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Present Invoicing system vs E-invoicing system

Updated on

The e-invoicing system was introduced with the objective of providing better taxpayer services, reduction in tax evasion, increasing efficiency in the administration of GST and many other benefits.

Latest Updates

Update as on 29th November 2020

The CBIC 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 31st March 2021, provided the eligible registered person complies with these provisions from 1st April 2021.

Update as on 10th November 2020 The taxpayers having an aggregate turnover exceeding Rs.100 crore in any preceding financial year (starting from 2017-18) should implement e-invoicing from 1st January 2021. Update as on 1st October 2020 The applicable taxpayers have been given a grace period of 30 days for generating an Invoice Reference Number (IRN). However, this grace period is valid for the invoices issued between 1st October 2020 to 31st October 2020. Update as on 30th September 2020 Now, the aggregate turnover should be checked from FY 2017-18 till FY 2019-20, for checking the applicability of e-invoicing. Also, the date of implementation of the dynamic QR Code for B2C invoices has been extended until 1st December 2020. Update as on 30th July 2020

1. A new refined format of e-invoice has been notified by CBIC adding 20 new fields and removing 13 fields. Certain fields have undergone changes in character length as well.

2. e-Invoicing system shall apply to those taxpayers with annual turnover exceeding Rs 500 crore instead of Rs 100 crore.

3. Special Economic Zones (SEZ) units shall also be exempted from issuing e-invoices.

Update as on 23rd March 2020

The implementation of e-invoicing and the QR code has been deferred to 1st October 2020.

Exemption from e-Invoicing and QR code has been granted to sectors such as the insurance, banking, financial institutions, NBFCs, GTA, and passenger transportation service and movie tickets.

In this article, let us know how the face of invoicing changes with the e-invoicing system as compared to the present system of raising invoices.  
Sl. No. Point of comparison Under the present system of invoicing  Under the e-invoicing system
1. Applicability All taxpayers Those taxpayers making B2B supplies or exports with an aggregate annual turnover more than Rs.500 crore in any preceding financial year (FY 2017-18 onwards) must generate e-invoice from 1st October 2020 (Applicable to those with more than Rs.100 crore as turnover from 1st January 2021)
2. Physical invoice A physical invoice will continue to be generated as per the rules prescribed under the Act. There is no change in how an organisation issues physical invoices
3. Reporting of invoices on the GST portal Manual typing-in of invoice details, JSON upload, accounting/billing software that use the API to upload invoices. Same as the present system, but invoices have to follow the prescribed schema and contain the mandatory parameters.
4.  Invoice Reference Number There was only the concept of the invoice number and not an invoice reference number. No prescribed format/conditions in this regard were present except that the invoice number had to be assigned sequentially. Invoice Reference Number generated through Hash generation algorithm must be used under e-invoicing system. The objective is to allow easy comparison of e-invoices through unique IRN validated on the Central Registry and stored for future reference.
5. Dispatch of e-invoice GST portal did not contain any facility for validation and downloading of invoices. Validated e-invoices are sent to the supplier to their registered e-mail ID.
6.  Digital Signature Only supplier’s digital signature was required on the invoice and there was no facility for digital signing of uploaded invoices by GSTN/GST portal. Validated invoices will be digitally signed by the IRP.
7. QR code  Invoices could not be verified on the basis of a QR code. Validated invoices will also contain QR code generated by IRP. This will enable verification of invoices even when internet facility is not available. It is mandatory for B2C transactions to have QR code.
8. Possibility of mistakes Higher possibility of mistakes since higher manpower involvement. Much lower possibility of mistakes since once the JSON of invoice details is uploaded and verified on the IRP, GSTR-1 of seller is updated. Further, e-Way bill details under Part A are also filled up, wherever applicable.
9. Amendment of invoice Amendment/cancellation facility available on GST portal and can be made as per law E-invoice is only available for 24 hours with the IRP during which time the invoice can be fully cancelled. After that, the invoice can be amended as per GST laws on the GST portal.
10. Viewing the invoice Invoice details entered could be viewed on the GST portal Necessary invoice details can be made available on an app that can scan the QR code. Further, e-invoices are sent as an e-mail ID so the supplier can always save a copy under the e-invoicing system.
11. Verification of invoice Not easy to verify the genuineness of an invoice during an inspection Easy to verify the genuineness by scanning QR code and also checking of IRN
12. Possibility of search Relatively higher possibility of a search by the department Lower possibility of a search by the department since invoice details at the transaction level is already available with them.