‘E-invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal.

Under the proposed electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).

All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time.

Therefore, it will eliminate the need for manual data entry while filing ANX-1/GST returns as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to GST portal.

Currently, businesses generate invoices through various softwares, and the details of these invoices are manually uploaded in the GSTR-1 return. The invoice information is thereafter reflected in GSTR-2A for the recipients for viewing only. On the other hand, the consignor or transporters must generate e-way bill by again importing the invoices in excel or JSON manually.

Under the new return system, an annexure in form GST ANX-1 will mostly take the place of the GSTR-1 return. However, the process of generating and uploading invoice details will remain the same. It will be done by importing using the excel tool/JSON or by the online entry of data. A seamless flow of data is expected for e-way bill generation. e-invoicing will be the key tool to enable this.

Businesses will have the following benefits by using e-invoice initiated by GSTN:

1. E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
2. E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
3. Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
4. Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
5. Faster availability of genuine input tax credit.
6. Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

Accordion Content

The taxpayers with annual aggregate turnover of over Rs 500 Crore can voluntarily generate e-invoices starting from 7 January 2020 through APIs. Whereas the taxpayers with the turnover over Rs 100 but less than Rs 500 Crore can join them from 1 February 2020. The electronic invoicing will be mandatorily implemented from 1 April 2020. for taxpayers with turnover over Rs 100 Crore. The aggregate turnover will include the turnover of all GSTINs under a single PAN, across India.

The following are the stages involved in generating or raising an e-invoice.

1: Taxpayer must ensure to use the reconfigured ERP system as per PEPPOL standard. He must coordinate with the software service provider to incorporate the standard set for e-invoicing, i.e. e-invoice schema (standards) and must have the mandatory parameters, at least. It should be capable of generating the JSON file for multiple invoices together. Those taxpayers not having any software will be provided offline utility. At a future date when e-invoicing applies to small taxpayers, they can choose from 8 different accounting and billing softwares all tied up with the GSTN. It is available free of cost. It is available both as online (cloud-based) as well as offline (installed on the computer system of the user).

2: The taxpayer must thereafter raise a normal invoice on that software. He must give all the necessary details like, billing name and address, GSTN of the supplier, transaction value, Item rate, GST rate applicable, tax amount, etc.

3: Upload the details of invoice especially mandatory fields onto the IRP using the JSON file only. It can be done directly or through GSPs or APIs(apps or software providers). The IRP will act as the central registrar for e-invoicing and its authentication. There are several modes of interacting with IRP such as web-based, API-based, SMS based, mobile app-based, an offline tool-based, and GSP based.

4: IRP will validate the key details of the B2B invoice, checks for any duplications and generates an invoice reference number (hash) for reference. There are four parameters: Seller GSTIN, Invoice number, and FY in YYYY-YY) and document type (INV/DN/CN).

5: IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. On the other hand, the seller of the supply will get intimated of the e-invoice generation through email (if provided in the invoice).

6: IRP will send the authenticated payload to GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. ANX-1 of seller and ANX-2 of the buyer gets auto-filled for the relevant tax period. In turn, it determines the tax liability.

A taxpayer can continue to print his invoice as being done presently with logo. e-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.

It will help in curbing tax evasion in the following ways:

• Tax authorities will have access to transactions as they take place in real-time since the e-invoice will have to be compulsorily generated through the GST portal.
• There will be less scope for the manipulation of invoices since the invoice gets generated prior to carrying out a transaction.
• It will reduce the chances of fake GST invoices and the only genuine input tax credit can be claimed as all invoices need to be generated through the GST portal. Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.

There are two different concepts of QR Codes when it comes to e-Invoicing in India.

• QR Code for a Business-to-business B2B E-Invoice containing details of the Invoice (this article)
• Payment QR Code for a Business-to-consumer B2C Invoice (different article)

In order to issue an e-Invoice, a taxpayer has to prepare a valid invoice in electronic format as per the e-Invoice schema and submit it to a government authorized Invoice Registration Portal (IRP).

The IRP will validate the invoice and also generate a QR code containing the unique Invoice Reference Number along with some important parameters of invoice and digital signature so that any person such as the recipient or tax officer could verify the details of the invoice. The QR Code contains important details of the invoice so that one can check those details even without internet access. The QR code will consist of the following e-invoice parameters:

• GSTIN of supplier
• GSTIN of Recipient
• Invoice number as given by Supplier
• Date of generation of invoice
• Invoice value (taxable value and gross tax)
• Number of line items.
• HSN Code of main item (the line item having highest taxable value)
• Unique Invoice Reference Number (IRN)

It is expected that suppliers include the QR Code while generating PDF format of the invoice or printing the invoice on paper. However, there is no legal requirement at present to display the QR code on the invoice.