e-Invoicing is applicable to B2B Invoices, however, there are other technicalities also, where you must account for other invoices & documents on the IRP too.
Before implementation, businesses must understand each & every provision of e-Invoicing in order to avoid any friction that may arise due to confusion.
In this article, we have discussed the application of e-Invoicing on the B2C Transactions of your business.
There is a lack of clarity in the Notification No.14/2020, but we have detangled it & made it easier for you to understand the same via this article.
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What is e-Invoice under GST?
e-Invoice under GST is the new provision proposed by the government under GST to manage invoices electronically & more efficiently.
All businesses having an annual aggregated turnover of more than Rs. 500 Crores will have to comply with the provisions of e-Invoicing.
Businesses are supposed to create the invoices in the SCHEMA format that has been fixed by the GSTN.
These invoices shall then be uploaded to the unified portal called the IRP or Invoice Registration Portal.
The portal will validate the invoice in real-time & provide a unique IRN & QR Code for the invoice, upon successful validation.
The users can then share the invoices with their vendors & continue the transactions per usual.
e-Invoicing is applicable to the following documents under GST, B2B Invoices, B2G Invoices, RCM invoices, Export invoices, Credit Notes, & Debit Notes.
Additionally, businesses are required to generate QR Codes for their B2C invoices too.
Nevertheless, the validation of the above-mentioned documents & B2C invoices will be very different from each other.
Note: b2cs meaning business to customer
The B2C QR Codes shall contain the detail of the invoices along with the payment reference link.
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The workflow of B2B e-Invoicing under GST
The working of e-Invoicing is both simple & complicated at the same time, making it confusing for users to understand.
Let us see how e-Invoicing will work within a business-
List of Steps
Invoice Generation
Create the invoice within your billing system in the SCHEMA format as specified by the GSTN. There are a total of 20 mandatory fields in the e-Invoice that you must furnish.
Generating the IRN
You can generate your own IRN using the hash code.
Uploading Invoices to IRP
You then need to upload the invoices to the IRP for validation of the IRN, mandatory fields & other details. For invoices, without IRNs the IRP will generate the IRN & QR Codes upon successful validation. Invoices must first be converted into JSON Files, as the IRP will only accept the JSON File.
Authentication, IRN-QR Code generation, Signing
Upon the successful validation of the e-Invoice, the IRP will generate a unique IRN & QR Code for the e-Invoice. The IRP will also digitally sign the e-Invoice.
The Backend process & downloading the e-Invoice
You can then download the JSON of the finished & validated e-Invoice, convert it into a PDF or a suitable format & share the same with your buyers. The IRP will share the e-Invoice with the e-Way Bill Portal to generate Part-A of the e-Way Bill & with the GST Portal for Filing the GST Returns.
Now, the process may seem simple but there are certain things that make it lengthy & less user-friendly.
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The first most difficult task is to comply with the SCHEMA Format.
Secondly, your accountants will have to juggle constantly with the data between the IRP & the ERP and keep on converting the files from JSON to PDF & back, this can be very time and effort consuming and is likely to hamper the productivity of your team.
How is E-Invoicing of B2C & other invoices done?
The above- mentioned process is applicable to B2B invoices majorly, but there are other documents as well that are liable to e-Invoicing under GST such as B2G invoices, Export & RCM invoices, Credit Notes & Debit Notes.
Although B2C invoices are exempted from e-Invoicing as of now, you still have to generate QR Codes for your B2C invoices.
An important point to be noted here is, Government has clearly mentioned that B2C Invoices are exempted from e-Invoicing & so, your B2C invoices will be rejected if uploaded on the IRP.
If you try to upload the B2C invoices repeatedly, the IRP may even block your IRN generation for a short while.
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As per Notification No.14/2020- Central Tax, given on March 21st, 2020 all taxpayers bearing an annual turnover of over Rs. 500 Crores must generate dynamic QR Codes for their B2C invoices.
Reporting of all the other invoices, Credit & Debit notes is mandated by the Government to make work easier for the taxpayers as these details tend to auto-populate in the GSTRs.
More clarity on these & more such matters under e-Invoicing is yet to be given by the government.
E-Invoicing & B2C Transactions- Things you didn’t know about QR Code Generation
As per Notification No.14/2020- Central Tax, given on March 21st, 2020, e-Invoicing does not apply to B2C invoices, however, it mandates taxpayers to generate dynamic QR Codes for their B2C invoices, mandatorily.
If you are a business & have an annual aggregate turnover of over Rs. 500 Crores then you are required to generate QR Codes for the invoices made for unregistered recipients.
So, how to generate the QR Codes?
The Government has not specified any particular detail or method to generate B2C QR Codes, so taxpayers can generate their own QR Codes using their QR code generating machines & algorithms.
In simpler words, QR Codes can be self-generated in the case of B2C Invoices, although the same is not the case with B2B invoices.
In B2B e-Invoices QR Codes are generated by the IRP & not the taxpayer, at any point if the B2B invoices in gst QR code is scanned & it is found that the same is self-generated then such e-Invoice will be considered void.
The second question would be, what should be the content of an e-Invoice QR Code?
Following are the details that a normal B2B QR Code must contains:
So, at any point when you scan a QR Code, it must display the details mentioned above. for example IRN number.
In self-generated B2C QR codes as well you must include the same details except for two changes-
- Since the recipient is an unregistered person, he does not bear a GSTIN, so you can mention their name instead of GSTIN.
- You must include a payment reference link in the B2B QR Code, so when the recipient scans the code, they are redirected to the payment page where they can make the payment against
The main motto of adding QR Codes to B2C e-Invoices is to have a slight grip around B2C transactions, as this is where most of the tax evasive activities thrive.
Also, with the Digital Bharat movement, Government is willing to promote digitalization of payments, etc, nevertheless, there are more perks of digital payments than cons.
The QR codes on B2C e-Invoices in GST will enable you to make payments through UPI in a single go, meaning you do not have to enter the amount, just the UPI Pin/Passwords & the payment will be made automatically as per the Invoice value mentioned on the e-Invoice.
This process is even simpler than scanning the QR Code at shops & making the payments through the mobile UPI applications that usually require location access, entering the amount, entering the pin, etc.
How do I create a QR code for an e-Invoicing?
Lets undertsand important facts about QR code & learn how to generate a QR code?
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Whereas type-2 is only applicable to B2C Invoices, where taxpayers have to use tools or software to create dynamic QR codes that will contain the Invoice details as well as the referral payment link.
So the customers can directly scan the QR Code and make the payments.
Type-1 QR codes are generated directly from the IRP at the time of IRN generation & taxpayers need not do anything additional.
However, QR Codes can be created for B2C Invoices using the following parameters & using the hash algorithm-
All e-Invoicing QR codes details shall contain the following information-
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How to verify e-Invoicing QR code?
There are 2 simple & important ways to verify the e-Invoice QR codes-
- Scanning the QR Code using a scanner that is linked to a system/ app
- Uploading the JSON of the e-Invoice in the billing system
The Government has enabled an application to scan & verify the QR Code.
You simply need to download the application & scan the QR code using the same, you will find all the details mentioned above in a QR Code, essentially look for the IRN or the e-Sign in your QR Code to declare it valid.
List of Steps
Visit Government websites
Select the type of operating system on your mobile device- Android or IOS.
Enter your mobile number and click on ‘Submit’. You will receive an OTP on the entered mobile number.
Enter the OTP and verify it.
On successful validation, the e-invoice system will send a QR code. Verify the App APK to the registered mobile number.
You can download this app and install the APK and verify the QR code form there.
e- Invoicing Dynamic QR code for B2C transactions
The Government has not specified any particular detail or method to generate B2C QR Codes yet, so taxpayers can generate their own QR Codes using their QR code generating machines & algorithms.
QR Codes can be self-generated in the case of B2C Invoices.
The QR Codes can be created for B2C Invoices using the following parameters & using the hash algorithm-
Additionally, all B2C QR codes shall contain the following information-
Note- GSTIN of the recipient is not required in a B2C QR Code as the recipient is not a registered person.
Conclusion !
E-Invoice implementation is a big change for businesses. Even though it is only applicable to a limited class of taxpayers it will change their workflow completely.
- Data Security & Encryptions
- Scalability or the ability to handle high data volume
- Highly Automated- to save time & efforts
- Simple, minimal & yet direct Integration with ERPs
- Offers additional features for 100% compliance (such as BULK GENERATION facility)
e-Invoice compliance will also require changes to the businesses & their workflow, although for a longer run & from the national economy perspective e-Invoices can be very useful.
But at the initial stage businesses must figure out ways to comply with this provision 100% whilst not having to make too many changes & not hampering the overall productivity of the business.
Businesses will have to enable APIs & take help from API Solutions & GSPs instead of revamping their billing systems internally.
For this, you must ensure to opt for an option that will offer you the following benefits for sure-
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