We have discussed the process of how to generate e invoice in gst portal and IRN separately in various articles. In this article, we will talk about the e invoicing process flow system from its starting point to know how to generate IRN in the GST portal. The overall flow of e invoicing process (e invoice step by step process) can be divided into two major parts:
Who is Required to Generate E-Invoice under GST?
Under the Goods and Services Tax (GST) system in India, businesses with a specified turnover threshold are required to generate e-invoices. As per the latest official notification, businesses with a turnover of ₹5 crore or more are required to generate e-invoice. It is also pertinent to note that while calculating the turnover, the taxpayer will have to include the turnover of all the businesses that have obtained their GSTINs under a common PAN number.
How to Create e-invoice (E invoice generation process)
Part A: Data Flow From The Business To The Invoice Registration Portal (IRP)
- Step 1: Generation of Invoice The Business (seller) generates the invoice through their internal billing system, which could be any software including an Excel sheet or any GSTN-provided offline utility. Note:
- How to prepare e-invoice: The invoice should be prepared according to the notified standard format (e-invoice schema).
- The seller’s software/utility should be capable of converting the invoice data into a JSON file as the IRP will accept invoices only in the JSON format.
- While generating an e-Invoice, several fields like ‘Transporter ID’, ‘Vehicle Number’, etc., if available with the seller, should be entered so that further data entry is not required while generating the e-Way B
- If the seller does not use any accounting software or any IT tool to generate invoices, GSTN provides a free offline tool to upload/report invoices to the IRP.
- Step 2: To know how to upload e invoice in the GST portal Once the invoice is generated. How to generate IRN number, the Business/seller uploads/reports the invoice JSON to the IRP. Note:
- Step 3: Generation of IRN The IRP will then generate an Invoice Reference Number (IRN) based on the seller’s GSTIN, Document Type, Document Number and Financial Year. This IRN generation portal will be a unique identity for the invoice. Note:
- The IRP will simultaneously verify the details uploaded by the business/seller on the GST System's Central Registry for duplication of the invoice(s). In case of duplication, the IRP will reject the invoice with an error code.
- Step 4: Digital Signature and QR Code
- Once the Central Registry confirms the validity of the invoice, the IRP will authorise the invoice by adding a digital signature.
- A Quick Response (QR) code gets added to the signed invoice JSON. It contains the GSTIN of the seller and buyer, invoice number, invoice date, invoice value, number of line items, HSN of major commodities (as per value) in the invoice, hash (computer science language for IRN), etc.
- The QR code enables quick view, authorisation, and access of invoices from the GST System through handheld devices. It also assists Taxpayers to validate whether the e-invoice has been registered with the IRP or not.
- Since the IRP does not store the e-invoice data, e-invoice verification is available only through the GST system and not the IRP.
- Step 5: Invoice is sent back to the seller The digitally signed e-Invoice JSON is sent back to the seller along with the allocated QR code.
- Step 6: Sharing of invoice data with other Government portals. The IRP will concurrently share the invoice data with the GST and e-Way bill System.
Part B: Data Flow From The Invoice Registration Portal (IRP) To the GST System And The Buyer
- Step 1: Sharing of invoice data with the GST System and E-Way Bill System The digitally signed e-invoice and the IRN are shared with the GST system and the e-Way bill system automatically. This helps in auto-populating details in GST returns and e-Way bills.
- Step 2: Auto-Population of data in GSTR-1 Once the GST System receives the required information from the IRP, it will automatically update the GSTR-1 of the concerned business/seller.
- Step 3: Issue of e-Invoice to buyer On the other side, the business/seller can convert the digitally signed e-Invoice JSON into a PDF and share it with the buyer to complete the transaction. The allocated QR code has to be a part of the final invoice shared.
- The buyer can use the QR code verification app to verify the e-invoice received.
- The buyer can also view the Input Tax Credit available, as per the e-invoice, in their Form GSTR-2A.
The Government is bracing up the system to bring more and more Taxpayers under the e-invoicing bracket. The e-invoicing mechanism will assist businesses in achieving a seamless and efficient flow of GST Output Tax and Input Tax Credit. Since all transactions will be validated and digitally signed by the IRP, tax authorities can keep track of significant transactions and curb tax evasion as well.