E-Invoice Under GST: Applicability, Myths & Facts, Generation Process and Benefits
In the 37th GST Council Meeting held on 20th September, 2019, decision was made to implement e-invoice. Further, in support of this decision, CBIC has issued Notification No 68/2019 to Notification No 72/2019 dated 12th December. 2019. In these notifications, CBIC has laid down guidelines for implementation of e-invoice.
What is E-Invoicing?
E-invoicing or electronic invoicing is a process of uploading and verifying invoices electronically through GSTN portal. Such invoices shall have multiple uses on the portal like being used for e-way bill generation, filing GST returns, etc.
Applicability of E-invoice
E-invoice shall be implemented phase wise.
As per Notification No 68/2019 dated 12th December, 2019, every registered taxpayer whose turnover exceeds Rupees 100 crores shall mandatorily use e-invoicing system from 1st April, 2020. Thus, every taxpayer falling under this category should upload invoices on Invoice Registration Portal (IRP).
E-invoice system can be voluntarily used by a registered taxpayer from 1st January, 2020.
Myths & Facts About E-invoicing
Invoices are to be issued through Invoice Registration Portal (IRP)
Invoices are to be generated through ERP or billing software and uploaded on Invoice Registration Portal (IRP)
E-invoice is required for all transactions
E-invoice is now mandatory only for B2B and exports transactions
E-invoice cannot be generated without a billing software or ERP
Free billing software will be provided by GSTN for registered taxpayers having turnover below INR 1.5 crores
Major changes will be required in ERP or billing software
No major changes will be required at taxpayers end. Certain updates and changes will be required to be made by the ERP or billing software
Generation of Invoice Registration Number (IRN) will take time
IRN will be generated almost immediately by the IRP.
IRN generated will be invoice number
Invoice number will be as per ERP or billing software. IRN will be a reference number GSTN
Separate invoice formats will be available for different businesses
There will be one standard format. Certain fields will be mandatory and others optional. These fields may be filled depending upon nature of businesses.
E-Invoice Generation Process
Using Invoice Registration Portal (IRP), the following steps are to be followed for e-invoice generation:
The registered taxpayer (seller) shall generate invoice in his ERP or billing software. The invoice generated shall have all mandatory and optional fields as required by e-invoice schema. All mandatory fields are necessary to be filled whereas optional fields may be filled depending upon business requirement.
Where a registered tax payer whose turnover does not exceed INR 1.5 crores, does not use an ERP or billing software may use software provided by GSTN.
The registered taxpayer is required to generate a JSon file of the invoice generated from the ERP or billing software.
The JSon downloaded from ERP or billing software needs to be uploaded on Invoice Registration Portal (IRP).
IRP will check from Central Registry of the GST portal and validate the invoice on 4 parameters:
- Customer GSTN
- Invoice number
- Type of Document
- Financial Year
The uniqueness of an invoice will depend on invoice number within the same financial year.
Once the invoice is validated, IRP will generate a unique Invoice Reference Number (IRN) for the invoice based on JSon uploaded. This IRN shall be used to identify the invoice by GSTN.
Once IRN is generated, IRP will digitally sign the invoice and also add a QR code to the JSon file uploaded on the portal.
IRP will send the digitally signed JSon file along with IRN and QR code to the seller. This file shall be maintained by the seller. The seller shall also update IRN in the ERP for reference purposes.
IRP shall also a send a copy of e-invoice along with IRN to the buyer for his reference.
Important Terms and Points
Benefits of E-invoicing
Modes of Generation of E-Invoice
IRP has allowed multiple modes through which an e-invoice can be generated which is as follows:
1. Web Based
2. API Based
3. Mobile App Based
4. Through SMS
5. Offline Tool
6. Through GSP
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The introduction of e-invoice system shall result in more streamlining of GST process. However, there are still some clarifications that are required from the Government on process and legal validations of e-invoice.