e-Invoicing under GST

The Government's decision to introduce e-Invoicing received mixed reactions during the initial phase. Most businesses saw this as an extra compliance burden and addition in their expenses to be spent on e-Invoicing software.

However, the objective of making e Invoicing mandatory was to facilitate more and more transparency between the businesses and the Government and to keep the GST tax evasion cases in check.

It has been a couple of years since the inception of the e-Invoicing system, and there have been multiple improvements to this process.

In this comprehensive blog, we will look at the most critical facets of e Invoicing under GST in detail and answer some of the most commonly asked questions by the taxpayers.

What is e-Invoicing under GST?

e-Invoicing process

‘e-Invoicing’ stands for ‘Electronic Invoicing.

e-Invoicing under GST is a system in which generated B2B invoices are reported to the Government on a common portal called 'Invoice Registration Portal'. The IRP portal then assigns a unique Invoice Reference Number (IRN) to every invoice as a token of authentication.

This mechanism has helped the taxpayers in GST return filing and easy E-way Bill generation. In addition, all the e-Invoice data is further sent to the GST portal and the E-way Bill portal to avoid re-entering of data later.

The primary objective to make e Invoicing mandatory for a group of taxpayers was to bring more and more transparency between the large businesses and the Government.

Why was e Invoice under GST introduced?

e Invoice mandatory under GST

Following are some of the direct impacts that e Invoicing process will have on the taxpayers:

1. Elimination of fake Suppliers

  • As the GST registered taxpayers are increasing, the number of ‘fake suppliers is also rising.
  • These suppliers DO NOT supply any goods or services but pretend to be supplying so that their recipients would avail fake GST Input Tax Credit based on these fake invoices.
  • Since the inception of e Invoice generation system, the circulation of these fake invoices has been clipped to a reasonable extent.
  • These mal-practising suppliers used to report ‘Incorrect outward GST liabilities ‘in their GSTR 1 return filing, and based on this, the recipients used to avail fake ITC.
  • e-Invoicing applicability will help eliminate tax evasions by these fake suppliers.
  • However, using an automated e-Invoicing software is now helping the businesses to identify the defaulting suppliers and send them automated reminders about the discrepancies.

2. Backdated Invoice Generation has now been under check

  • In the pre-e-Invoicing era, the businesses generated back-dated invoices to pump up their annual turnover.
  • They used to generate backdated invoices after the yearly audit and then upload these invoices in their GSTR-1 & GSTR-3B filing.
  • Further, these businesses then paid the GST with interest on these fake sales.
  • In this way, fake invoice generation increased day by day in the pre-E Invoicing era, thus leading to huge tax evasions.
  • Thus, e-Invoicing under GST has now eliminated the generation of back-dated invoices.

How did tax evasion impact the Government?

Tax evasion had a significant impact on the revenue of the Government. Following are some of the direct effects:

  • Loss of revenue to the Government
  • Inadequate GST collection hence lesser development projects
  • Negative impact on the Indian Economy

To devise a solution to all these problems, the Government has introduced e Invoice under GST under Rule 48 (4) of CGST Rules, 2017, which came into effect on October 1st 2020.

E-Invoicing under GST and its Applicability

e-Invoicing Applicability

When e-Invoicing was first introduced in the GST structure on October 1st, 2020, only the taxpayers whose annual aggregate turnover exceeded Rs. 500 Crore were mandated to generated the e-Invoices for their B2B transactions.

Today’s scenario

w.e.f April 1st 2022, the businesses whose Annual Aggregate Turnover lies above 20 Cr. are eligible for an e-Invoice generation.

Let us understand the meaning of ‘Annual Aggregate Turnover’ here.

As per Section 2 (6) of the CGST Act, 2017, ‘Annual Aggregate Turnover’ includes: 

  1. Taxable supply
  2. Exempted Supplies
  3. Nil-rated Supplies
  4. Non-GST Supply
  5. Non-taxable supplies
  6. Branch transfer to distinct persons.

Let us understand this with an example:

Following are some of the details of a Supplier:

  • Taxable supplies = 29 Cr.
  • Exempt Supplies = 15 Cr.
  • Non-GST Supplies = 8 Cr.
  • Exports (zero-rated supplies)= 10 Cr.
  • Total Turnover = 62 Cr.

In this example, we can see that though the total turnover of this taxpayer exceeds Rs. 20 Crore, but the total taxable supplies are just Rs. 29 Crore.

So, is e Invoicing mandatory for this business?

  • Yes. AS per Section 2 (6) of the CGST Act, 2017 defines that ‘Annual Aggregate Turnover’ includes all the supplies as described in the above section.

Who is not eligible for e-Invoicing?

Irrespective of the annual aggregate turnover, these entities shall not be eligible for e Invoicing process :
  • Special Economic Zones (SEZ) Units
  • Goods Transportation Agency
  • Insurance company
  • Banking company
  • Non-Banking Financial Companies

e-Invoice Generation Process & e-Invoicing software

e-Invoice Generation Process

We will show you a step-wise guide for the e Invoice generation.

1. Generate Invoice in ERP or Billing Software

  • Registered taxpayer generates an invoice in his ERP or Billing software.
  • This invoice shall contain all the mandatory and optional fields required in the e Invoice schema

2. Generate JSON file for this invoice

  • The registered taxpayer is now required to generate a JSON file of the invoice generated from their billing software or the ERP.

3. Upload this JSON file on the IRP

  • The JSON created on the ERP or the billing software should now be uploaded on the Invoice Registration Portal (IRP).

4. IRP Validates the Uploaded Data

IRP will now validate the JSON file uploaded by the taxpayer on the IRP.

IRP will check this data from the Central registry of the GST Portal & validates the invoice on the following four validation checks:

-Customer GSTN

- Invoice number

- Type of Document

- Financial Year

Every invoice will be assigned a unique Invoice Reference Number (IRN).

5. IRP generates IRN & generates QR code

IRP (Invoice Registration Portal) generates a unique IRN for every invoice.

Along with the IRN, IRP will also digitally sign this e-Invoice and add a QR code on the newly generated e-Invoice.

6. E-Invoice returned to the taxpayer

This newly generated e-Invoice is now sent to the ERP of the taxpayer by the Invoice Registration Portal (IRP).

This e-invoice is returned with the QR code and the uniquely identified IRN number.

NOTEThe Government has now introduced a new automation facility in the GST portal, which shall auto-fetch the e-invoice data from the IRP.

Now, the e-Invoice details will get auto-populated in the GSTR-1 return of the Recipient.

e-Invoice under GST Schema & e-Invoicing software

e-invoicing software

An e-Invoice contains details & information of the transaction, including the details of both the Supplier & the recipient.

Apart from the details of both the parties, an e-Invoice also contains multiple Mandatory & Optional Fields.

What are the mandatory fields on e-Invoice?

As of today, there are 30 Mandatory fields in the e Invoice Schema.

The following table shows the mandatory fields in an e-Invoice Schema:

No.

Mandatory Field

Specifications

1

Document Type Code

Enumerated List such as INV/CRN/DBN

2

Supplier Legal Name

String Max length: 100

3

Supplier GSTIN

Max length: 15 Must be alphanumeric

4

Supplier Address

Max length: 100

5

Supplier Place

Max length: 50

6

Supplier State Code

Enumerated List of states

7

Supplier Pin code

Six digit code

8

Document Number

Max length: 16 Sample can be “ Sa/1/2019”

9

Preceding Invoice Reference and date

Max length:16 Sample input is “ Sa/1/2019” and “16/11/2020”

10

Document Date

String (DD/MM/YYYY) as per the technical field specification

11

Recipient Legal Name

Max length: 100

12

Recipient’s GSTIN

Max length: 15

13

Recipient’s Address

Max length: 100

14

Recipient’s State Code

Enumerated List

15

Place Of Supply State Code

Enumerated List of states

16

Pin code

Six digit code

17

Recipient Place

Max length: 100

18

IRN- Invoice Reference Number

Max length: 64 Sample is ‘a5c12dca8 0e7433217…ba4013 750f2046f229’

19

Shipping To GSTIN

Max length: 15

20

Shipping To State, Pin code and State code

Max length: 100 for state, 6 digit pin code and enumerated List for code

21

Dispatch From Name, Address, Place and Pin code

Max length: 100 each and 6 digits for pin code

22

Is Service

String (Length: 1) by selecting Y/N

23

Supply Type Code

Enumerated List of codes Sample values can be either of B2B/B2C/ SEZWP/S EZWOP/E XP WP/EXP WOP/DE XP

24

Item Description

Max length: 300 The sample value is ‘Mobile’ The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’

25

HSN Code

Max length: 8

26

Item Price

Decimal (12,3) Sample value is ‘50’

27

Assessable Value

Decimal (13,2) Sample value is ‘5000’

28

GST Rate

Decimal (3,2) Sample value is ‘5’

29

IGST Value, CGST Value and SGST Value Separately

Decimal (11,2) Sample value is ‘650.00’

30

Total Invoice Value

Decimal (11,2)

To learn more about the salient features of the e Invoice Schema, click on the link given.

Auto-population of e-Invoicing data in GSTR-1

On November 13th 2020, the Government notified the taxpayers that the e-Invoice data would be auto-populated in the taxpayer’s GSTR-1 form.

 Following e-Invoice details are auto-populated in the GSTR-1 of the taxpayer:

  • B2B Invoices (4A, 4B, 4C, 6B, 6C)
  • CDNR – Credit/Debit Notes (Registered) (9B)
  • EXP- Exports (6A)
  • CDNUR Credit/Debit Notes (Unregistered) (9B)
  • HSN Summary (12)

From this data, taxpayers must note that your GSTR-1 will be affected by your e-Invoice data. Hence, the e-Invoicing process must be flawless.

Businesses required to generate e-Invoices in bulk should ensure that they generate accurate e-Invoices. They should also prefer an ERP connector to generate e-Invoice directly from their ERP without visiting the IRP portal.

This Tally ERP Connector turns your Tally ERP into an automated e-Invoicing software and helps you generate e-Invoices in bulk. 

To learn more about auto-population of GSTR-1, click on the link given.

e-Invoicing software

e Invoicing in Tally is more smoother with Tally Integration with the GSTN portal. GSTHero's Tally connector enables you to do so.

e-Invoicing and E-way Bill using e-Invoicing software

On successful validation of an e-Invoice, Part A & Part B of the E-way Bill shall get auto-populated. The Government has enabled this auto-population to ensure simplicity in creating E-way Bills.

IRP portal provides the following options for E-way Bill:

What are the benefits of this integration?

  • Automating the process will ensure more accuracy in E-way bill generation
  • Easy compliance for the taxpayers

To learn more on E-way Bill integration with e-Invoicing, and automated e-Invoicing software, click on the link given.

FAQs | e-Invoice generation & e-Invoicing software

Which Year’s Aggregate Turnover Should Be Considered For Deciding The Eligibility Of E-Invoicing?

  • Any one of the three preceding financial years.
  • Meaning if my business has to be enrolled for e-Invoicing under GST in April 2022, then the annual aggregate turnover in any 1 FY from three preceding FYs (any one between FY 21-22, FY 20-21, FY 19-20) has to be greater than the threshold of 20 Cr.

If a taxpayer is registered on the E-Way Bill portal, is he required to register again on the e-Invoice Portal?

No. The taxpayer need not re-register on the E-Way Bill portal if he is already registered on the IRP.

If a taxpayer is already registered on the GST portal, is he required to register again on the e-Invoice Portal?

Yes. Even if the taxpayer is registered on the GST portal he is required to separately register on the e-Invoice portal i.e. Invoice Registration Portal (IRP).

How to know e-Invoicing status of my company?

To find out the e-Invoicing enabled status of your company,

Go to https://einvoice1.gst.gov.in/

Navigate to ‘Search’ menu and then select ‘e-Invoice status of taxpayer’ option.

Enter your GSTIN details to check the e-Invoicing status for you business.

What is Notification 05/2021 for e-Invoicing under GST?

  • This notification defined the new threshold limit of the annual aggregate turnover of 50 Cr. for the businesses to be eligible for e-Invoicing.
  • If your ‘Annual Aggregate Turnover’ exceeds 50 Cr in any 1 of the preceding three financial years, then you are eligible for e-Invoicing according to this notification.
  • Small & medium businesses shall continue to create physical invoices in their ERP software like Tally, SAP, Oracle or any other customized ERP but should strictly follow these conditions:-
    a. Follow the SCHEMA defined by the e-Invoice portal
    b. Your ERP should generate a JSON file.
  • This JSON file generated by your ERP shall be uploaded on the e-Invoice portal (einvoice1.gst.gov.in)
  • This e-Invoice portal shall generate an Invoice Reference Number (IRN) for every invoice uploaded by the taxpayer.
  • Corresponding to every e-Invoice, the IRP portal shall append the QR code and digitally sign this e-Invoice for the document's authenticity.

What if I am eligible for e-Invoicing, but my Registration is NOT enabled?

  • This has been the case with many businesses that have recently been added to the e-invoicing system.
  • You can use the following steps to ‘Enable’ your e-Invoicing Registration.
  • There is a feature called 'e-Invoice Enablement' on the IRP portal.
  • Log on to www.einvoice1.gst.gov.in  >  Registration > e-Invoice Enablement
  • Enter your GSTIN.
  • You will receive an OTP on your registered mobile number.
  • By providing this OTP on the portal, your e-Invoice Registration will be enabled.

What if any business is NOT eligible for e-Invoicing, and even then, he has erroneously enrolled for e-Invoicing?

  • Even this scenario is possible.
  • Your turnover may be below 50 Cr & even then, your business has erroneously been mandated e-Invoicing.
  • Follow the below-given steps to disable your e-Invoice Registration.
    a. You need to send an e-mail to the GST Grievances Redressal Portal.
    b. The portal then looks into the issue and verifies it.
    c. If the issue is legitimate, action will be taken in a few days.

This will ‘Disable your e-invoicing’.

Can I modify/amend or rectify e-Invoice once generated?

  • E-Invoice, once generated, CAN NOT be amended/modified or rectified.
  • Then what is the solution if I create an incorrect e-Invoice?
  • Then, the Supplier may CANCEL the e-Invoice from the IRP portal within 24 hours of generation of this e-Invoice.

Can I cancel or delete the IRNs?

Yes. Invoice Registration Number (IRN) can be cancelled.

 IRN cancellation is allowed only within 24 hours of its generation.

After 24 hours from the invoice generation, the IRN cannot be cancelled and in this case the supplier has to issue either a Debit or Credit note or amend the GSTR-1 Form.

IRN cancellation is NOT possible if an E-Way Bill is generated corresponding to this IRN.

Is e-Invoicing required for Exempt Supplies or Nil rated Supplies?

  • E-Invoicing under GST only applies to the ‘Taxable’ goods or services or both.
  • It is also applicable to the EXPORTS.
  • However, e-invoicing does NOT apply to the 'Nil-rated supplies' or 'Exempt Supplies.

Is e Invoicing mandatory for export invoices?

  • Yes. The IRP portal electronically verifies all B2B Export invoices.

Is e invoice applicable for B2C?

  • E-Invoicing ONLY applies to B2B invoices for the businesses with annual aggregate turnover exceeding Rs. 50 Crore.
  • E-Invoicing is NOT mandatory for B2C invoices of these businesses.
  • Exception- For the businesses whose annual aggregate turnover exceeds Rs. 500 Crore to generate and print dynamic QR codes for B2C invoices.
  • To learn more on B2C einvoice, visit our detailed blog.

Is e-Invoicing required for supplies to un-registered or end consumers?

  • E-Invoicing under GST only applies to the ‘Taxable’ goods or services or both.
  • It is also applicable to the EXPORTS.
  • However, e-invoicing does NOT apply to the 'Nil-rated supplies' or 'Exempt Supplies.

What if e-Invoice not generated?

  • Failure to generate IRN for an eligible invoice is an offence under the GST Act.
  • The penalty is – 100% of the tax due or Rs. 10 000 (whichever is higher).

Can we generate e-Invoices in bulk on IRP?

  • No. There is no such facility available for bulk e-Invoice generation on the IRP portal.
  • However, GSTHero’s ERP connector will allow businesses to generate e-Invoices directly from your ERP system. For example, Tally e Invoicing.

After how many days e-Invoice data expires from the IRP?

  • The IRP saves the e-Invoice data only for 24 hours from the date of e-Invoice generation. Hence, businesses need a robust e-Invoicing solution like GSTHero to keep your e-Invoicing data for much longer so that you can access it for your future reference.

Conclusion

einvoice software india

In this comprehensive article, we have put all the significant sections of e-Invoicing.

We will keep updating this article for more and more e-Invoicing related stuff to get all the information in one place.

 Until the next time…..

All the actions of the Government suggest that e-Invoicing will soon be implemented for all the businesses irrespective of the turnover. Hence, small businesses must be well equipped for this change.

Businesses should consider GSTHero’s automated e-Invoicing software for bulk e-Invoice generation.

Stay updated; stay ahead!

 Until the next time…..

Gaurav Yadav

About the author

Gaurav is an Engineer by training with a deep interest in Economics & Finance. He has been associated with the Fin-Tech industry for quite some time now. He writes for GSTHero for topics including GST Compliance, GST Structure, etc & aims to break down complicated technical jargon into simple terms for the taxpayers.

His expertise includes GST Laws, Corporate Finance & Macro-Economics.

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