E-Invoicing under GST

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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

Q1. What are the pre-requisites for businesses to be ready for e-invoice?

» Businesses will issue invoices as they do currently.
» Necessary changes on account of e-invoicing requirements (i.e., to enable reporting of invoices to IRP and obtain IRN) will be made by ERP/Accounting and Billing Software providers in their respective software.
» They need to get the updated version having this facility. Check the website for generating and creating E-Invoice

Q2. Is an invoice/CDN/DBN (required to be reported to IRP by notified person) valid without IRN?

» The notified person has to prepare an invoice by uploading specified particulars in FORM GST INV-01 on Invoice Registration Portal and after obtaining the Invoice Reference Number (IRN).
» Any invoice issued by a notified person in any manner other than the manner specified in Rule, the same shall not be treated as an invoice.
» The document issued by the notified person becomes legally valid only with an IRN.

Q3. Which supplies are presently covered under e-invoice?

» Supplies to registered persons (B2B),
» Supplies to SEZs (with/without IGST),
» Exports (with/without IGST),
» Deemed Exports,
» Credit Notes and Debit Notes

Q4. Which supplies are presently Not covered under e-invoice?

» Supplies to unregistered persons (B2C)
» ISD Invoice
» Nil Rated / Exempt Invoices
» Financial Credit notes and debit notes
» High-seas / Bounded Warehouse Sales since they are neither supply of goods or service

Q5. When E-invoice is to be issued to customer?

» For movement of Goods – before commencing movement of goods.
» For providing services – before issuing invoice to the customer.

Q6. How does the supplier send an e-invoice to the receiver?

» A suggested mechanism may be to exchange the PDF of the JSON received from IRP (including QR code) as the best-authenticated version of the e-invoice for business transactions.
» However, a mechanism to enable system-to-system exchange of e-invoices through ecosystem partners will be made available in due course.

Q7. Can the details of a reported invoice for which IRN has already been generated amended?

» Amendments are not possible on IRP.
» Any changes in the invoice details reported to IRP can be carried out on the GST portal (while filing GSTR-1).
» In case GSTR-1 has already been filed, then using the mechanism of the amendment as provided under GST. However, these changes will be flagged to the proper officer for information.

Q8. Can an IRN/invoice reported to IRP be cancelled?

» Yes. Cancellation of IRN can be done within 24 hours from reporting the invoice to IRP, once its connected E-Waybill, if generated is cancelled first.
» However, if the connected e-way bill is active or verified by the officer during transit, the cancellation of IRN cannot be permitted.
» In case of cancellation of IRN, GSTR-1 also will be updated with such ‘cancelled’ status.

Q9. Will the e-invoice details be transferred to the GST System? Will it auto-populate the return?

» Yes. On successful reporting of invoice details to IRP, the invoice data (payload), including IRN, will be saved in GST System on T+3 days basis i.e. for example, the data from e-invoices uploaded on 18-12-2020 would be visible in GSTR-1 on 21-12-2020
» GST system will auto-populate them into GSTR-1 of the supplier and GSTR-2A of respective receivers. GSTN Portal will be updated for all e-invoices generated.
» With source marked as ‘e-invoice,’ IRN and IRN date will also be shown in GSTR-1 and GSTR-2A.