E-Invoicing under GST: Implementation, Requirements, Insights with FAQs

Introduction: E-invoicing, or electronic invoicing, revolutionizes billing processes by digitizing invoice generation and validation through a government portal. This guide explores its implementation, benefits, prerequisites, and clarifications.

Meaning of E-invoicing: –

‘E-invoicing’ or ‘electronic invoicing’ is a system where the supplier will upload his invoice details and register his supply transaction on the Government Invoice Registration Portal (IRP) and get the Invoice Reference Number (IRN) generated by the IRP system. That is, the taxpayer will first prepare and generate his invoice using his ERP/accounting system or manual system in the standard e-invoice schema and then upload these invoice details in Form GST INV-01 to IRP and get the unique reference number, known as IRN. It is clarified again that the e-invoice does not mean preparation or generation of taxpayer’s invoice on the Government portal.

 IRP: –

IRP will validate the key details of the invoice, check for any duplication, and generate an invoice reference number (IRN), digitally sign the invoice and create a QR code in Output JSON for the supplier. An e-invoice will be valid only if it has IRN.

Reason for implementing the E-invoicing: –

The basic aim behind the adoption of the e-invoice system is to reduce the submission of multiple statements and details by the taxpayers and help the purchaser to get the Input tax credit easily.

Pre-requisite for generation of e-invoice

The pre-requisite for the generation of e-invoice is that the person who generates e-invoice should be a registered person on the GST portal and e-invoice system or e-way bill system. The documents such as tax invoice or debit notes or credit notes must be available with the person who is generating the e-invoice. If a user is generating Bulk invoices, then he/she should have a valid JSON file as per the e-invoice schema to upload on the e-invoice system.

Applicability of E-invoicing: –

While the word invoice is used in the name of e-invoice, it covers other documents that will be required to be reported to e-invoice system by the creator of the document:

♦ Business to Business Invoices

♦ Business to Government Invoices

♦ Export Invoices

♦ Reverse Charged Invoices

♦ Credit Notes

♦ Debit Notes

It may be noted that presently the Business to Consumer (B2C) invoices are not allowed for e – invoice/ IRN generation.

E-invoicing has been implemented in the following staggered manner based on the aggregate turnover threshold:

The following persons have been excluded from the requirement of issuing e-invoice:

1. Registered persons referred to in sub-rule (2), (3), (4) and (4A) of rule 54 (Notification No.13/2020-CT dated 21.03.2020)

♦ Rule 54(2): Insurer or a banking company or a financial institution, including a non-banking financial company.

♦ Rule 54(3): Goods Transport Agency (GTA)

♦ Rule 54(4): Passenger transportation service provider.

♦ Rule 54(4A): Multiplex theatres

2. A Special Economic Zone unit (Notification. No. 61/2020-CT, dated. 30.07.2020)

3. A Government department, a local authority (Notification. No.23/2021-CT dated 01.06.2021)

4. Persons registered in terms of rule 14 of CGST Rules (OIDAR)

Latest Updates about E-Invoicing:

1. GSTR-1 filers can now fetch the HSN summary from GST e-invoices. However, if the HSN code is not available, taxpayers need to manually add it to the HSN summary. Read Advisory

2. The GSTN department has issued an advisory required to generate an e-invoice from 1st April 2024 if their turnover exceeds INR 5 crores in FY 2023-24. Read Advisory

3. At least 6-digit HSN is mandatory in e-Invoices, for taxpayers whose AATO (Aggregate Annual Turnover) is 5 Cr and above, from the 15th of December 2023.

4. The taxpayers, notified for generation of e-invoices and supplying to government departments/agencies, need to generate B2B e-Invoices with the GSTIN of the Government department/agency.

5. 2-Factor Authentication for all taxpayers with AATO above Rs 20 Cr is mandatory from 20th November 2023.

6. With effect from 1st November 2023, a time limit of 30 days has been imposed for reporting of invoices from the date of invoice, on e-invoice portals. This time limit is applicable for taxpayers with AATO greater than or equal to 100 crores. Hence, the taxpayers in this category will not be allowed to report invoices older than 30 days on the date of reporting. This restriction will apply to the all-document types for which IRNs are to be generated. Thus, the Credit / Debit note will also have to be reported within 30 days of issue from the date of issue.

Rule 48(5) provides that if a registered person with aggregate turnover exceeding Rs. 5 crores in any preceding financial year from 2017-18 onwards issues any invoice other than an e-invoice, then such invoice shall not be treated as an invoice.

Rule 48(6) provides that the provisions of Rule 48(1) and 48(2) i.e., preparation of invoice in triplicate in case of goods and in duplicate in case of services shall not apply to an e -invoice.

Clarification regarding E-invoicing: –

Clarification on applicability of e-invoicing w.r.t an entity [Circular No. 186/18/2022-GST dt. 27.12.2022]

Issue: Whether the exemption from the mandatory generation of e-invoices in terms of Notification No. 13/2020-Central Tax, dated 21st March 2020, as amended, is available for the entity as a whole, or whether the same is available only in respect of certain supplies made by the said entity?

Clarification: In terms of Notification No. 13/2020-Central Tax dated 21.03.2020, as amended, certain entities/sectors have been exempted from the mandatory generation of e-invoices as per sub-rule (4) of rule 48 of Central Goods and Services Tax Rules, 2017. It is hereby clarified that the said exemption from the generation of e-invoices is for the entity as a whole and is not restricted by the nature of the supply being made by the said entity. For more clarity, we can understand by an illustration.

Illustration: A Banking Company providing banking services, may also be involved in making the supply of some goods, including bullion. The said banking company is exempted from mandatory issuance of e-invoice in terms of Notification No. 13/2020-Central Tax, dated 21st March 2020, as amended, for all supplies of goods and services and thus, will not be required to issue e-invoice with respect to any supply made by it.

Clarification on applicability of e-invoice [Circular No. 198/10/2023-GST dated 17.07.2023]

Issue: Applicability of e-invoicing where supply is made by a registered person who is required to generate e-invoice, to Government Departments or establishments/ Government agencies/ local authorities/PSUs registered solely for the purpose of deduction of tax at source under section 51 of the CGST Act, 2017.

Clarification: The Government Departments or establishments/Government agencies/ local authorities/ PSUs, registered solely for the purpose of deduction of tax at source as per provisions of section51ofthe CGST Act, are liable for compulsory registration in accordance with section 24(vi) of the CGST Act, 2017. Hence, they are treated as registered persons as per section 2(94) of the said Act. Therefore, the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, is required to issue e-invoices for the supplies made to such Government Departments or establishments/ Government agencies/ local authorities/ PSUs, etc. under rule 48(4) of CGST Rules.

Circular No. 160/16/2021-GST dated 20th September 2021 – Clarification on carrying a physical copy of invoice under Rule 48(4)

Issue: Whether carrying a physical copy of invoice is compulsory during the movement of goods in cases where suppliers have issued invoices in the manner prescribed under rule 48 (4) of the CGST Rules, 2017 (i.e., in cases of e-invoice).

Clarification: It is clarified that there is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules and production of the Quick Response (QR) code having an embedded Invoice Reference Number (IRN) electronically, for verification by the proper officer, would suffice.

FAQs which are more clarified about E-invoicing: –

Q.1 What is the time limit for E-invoice?

Ans. Until 31st October 2023, there was no time limit fixed by the GST systems to generate e-invoices. From 1st November 2023 onwards, taxpayers with AATO equal to or more than INR 100 crore must generate e-invoices for tax invoice and credit-debit notes within 30 days of invoice date, failing which the invoices/CDNs will be non-compliant. There is no defined time limit or period within which e-invoice must be generated for the rest. Hence, for such taxpayers, it is advised to create e invoice on or after the invoice date but before the filing of GSTR-1 returns.

Q.2 Can we raise e invoice after invoice date?

Ans. Yes, e-invoice is generated after the invoice date. Also, until 31st October 2023, there was no time limit fixed by the GST systems to generate e-invoices. From 1st November 2023 onwards*, taxpayers with AATO equal to or more than INR 100 crore must generate e-invoices for tax invoices and credit-debit notes within 30 days of invoice date, failing which the invoices/CDNs will be non-compliant.

Q.3 Can we generate e invoice in back date?

Ans. No. Until 31st October 2023, there was no time limit fixed by the GST systems to generate e-invoices. From 1st November 2023 onwards, taxpayers with AATO equal to or more than INR 100 crore must generate e-invoices for tax invoices and credit-debit notes within 30 days of the invoice date, failing which the invoices/CDNs will be non-compliant. There is no defined time limit or period within which e invoice must be generated for the rest. Hence, for such taxpayers, it is advised to create e invoice on or after the invoice date but before the filing of GSTR-1 returns.

Q.4 Does the e-invoice schema apply to reverse charge mechanism (RCM) transactions?

Ans. Yes, the e-invoice scheme applies to reverse charge mechanism (RCM) transactions under Section 9(3).

Q.5 We have crossed the notified turnover in the current financial year. Should we upload our invoices?

Ans. No. e-Invoice applies only if the turnover of any previous financial year (from 2017-18 onwards) has crossed the threshold limit.

Q.6 What are the supplies currently covered under e-invoicing?

Ans. e-Invoicing currently applies to

♦ Supplies to registered persons (i.e., B2B supplies),

♦ Supplies to SEZs developers (with/without payment of tax),

♦ Exports (with/without payment of tax), and

♦ Deemed exports, that are made by the notified class of taxpayers. It does not cover Free Trade & Warehousing Zones (FTWZ), import transactions, input service distributors, high sea sales and bonded warehouse sales. The exemption is with respect to entity and not transaction.

Q.7 Is e-invoicing applicable to nil-rated or wholly-exempt supplies?

Ans. No, e-invoicing is not applicable to nil-rated or wholly-exempt supplies as in these cases, only a bill of supply is issued and not a tax invoice.

Q.8 Whether e-invoicing applies for invoices between two different GSTINs under the same PAN?

Ans. Yes, e-invoicing by specifically notified persons is compulsory for the supply of goods or services or both to a registered person.

Q.9 Whether one must generate an e-Invoice for the export of services?

Ans. Yes, you must generate e-invoice for all types of export transactions which are B2B in nature.

Q.10 Do financial or commercial credit notes need to be reported to the IRP?

Ans. No, only credit and debit notes that are issued under Section 34 of the CGST or SGST Acts need to be reported to the IRP.

Q.11 Is there any time limit to make a credit note against an e-invoice?

Ans. There is no defined time limit to make a credit note or debit note against an e-invoice. However, it should be noted that from 1st November 2023 onwards, taxpayers with AATO of INR 100 crore and more must report tax invoices, and debit and credit notes to the IRP within 30 days of the document date, failing which the invoices/CDNs will be non-compliant.

Q.12 Can a business place its logo on the e-invoice template?

Ans. No, there will be no placeholder provided in the e-Invoice scheme for a company’s logo. The company can provide the same in its accounting/billing software. However, the logo will not get sent to the IRP.

Q.13 How to report the freight charges in an e-invoice?

Ans. Freight charges may be reported as line items only if it comes along with a GST component, else it may be entered under the ‘Other charges’ field.

Q.14 Can the Shipping bill number and date be reported in an e-Invoice and is it mandatory?

Ans. Yes, the shipping bill number and date can be entered in the e-invoice. However, it is not mandatory. Please refer to the schema of the invoice for more details.

Q.15 How can one verify the authenticity of an e-invoice?

Ans. 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.

Q.16 Can more than one IRN be generated for the same invoice?

Ans. 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.

Q.17 Can a cancelled e-invoice number be used again?

Ans. 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.

Q.18 Can an e-Invoice be cancelled partially/fully?

Ans. An e-invoice cannot be partially cancelled, it has to be cancelled fully. Once cancelled, it will need to be reported on the IRN within 24 hours. Cancellation done after 24 hours cannot be done on the IRN and needs to be manually cancelled on the GST portal in the GSTR-1 return before the same is filed.

Q.19 How can an e-invoice be amended?

Ans. All amendments to an e-invoice can be made only on the GST portal in the GSTR-1 return.

Q.20 What is the time limit for delivery of goods or generation of e-waybill in e-Invoice?

Ans. No, there is no defined time limit for delivering goods or generation of e-way bill for the e-invoice.

Q.21 After the generation of the IRN, is there a time limit for the generation of the e-way bill (wherever applicable)?

Ans. No, there is no time limit at present in the system.

Q.22 For how long will the data be available on the Government Portal?

Ans. 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.

Q.23 What can you do if your account gets frozen on the e-invoice system?

Ans. 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 log in to the GST portal but not the e-invoice portal, then you can raise a complaint at https://selfservice.gstsystem.in/.

Q.24 Do export transactions require e-invoice compliance?

Ans. 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.

Q.25 Do import transactions require e-invoice compliance?

Ans. No, e-invoicing is not applicable for import transactions/bills of entry.

Q.26 Do SEZ developers need to issue e-invoices?

Ans. Yes, SEZ developers have to issue e-invoices if their turnover crosses the specified limit, and they fulfil other conditions listed in the relevant notification. Only SEZ units have been exempted from issuing e-invoices.

Q.27 Is e-Invoicing applicable if my customers are of SEZ type?

Ans. Yes, it’s applicable for buyers who operate from SEZ. If the customer is of type SEZ, then an e-invoice can be generated using the transaction type ‘SEZWP’ / ‘SEZWOP’ by the seller.

Q.28 Can manual invoices with USD or EURO currency and corresponding e-invoices with INR be used? (Or) Can we report export invoice details with foreign currency?

Ans. All invoices to be reported on the e-invoice portal must contain the values in INR. However, there are some optional fields in the e-invoice schema in which foreign currency may be used.

Q.29 Is e-invoicing applicable to invoices that are issued by an Input Service Distributor (ISD)?

Ans. No, e-invoicing is not applicable to invoices issued by an ISD.

Q.30 If an SEZ unit and a regular DTA unit are under the same legal entity (i.e., they have the same PAN), and if in one of the financial years since 2017-18, the aggregate total turnover of the legal entity is more than the notified limit (considering both the GSTINs), will e-invoicing be applicable to the DTA even though the turnover of the DTA unit is below the notified limit?

Ans. In this situation, the SEZ unit is exempt from e-invoicing, but e-invoicing will still be applicable to the DTA unit. This is because the aggregate turnover of the legal entity, in this case, exceeds the notified limit. The turnover is to be calculated as per the definition of Section 2(6) of the CGST Act, which is based on the ‘aggregate turnover’ of the common PAN.

Q.31 Is e-invoicing applicable to B2C transactions?

Ans. As of now, e-invoice provisions do not apply 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. 6/2021 – Central Tax dated 30.03.2021.

Q.32 We are unable to enter slash ‘/’ in the document number. What to do?

Ans. Document numbers in e-Invoice should not begin with 0, / and -. One must pass the document number without such characters.

Q.33 What is the penalty for not making e invoice?

Ans. The taxpayer must pay 100% of the tax due or Rs.10,000, whichever is higher if they do not generate an e-invoice. Moreover, the penalty for incorrect invoicing is Rs.25,000 per invoice.

Conclusion: E-invoicing streamlines billing processes, enhancing tax compliance and reducing paperwork. With detailed insights on implementation, prerequisites, and FAQs, businesses can leverage e-invoicing to streamline operations and avoid penalties for non-compliance.