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How to use Digital Signature for an e-Invoice

Updated on:  

08 min read

The e-invoicing system was implemented from 1st October 2020. It applies to those taxpayers with an annual turnover exceeding Rs.500 crore. From 1st January 2021, it also became applicable to taxpayers having an aggregate turnover exceeding Rs.100 crore in any preceding financial year starting from 2017-18. Similarly, it has been extended to businesses with turnover of more than Rs.50 crore from 1st April 2021.

In this article, let us look into the requirements of Digital Signature on an e-invoice and how to meet the same.

Latest Update on e-invoicing

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.

8th March 2021
The CBIC has notified that e-Invoicing will be applicable from 1st April 2021 for businesses with an aggregate turnover of more than Rs.50 crores (in any financial year from FY 2017-18 onwards).

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.

10th November 2020
The taxpayers having an aggregate turnover exceeding Rs.100 crore should implement e-invoicing from 1st January 2021.

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.

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.

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 an 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.

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 insurance, banking, financial institutions, NBFCs, GTA, passenger transportation service and movie tickets.

What is DSC?

Digital Signature Certificate (DSC) is a means of electronically signing documents to verify the authenticity of the person signing. It can be substituted for a physical handwritten signature. DSC is valid only if it created as per the provisions laid down under the Information Technology Act, 2000. 

Use of DSC before e-invoicing system

The CGST Rules require all invoices (including credit notes/debit notes) to be physically signed by an authorised representative of the entity issuing the invoice. However, such person may also place his digital signature if it is affixed as per the provisions of the Information Technology Act, 2000. 

Use of DSC under the e-invoicing system

The e-invoicing system requires a supplier to upload the JSON of the invoice onto the Invoice Registration Portal (IRP). The JSON will have to follow specific mandatory and optional parameters while reporting the invoices. The digital signature is one of the optional parameters in this case. The IRP will generate the hash (Invoice Registration Number or IRN), and then digitally sign the JSON if it is deemed to be valid, using its private key. If the signed JSON is tampered with, then e-invoice will become invalid and the digital signature will fail.  Once the e-invoice is signed by the IRP, it will be a valid e-invoice to be used by the seller for his business transactions. The IRP will also forward this digitally signed e-invoice to the GSTN and the e-way bill system.

Requirement and applicability of DSC

As mentioned earlier, the JSON of the invoice is required to be uploaded onto the IRP with the digital signature being one of the optional parameters. Once the IRP validates the invoice, it will digitally sign the JSON and generate QR code. When the supplier provides a printed copy of his invoice to the recipient, he will have to disclose the QR Code, his digital signature and the Invoice Reference Number (IRN) generated by the IRP. The disclosure of the QR code and digital signature of supplier is not interchangeable but have to be disclosed separately. 

How to attach a digital signature to an e-invoice?

Ensure that the necessary software for reading the DSC is present and also that the ‘emSigner’ tool from the GST portal is installed and running. 

Step 1: There are various ways of generating an invoice in the prescribed JSON format – for example, offline utilities, mobile apps, etc. After doing so, we need to log in to the IRP and attach the JSON.

Step 2: Click on the button ‘Verify using DSC’. A dialogue box will open up, showing the various digital signatures available.

Step 3: Select the appropriate Digital Signature and click on ‘Sign’. Ensure that the DSC belongs to the Authorised Signatory as registered on the GST portal. The utility may prompt you to enter the password for the DSC.

Step 4: A success message will appear, indicating that the attaching of the Digital Signature Certificate was successful. Press OK/proceed.

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