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’ 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?
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
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.
w.e.f April 1st 2022, the businesses whose Annual Aggregate Turnover lies above 20 Cr. are eligible for an e-Invoice generation.
According to Notification No. 17/2022, starting on October 1, 2022, businesses with annual aggregate revenue of more than Rs. 10 crores and up to Rs. 20 crores will be allowed to use the B2B e-Invoicing system.
Let us understand the meaning of ‘Annual Aggregate Turnover’ here.
As per Section 2 (6) of the CGST Act, 2017, ‘Annual Aggregate Turnover’ includes:
- Taxable supply
- Exempted Supplies
- Nil-rated Supplies
- Non-GST Supply
- Non-taxable supplies
- 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?
e-Invoice Generation Process & e-Invoicing software
We will show you a step-wise guide for the e Invoice generation.
1. Generate Invoice in ERP or Billing Software
2. Generate JSON file for this invoice
3. Upload this JSON file on the 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:
- 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.
NOTE: The 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
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:
Document Type Code
Enumerated List such as INV/CRN/DBN
Supplier Legal Name
String Max length: 100
Max length: 15 Must be alphanumeric
Max length: 100
Max length: 50
Supplier State Code
Enumerated List of states
Supplier Pin code
Six digit code
Max length: 16 Sample can be “ Sa/1/2019”
Preceding Invoice Reference and date
Max length:16 Sample input is “ Sa/1/2019” and “16/11/2020”
String (DD/MM/YYYY) as per the technical field specification
Recipient Legal Name
Max length: 100
Max length: 15
Max length: 100
Recipient’s State Code
Place Of Supply State Code
Enumerated List of states
Six digit code
Max length: 100
IRN- Invoice Reference Number
Max length: 64 Sample is ‘a5c12dca8 0e7433217…ba4013 750f2046f229’
Shipping To GSTIN
Max length: 15
Shipping To State, Pin code and State code
Max length: 100 for state, 6 digit pin code and enumerated List for code
Dispatch From Name, Address, Place and Pin code
Max length: 100 each and 6 digits for pin code
String (Length: 1) by selecting Y/N
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
Max length: 300 The sample value is ‘Mobile’ The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’
Max length: 8
Decimal (12,3) Sample value is ‘50’
Decimal (13,2) Sample value is ‘5000’
Decimal (3,2) Sample value is ‘5’
IGST Value, CGST Value and SGST Value Separately
Decimal (11,2) Sample value is ‘650.00’
Total Invoice Value
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-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:
- EWay Bill generation using the IRN
- Generating E-way Bill in bulk
- Print E-way Bill
What are the benefits of this integration?
FAQs on e-Invoicing
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…..
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