An e-invoice is an invoice reported as per the electronic standard for reporting of invoices. This article will take you through the process of generation of an e-invoice and also its workflow.
1. Steps to create an e-invoice
Step 1 – Generation of e-invoice:
The taxpayer will continue to generate invoices in the normal course of business. However, the reporting of these invoices electronically has criteria. It needs to be done as per the e-invoice schema along with mandatory parameters. The mandatory fields of an invoice for the supply of goods are listed below:
- Invoice type
- Code for invoice type
- Invoice Number
- Invoice Date
- Supplier details like Name, GSTIN of Supplier, Supplier address (including place, pin code, state)
- Details of the buyer such as name, GSTIN, state code, address, place, pin code, payee name, account number, payment mode and IFSC code
- Dispatch details
- Invoice item being dispatched
- Total tax amount, paid amount and payment due
- Tax scheme (whether GST, Excise Custom, VAT)
- ‘Shipping To’ details like Name, GSTIN, address, pin code, state, supply type, transaction mode (whether regular, ‘bill to’ or ‘ship to’)
- Details of goods like Sl. no., quantity, rate, assessable value, GST rate, amount of CGST/SGST/IGST, total invoice value, batch number/name
The seller has to ensure that his accounting/billing software is capable of generating a JSON of the final invoice. The seller can create a JSON following the e-invoice schema and mandatory parameters by using the following modes:
- Accounting and billing system that offers this service
- Utility to interact with either accounting/billing system, ERP, excel/word document or a mobile app
- Offline Tool to generate e-invoice by keying-in invoice data
Step 2 – Generation of unique IRN:
The supplier has the option to generate ‘hash’ based on specific parameters usually three of them such as Supplier’s GSTIN, Supplier’s invoice number, Financial Year (YYYY-YY). The prescribed algorithm, such as SHA256 must be used for the hash generation. If the hash is validated, it would later become the Invoice Reference Number (IRN) of the e-invoice.
Step 3 – Uploading the JSON:
The following modes may be used to upload the JSON of the final invoice:
- Directly on the IRP
- Through GST Suvidha Provider (GSP)
- Third-party provided apps (including through API)
The supplier can also upload the hash along with the JSON onto the IRP, if generated by him.
Step 4 – Hash generation/validation:
Hash will have to be generated by the IRP in respect of the invoices uploaded without the hash. In such a case, the hash generated by the IRP would become the IRN. Where the supplier has also uploaded hash, a de-duplication check will be performed. It is done by validating the hash/IRN against the Central Registry of GST System to ensure that the IRN is unique. Once validated, the hash/IRN is stored in the Central Registry. IRP will then generate a QR Code and digitally sign the invoice and make it available to the supplier. The IRP also sends the e-invoice via e-mail mentioned on the invoice to the buyer and seller.
2. Back-end processing of a valid e-invoice
The signed e-invoice data will be sent to the GST system where ANX-1 of the supplier and ANX-2 of the buyer will be updated based on the details entered in the invoice. Thus the invoices can be viewed on the respective ANX-1 and ANX-2 after a successful upload.
Wherever applicable, details of invoices will be used to update ‘Part A’ of the E-Way Bill. As a result, only vehicle number needs to be entered in ‘Part B’ of the E-Way Bill system to create an E-Way bill.