For reporting B2B invoices to the GST System, the GST Council has proposed e-invoicing in a phased manner from January 2020. e-Invoicing standards has also been curated with the help of trade/industry bodies along with ICAI. Standard will ensure that e-invoices generated by one software can be read by another software, thus eliminating the data entry. E-invoicing standardization will also help in the easy transfer of data within the GST ecosystem and the removal of data entry errors.
The e-Invoicing standard was approved by the GST Council in the 37th GST Council meeting held on 20th Sept 2019. We have discussed all the important aspects related to e-Invoicing that will clear out misconceptions about e-invoicing. In addition to this, we hope this article will help the tax consultants, taxpayers and enterprises to understand and adopt the framed e-invoicing standards.
What is E-invoicing?
Electronic invoicing or e-invoicing is an electronic system through which Business to Business (B2B) invoices are authenticated by the Goods and Service Tax Network (GSTN) for using it on the GST portal.
As per the proposed e-invoicing system, every invoice generated will have an identification number that will be issued by the IRP (Invoice Registration Portal).
All the information related to the invoices will be transferred in real-time from this IRP to both GST and e-way bill portal.
This will help in automating the process of filing GST Returns, GST Annexures and PART-A of the e-way bills ensuring no or less human intervention.
Benefits of proposed e-invoicing system
Here is the list of benefits of the proposed e-invoicing system:
- E-invoicing will help in data reconciliation under GST to reduce mismatch.
- F-invoices will allow inter-operability as invoices generated on one software can be read by another.
- The invoice can be tracked on a real-time basis by the taxpayer under this proposed e-invoicing system.
- The proposed e-invoice system will ensure in claiming the accurate ITC (Input Tax Credit).
- Reduction of tax evasion as there will be a complete trail of B2B invoices
- Better tax administration as e-invoicing will eliminate the scope of fake invoices.
What documents type are to be reported to the GST System under the proposed e-invoicing system?
Here is the list of documents that need to be reported by the taxpayer on IRP under the proposed system:
2. Credit Note
3. Debit Note
4. Any other document as required by law
Process of generating invoice under proposed e-invoice system
Here is a detailed guide on how to generate an e-invoice:
1. The taxpayer needs to adopt the reconfigured ERP system as per the new e-invoicing standards (schema) and shall contain all the mandatory parameters. The software of the supplier shall be able to generate a JSON file to upload on the IRP system. As the IRP can only take the JSON file format.
2. The taxpayer can then issue the invoice after filling all the mandatory details such as billing name, address, GSTN of the supplier, item rate, transaction value, applicable GST rate, taxable amount and so forth.
3. Upload the generated invoice JSON on the IRP as it will act as a central registrar for its authentication. You can interact with IRP using different modes like web, SMS, mobile application, offline tool, APIs and GSP.
4. IRP will then verify the key details and duplication of the B2B invoices. Once the invoices passes all the validation IRP will generate IRN (Invoice Reference Number) or Hash. The format of Hash/IRN Contains 3 things:
- Seller GSTIN
- Invoice number
- Financial year YYYY-MM
5. Once the IRP generates the IRN it creates a QR code in the output JSON for the supplier. 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 the highest taxable value)
- Unique Invoice Reference Number (hash)
- On the contrary, the supplier also gets intimated about the same in his/her registered e-mail id (if mentioned in the invoice).
6. After all this process, the IRP will then send all the authenticated data to the GST portal for furnishing the GST returns and annexures. In addition to this, this data is also forwarded to the e-way bill portal.
Modes of getting invoice registered
There are different modes available to register the invoices so that the taxpayer can use the best mode based on his/her needs or usage. The various modes are:
- API based
- GSP based
- Mobile App-based
- Offline tool based
- SMS based