e-Invoicing Validation Rules

Updated on: Mar 31, 2021 - 11:11:27 PM

08 min read

As e-invoicing is a fairly new concept under GST, a taxpayer will encounter various challenging situations while generating an e-invoice.

Latest Updates on e-Invoicing

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.

This article discusses, in brief, the various errors that a taxpayer may encounter and how can he avoid those errors.

Use of unique invoice numbers- A taxpayer is supposed to use unique invoice numbers for each invoice in a financial year. Note that every e-invoice can be generated against a unique invoice number. Even for making corrections to a current invoice, a new invoice must be raised with a unique number.
Sorting B2B invoices- E-invoicing applies only to B2B (business-to-business) transactions. So, a taxpayer should sort all B2B invoices for generating e-invoices. If a taxpayer chooses the category of a transaction as B2C (business-to-consumer), then such invoices won’t be considered, and IRN won’t be generated for such invoices.
Invoice number should not start with certain characters- The invoice number should not start with 0, / and -. If these characters are used, the request will be rejected.
Two IRNs cannot be generated for the same invoice number- If a taxpayer has already generated an IRN for a particular invoice number, then IRN cannot be generated again on the same invoice number. If a taxpayer tries to do so, the request will be rejected.
If an IRN is cancelled for a specific invoice number, the same cannot be regenerated on the same invoice number. A new invoice number should be used.
Verify the recipient’s GSTIN- A taxpayer shall verify whether the recipient’s GSTIN is registered and active on the GST portal on the invoice’s date of preparation.
Verify the first two digits of the GSTIN with the state code- A taxpayer must verify whether the first two digits of the GSTIN match with the state code entered in the supplier/recipient details section while uploading an invoice. If the supply type is ‘export’, then the recipient code will be 96.
Verification of PIN code- The master database of the e-invoicing system has a state master which validates the PIN codes against the states. If a particular PIN code does not exist, it will match the first three digits of the PIN code with the PIN code to the state mapping pattern as defined by the postal department. Only after proper validation, an IRN will be generated.
An SEZ unit cannot generate an e-invoice but an invoice can be generated with the SEZ unit as the recipient.
In case of reverse charge- In reverse charge invoices, the supplier is required to generate IRN. Reverse Charges can be marked as “Y” in the case of B2B and SEZ invoices. But, the tax is to be paid in a reverse manner.
Document date is before the filing date- Suppose the invoice document date is before the reporting date to the IRP. Consider that the GSTR-1 is already filed by that date, then the e-invoice will not be declared to that period’s GSTR-1.
Blank spaces where a specific master code list needs to be followed- A white space/blank space is counted as a GST system character. For instance: If a state code has been entered as ‘7 ’ instead of ‘7’ or ‘07’ while generating e-invoices, the same will not be auto-populated accurately in the GSTR-1.