. E-invoicing portal / Invoice Registration Portal (IRP)

  1. Will the bulk-uploading of invoices be possible?
Yes, details of invoices can be entered in bulk in an excel based bulk convertor tool, available on the e-invoice portal. Thereafter, the JSON file must be generated and uploaded on the e-invoice portal after logging into it. The IRN and QR code shall be generated in the form of a response JSON file.  
  1. For how long will the data be available on the Government Portal?
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.  
  1. What can you do if your account gets frozen on the e-invoice system?
If your account gets frozen on the e-invoice portal, it means that either you have either cancelled your registration or your GSTIN has been deactivated on the GST common portal. A taxpayer should visit the GST common portal and check the status of his GSTIN under the ‘Search Taxpayer’ tab. If you are able to login to the GST portal but not the e-invoice portal, then you can raise a complaint at https://selfservice.gstsystem.in/  
  1. Is there a time limit for uploading e-invoices on the IRP?
A time limit is not yet notified. However, an invoice is considered valid only after its registration on the Invoice Registration Portal (IRP). Once uploaded on the IRP, the same will be registered immediately on a real-time basis.

8. Miscellaneous FAQs on e-invoicing

  1. Are electronic invoices legal?
Since every electronic invoice is verified and authenticated by the IRP on behalf of GSTN, they are legally valid.  
  1. 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.  
  1. What is the e-Invoicing software that will be used?
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.  
  1. Do export transactions require e-invoice compliance?
Yes, e-invoice compliance is mandatory for export transactions as well. The e-invoice system allows the declaration of export invoices as well as zero rated supplies.  
  1. Do import transactions require e-invoice compliance?
No, e-invoicing is not applicable for import transactions/bills of entry.  
  1. Can e-invoices be printed?
Yes, a supplier as well as the buyer can print the e-invoice using the QR code on the signed e-invoice returned by the IRP.  
  1. Is e-invoice applicable to B2C transactions?
As of now, e-invoice provisions are not applicable to B2C transactions. However, a seller is required to display a dynamic QR code on B2C invoices as per Notification No. 14/2020 – Central Tax dated 21.03.2020, read with Notification No. 71/2020 – Central Tax dated 30.09.2020.  
  1. What data is embedded in the QR code?
The QR code contains below data
  1. GSTIN of supplier and recipient
  2. Invoice Number
  3. Date of generation of invoice
  4. Invoice value
  5. Number of line items
  6. HSN code of the item with highest taxable value
  7. Unique IRN
  8. Date of generation of the IRN