E-Invoicing Under GST

Introduction

E-Invoicing under GST is an authentication mechanism just like the E-way Bill system. However, the mechanism is different, wherein it involves submitting already generated invoices on the common e-invoice platform before issuing the same to the customer.

It is a system in which Business to Business (B2B) invoices are authenticated electronically by GSTN. All the invoices uploaded on the e-invoice platform will be automatically transferred to the GSTN portal and E-way bill portal in real-time, so there will be no need for manual entry to file GSTR-1 return as well as for generation for E-Way bills. Invoice Registration Portal (IRP) will issue a QR code and unique document identification number for every invoice generated which will be called Invoice Reference Number (IRN). IRN is 64 digit character created by combination of GSTIN, Financial Year and Invoice Number It is mandatory to print QR Code on Invoice. Even, a dedicated mobile app to scan and verify validity of e-invoice QR Code is provided on portal

What is the applicability under E-Invoicing?

• E-invoicing has been made applicable from 1st October 2020, for registered persons exceeding aggregate turnover of Rs. 500 crore limit in any preceding financial years from 2017-18 to 2019-20.
• From 1st January 2020 onwards, e-Invoicing has been made applicable to businesses exceeding the Rs. 100 crore aggregate turnover limit in any of the financial years between 2017-18 to 2019-20.

When will E-Invoicing be non-applicable?

E-invoicing will not apply to the following categories of the registered persons even if the aggregate turnover exceeds the specified limits:

What are the benefits of E-Invoicing?

Businesses will have the following benefits:

• Faster availability of ITC
• Real-time tracking of invoices
• No need to separately upload invoices on GSTN portal and E-Way bill portal
• Faster data reconciliation which will lead to a reduction of mismatches
• Invoices generated in multiple software can be integrated on GSTN
• Faster return filing process as invoices are already auto-populated

Process flow for E-Invoice generation

What are the contents of the E-Invoice?

E-Invoice will mandatorily contain the following fields:

Why was E-Invoice introduced?

• Tax authorities will have access to transactions as they occur in real-time since the e-invoice will have to be compulsorily generated through the E-Invoice portal.
• Less scope for the manipulation of invoices since the invoice gets generated before carrying out a transaction.
• It will reduce the chances of fake GST invoices and the only genuine input tax credit can be claimed. Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.
• This mechanism will help in overall reduction of tax evasion.

Buyer’s perspective on E-Invoice

• In order to claim ITC, it is mandatory that the buyer must be having a valid tax invoice.
• In terms of Rule 48(5) of the CGST Rules, if the invoice is generated without complying with the E-Invoicing requirement, it shall not be treated as invoice for GST purposes.
• The buyers must ensure that their vendors are compliant with this new requirement if it applies to them. Otherwise, there would be issues on claiming ITC.
• In this regard, the buyers must take confirmation from their suppliers regarding the applicability of E-Invoicing and agree on the implications in case of non-compliance

How can Incorp Advisory help?

We provide comprehensive advice and assistance on various indirect tax levies including Goods and Services Tax (GST) and Customs Duty. Our experts can help you with the following:

• Assisting entities to understand the impact on business operations due to the implementation of E-invoicing
• Assisting to configure the existing accounting ERP for compliance
• Assist in solving any problems faced by the entities in the E-Invoice environment.

FAQs