The overall flow of e-Invoice generation can be divided into two major parts:
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.
- This 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: Upload invoice JSON
Once the invoice is generated, the Business/seller uploads/reports the invoice JSON to the IRP.
- Businesses can upload the invoice JSON via Application Programming Interface (API), offline tool, or they can onboard a GST Suvidha Provider (GSP) as well.
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 will be a unique identity for the invoice.
- 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.
Step1: 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 to achieve 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 the significant transactions and curb tax evasion as well.