On the 35th GST Council meeting held on 21st June 2019, the council has decided to implement the concept of E-Invoice under GST but the council has approved the standard of E-invoicing on its 37th GST council meeting which was held on 20th September 2019.
Introduction & Applicability of GST E-Invoices
The introduction of E-Invoicing under GST will be a big move to Today’s business model by transforming the paper-based system to the digital-based system. The council has approved the introduction of e-invoicing in phase for reporting the Business to Business invoices and shall be mandatorily applicable from 1st April 2020 into the GST business process for all taxpayers having the aggregate turnover in a financial year exceeds Rs. 100 crores. (Notification no. 70/2019- Central Tax)
“aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax, and cess.”
Although, the system has rolled out voluntarily from Jan, 2020 for taxpayers having annual aggregate turnover more than Rs. 500 crore, while the taxpayers having annual aggregate turnover more than Rs. 100 Crores can generate e-invoice from Feb, 2020.
Advantages of E-invoicing under GST
1. One time reporting of invoice data, which will reduce the reporting in multiple formats (E-way bill and GSTR-1 or Anx-1 and Anx-2 under new returns).
2. Real-time tracking of invoices prepared by the suppliers.
3. Elimination of Fake invoices.
4. Reconciliation of Input tax credit and output tax.
5. Standardization of invoicing system.
The government has issued the notifications no. 68/2019, 69/2019, 70/2019, 71/2019 and 72/2019- Central Tax on dated 13th of December 2019 to lay down the roadmap for the E-invoicing.
E-Invoice format
(Notification no. 68/2019- Central Tax)
The Invoice shall be prepared in the Standardized format by including such particulars contained in FORM GST INV-01. The E-invoices drafted format by GSTN contains the following parts:-
1. E-Invoice Schema: This should consist of the Technical fields name, description of each field, whether it is mandatory or not, and has a few sample values along with explanatory notes.
2. Masters: Masters should include fields like UQC, State Code, Invoice type, supply type, etc.
3. E-invoice template: Template should be as per the Rule -48 of CGST and has been provided here to enable the reader to correlate the terms used in the sheets. The mandatory fields are marked in Green and optional fields are marked in yellow.
Purpose of Standardization of E-invoice: The purpose of standardization of e-invoice format is to ensure there is interoperability of data, which allows taxpayers the user-friendly, flexible and cost-efficient electronic invoicing system.
Following the summary of the field included in e-invoice standard format:
Invoice details, items detail, Supplier details, Buyer details, HSN code, tax rates, Unit description, Price, total amount, etc.
E-Invoice Registration Portal (IRP) (Notification no. 69/2019- Central Tax)
The Government has notified the following the E-Invoice portal for the preparation of e-invoice namely as:-
1. www.einvoice1.gst.gov.in
2. www.einvoice2.gst.gov.in
3. www.einvoice3.gst.gov.in
4. www.einvoice4.gst.gov.in
5. www.einvoice5.gst.gov.in
6. www.einvoice6.gst.gov.in
7. www.einvoice7.gst.gov.in
8. www.einvoice8.gst.gov.in
9. www.einvoice9.gst.gov.in
10. www.einvoice10.gst.gov.in
These portals will validate the genuineness and correctness of the invoice data and check whether the invoice already exists in the GST portal or not. The main function of these portals is to generate the Invoice Reference Number (IRN).
Functions of Invoice Registration Portal
- Generation of an invoice reference number
- Validation of the Invoice reference number (if created by the supplier directly)
- Digitally signing of the E-invoicing
- Generation of QR-Codes
- Sending of invoices via – Email
E-Invoice Workflow: The flow of the e-invoice generation, registration, and receipt of confirmation can be divided into two major parts:
- Interaction between Supplier and IRP
- Interaction between IRP and GST/E-way portal and Buyer
Step 1: Interaction between Supplier and IRP
Generation of invoice by the seller in his accounting or billing system, the invoice must confirm the GST e-invoice schema (Standards). The supplier’s software should be capable to generate the JSON of the final invoice that is ready to be uploaded to the IRP. The IRP will only take the JSON of the e-invoice. The supplier will upload and push the JSON of the e-invoice to the IRP (Supplier may also generate the IRN). Supplier may use the following channels for getting the invoice registered:
- API Based
- GSP Based
- Offline Tool Based
- Web-Based
- SMS Based
- Mobile App-Based
IRP will validate and generate the Unique Invoice reference number (IRN) of the uploaded JSON (IRN will be based on the supplier GSTN, Invoice no. and Financial year) and check the IRN from the Central Registry of GST System to ensure that the same document from the same supplier pertaining to same Fin Year is not being uploaded again. On receipt of confirmation, the IRP will add its signature on the invoice data to the JSON.
(In case the same document has been uploaded earlier, the IRP will send an error code back to the seller, when he tries to upload a duplicate e-invoice.)
The IRP will return to the seller a digitally signed JSON with IRN and share the same with the GST system and e-way bill system.
Step 2: Interaction between IRP and GST/E-way portal and Buyer
IRP will be sent the digitally signed e-invoice data along with IRN to the GST system and E-way bill system. The GST will update the ANX-1 of the seller and ANX-2 of the buyer, which determines the output liability and ITC. The E-way bill system will accordingly create the e-way bill by using this data.
Cancellation and Amendment of E-Invoice (FAQs issued by GSTN)
- E-Invoice can’t be partially cancelled. It has to be fully cancelled. Cancellation has to be done as per the process defined under Accounting Standards. The e-invoice mechanism enables invoices to be cancelled. This will have to be triggered through the IRP if done within 24 hours. After 24 hours, the same will need to be done on the GST System.
- Amendments to the e-invoice will be allowed on the GST portal as per the provisions of GST law. All amendments to the e-invoice will be done on the GST portal only.
QR Code (Notification no 72/2019)
Govt. notifies that an invoice issued by a registered person, whose aggregate turnover in a financial year exceeds five hundred crore rupees, to an unregistered person (hereinafter referred to as B2C invoice), shall have Quick Response (QR) code.
The IRP will generate a QR code containing the IRN along with important parameters of invoices (like- GSTN of supplier, GSTN of recipient, Invoice no., Invoice date, HSN code, IRN and Invoice value) and digital signature so that it can be verified on the central portal as well as by an Offline App.
The facility of QR code verification will be made available only through the GST System and not the IRP. This is because the IRP will not have the mandate to store invoices for more than 24 hours. To achieve speed and efficiency, the IRP will be a lean and focused portal for providing invoice registration and verification service, IRN, and QR codes. Hence, storing of the invoices will not be a feature of the IRP.
FAQs- Frequently Asked Questions on GST E-Invoices
Q 1. Will businesses now be required to generate e-invoices on the GST portal or the e-invoice portal or the IRN portal?
Ans: No, E-invoicing is not the generation of invoices on the Govt Portal, Taxpayer will have to re-configure their ERP or billing accounting system. The e-invoicing mechanism only indicates the invoice schema and standard so as to be inter-operable amongst all accounting/billing software and all businesses.
Q 2. Will there be a time limit for e-invoice uploading for registration?
Ans: Once the invoices has been uploaded to the Invoice reference portal, it will be registered immediately on the real time basis. Without registration of e-invoice to the portal it will be not valid.
Q 3. Will it be possible to allow invoices that are registered on invoice registration system/portal to be downloaded and/or saved on handheld devices?
Ans: Yes, after the registering of invoice on the portal, IRP will share the digitally signed copy of e-invoice for the record of supplier. It will also be sent to the email address of recipient provided in the e-invoice.
Q 4. Can IRP reject the submitted invoice?
Ans: IRP will validate for GSTIN existence (of seller and buyer) and de-duplication of the invoice. If non-existent GSTIN and/or a duplicate invoice is found, the invoice will be returned with relevant error codes, without registering it.
Q 5. Will the e-invoice be mapped to the ANX 1 / 2 by IRP or will the tax payer have to do that?
Ans: The IRP will push the data (payload) to the GST System. The GST system will convert the e-invoice received and populate it into the GST ANX 1 and GST ANX 2 of the seller and buyer respectively.
Q 6. Large business (> 100 crores) also has B2B and B2C door to door delivery. Will he also be required to print QR codes on the invoices?
Ans: Currently, B2C supplies are exempted from e-invoice creation mandate.
Q 7. Whether bulk generation facility of E-invoices provided by the IRP?
Ans: Bulk generation tool is provided by the IRP where taxpayer can upload multiple invoices, this can be done in two ways:
1. Directly upload the JSON file from the accounting system, or
2. Using bulk generation tool (Portal>Help>Bulk Generation Tool)
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