E-Invoicing under Indian GST Law

Introduction:

E-invoicing under the Indian GST law is a concept which is similar to e-way bill where the details of the tax invoice issued in the software has to be filled in FORM INV-01 and Invoice Reference Number (IRN) along with QR code has to be generated for each invoice from the e-invoice portal. The concept of e-invoicing has been introduced to reduce the evasion of GST, fake invoicing and various other means of revenue leakage.

Applicability

E-invoice requirement is applicable to a registered person whose aggregate turnover exceeds Rs. 10 Cr in any of the previous financial years from July 2017 to March 2018 till FY 2022-23. The provisions of e-invoice have been introduced in phased manner as follows:

Aggregate turnover in any of the preceding financial year	Applicability
500 Crores	01.01.2020
100 Crores	01.01.2021
50 Crores	01.04.2021
20 Crores	01.04.2022
10 Crores	01.10.2022
5 Crores	01.08.2023

Exemption from generating IRN:

• Insurance Company
• Banking Company including non-banking financial company
• Goods Transport Agency
• Passenger transport service provider
• Registered person supplying services by way of admission to exhibition of cinematograph films in multiplex screens
• SEZ unit
• A government department
• A local authority
• Persons registered under the Rule 14 of CGST Rules (OIDAR)

Circular 186/18/2022-GST has clarified that the said exemption from generation of e-invoices is for the entity as a whole and is not restricted by the nature  of  supply  being  made  by  the  said entity. Hence, for example, a banking company would not be required to generate IRN for any of its supplies as banking company are exempted from the applicability of provisions of e-invoicing.

Applicability – Supplies vis-à-vis document

Nature of supply	Document	Applicability
B2B – taxable	Invoice	Yes
B2B – taxable	Credit/Debit note	Yes
B2C	Invoice	No
B2C	Credit/Debit note	No
B2C – exports	Invoice	Yes
B2C – exports	Credit/Debit note	Yes
B2B – exempt	Bill of supply	No

In summary, though e-invoice could be applicable to a registered person, the following supplies would not require an IRN:

• Outward exempted supplies
• Supplies to unregistered customers

Integration of e-invoice and GSTR-1

The invoices for which IRN has been generated in a month would auto-populate in the relevant tables of GSTR-1. The auto-populated details could be considered for filing GSTR-1 however, certain precautions should be taken.

• Ensure that all invoices as per the books have been auto-populated in GSTR-1
• If any invoice has not been auto-populated in GSTR-1, then the same should be added manually. Recheck whether e-invoice was issued for that particular document (invoice/credit or debit note).
• If any invoice is appearing two times in GSTR-1 as e-invoice was generated twice, then one of the auto-populated entries should be removed. Two e-invoices could be available because e-invoice was generated wrongly for the 1^st time and the time limit to cancel has expired.

Common practical questions:

When to generate e-invoice?

There is no specific time limit under the GST law for issuing an e-invoice. However, an invoice generated from the accounting software would not be valid unless IRN is generated and hence the best approach is to generate IRN on the very same day on which the tax invoice is generated by a registered person.

From where should the IRN be generated?

The following websites should be used to generate IRN:

• https://einvoice1.gst.gov.in/
• https://einvoice2.gst.gov.in/ (this has been in operation from 1^st April 2023)

Whether both the websites could be used or only one should be used?

• Both the websites could be used for generating IRN
• The same login details could be used for both the websites
• However, if e-invoice is generated on e-invoice1 portal, then get details, cancellation and e-way bill generation referring to the IRN for that invoice has to be done only on eInvoice1 portal. Similarly for e-invoice2 portal.

Whether e-invoice is a replacement to e-way bill?

No. The provisions and requirement of generating e-way bill is in addition to generating IRN for a tax invoice as the two requirements serves different purposes. E-way bill would still be requirement for movement of goods though a motorized conveyance. Hence, e-invoice should be generated at the time if issuing the invoice and e-way bill should be issued at the time of commencement of movement of goods. There is no maximum gap which is required between e-invoice and e-way bill. E-way bill should be generated only before commencement of movement of goods which can even be after few months of generation of e-invoice.

Whether e-invoice could be cancelled?

Yes. An e-invoice could be cancelled within 24 hours if certain errors have been committed at the time of generation of e-invoice.

Whether IRN could be edited?

No. If any errors are committed, then the only option is to cancel the IRN and generate a fresh IRN with the correct details.

Whether e-invoicing is required for RCM transactions?

The recipient is not required to generate any IRN for services received by it which are taxable under reverse charge in his hands. However, a supplier supplying goods/services which are taxable under reverse charge in the hands of the recipient would be required to generate IRN if his aggregate turnover in the preceding years exceeds the threshold limit (presently Rs. 10 Cr).

Whether two copies of invoices are required to be issued, one from software and another from e-invoice portal?

No. The invoice issued by the software would suffice as long as it contains the QR code generated from the e-invoice portal. There is no requirement to give two invoices to your customer.

What if IRN is not generated even though applicable?

A document without IRN is not a valid document under the GST law. Consequently, if a tax invoice is issued without IRN, then such a document is not a valid tax invoice in terms of section 46 of the CGST Act. Hence, the consequences could be as follows:

• Allegations that supplies have been made without issuing an invoice. Consequently, penalty could be demanded under section 122 of the CGST Act.
• Denial of credit to the recipient as the recipient does not have a valid tax invoice as required under section 16(2) of the CGST Act.

What are the precautions that need to be taken as a supplier?

• E-invoice should mandatorily be generated before the invoice is issued to the customer. Suggested to generate IRN on the same day.
• The e-invoice should also have a QR code embedded on it. This is a mandatory requirement.
• The ERP could be integrated to ensure that few invoices are not missed and no typographical errors are committed.
• Monthly reconciliation should be done of invoices as per books and invoices with IRN
• Keep a copy of IRN generated invoice as a back-up as the e-invoice portal does not store the details of IRN’s generated beyond 2 days unlike the e-way bill portal.
• Even though mistakes would have been committed during generation of IRN, the details of invoices actually issued during the tax period have to be reported in GSTR-1.

What are the precautions that need to be taken as a recipient?

• Check whether e-invoicing provisions are applicable to your top vendors.
• Ensure that they are generating IRN and affixing QR code on the invoice issued to you
• Verify the correctness of e-invoice by either of the following two methods:
  • By uploading the signed JSON file or Signed QR Code (string) into e-invoice system: einvoice1.gst.gov.in > Search > ‘Verify Signed Invoice’
  • Through “Verify QR Code” mobile app. This app could be downloaded from einvoice1.gst.gov.in > Help > Tools > Verify QR Code App.
• Take a declaration from the supplier to safeguard your credit which means that if credit is denied to you because of the default of the supplier, the supplier would be required to compensate.

Do feel free to send an e-mail on mayankgadiya@gmail.com for any further clarifications.