Hello, in this post, we will discuss the concept of E-invoicing under GST.
We will cover the following topics in this post:
- What is E-invoicing in GST?
- The Current system of invoicing
- Implementing E-invoicing under GST
- Benefits of E-invoicing under GST
What is E-invoicing in GST?
E-invoicing/ electronic invoicing is the validation process of invoices electronically by GSTN for further use on common GST portal. As a result, Invoice Registration Portal (IRP) issue an IRN number with every invoice.
The 35th GST Council meeting decided to implement E-invoicing system in India. E-invoice is mandatory for all registered persons with an aggregate turnover above 100Cr in an FY.
So, E-invoicing will easily update all invoice information from IRP to both the GST portal and e-way bill portal consecutively. Therefore, there will be no manual data entry while filing GST returns as well as generation of the e-way bills.
E-invoicing under GST will be applicable on a voluntary basis from January 2020 and mandatory from April 2020.
The Current system of invoicing
The invoices generated through accounting software and details of the invoices are manually uploaded to GSTN by GSTR-1 return. The recipients can then view these details in their GSTR-2A. In case of the supply of goods, one has to upload the invoices to the e-way bill common portal and generate an e-way bill reference number.
As a result, these generated invoices lack common format and the GST system can not identify the invoice if not reported in their respective formats. New entry needs to be done every time for reporting details to the GST system.
Now, form GST ANX-1 will replace the GSTR-1 return. The process of generating and uploading invoice details will be the same. You can import the invoice using the excel tool/JSON or by the online data entry.
So, E-invoicing under GST will create a smooth flow of information during the e-way bill generation.
Implementing E-invoicing under GST
The E-invoicing system has two main parts:
- Invoice generation in a standard format
- E-invoice reporting to a central system
Generation of invoice in a standard format
The taxpayer needs to generate an invoice in his/her own accounting/billing system. He/she can use any software utility like or Excel-based utility to generate an invoice.
While generating an invoice, it must conform to some parameters and E-invoice standard (schema) as per the GST common portal. PEPPOL (Pan European Public Procurement Online) standard is made use for invoice generation in this new system.
The supplier’s software will generate a JSON of the invoices that need to be uploaded to the IRP of GSTN.
All GST Registered person with annual turnover above 500Cr can voluntarily generate E-invoice from 1st January 2020. Also from 1st April 2020, if they generate a B2C invoice, it will have QR code on the invoice.
Reporting of E-invoice to a central system
Invoice Registration portal (IRP) will check with the Central Registry of GST system. Therefore, the same invoice from the same supplier during the same FY cannot be uploaded again.
If the invoice is confirmed, IRP will generate a unique Invoice Reference Number (IRN) and digitally sign it. It will also generate a unique QR Code for the invoice. The portal will return it to the taxpayer who generated the document. The IRP will also send the digitally signed E-invoice to the recipient.
E invoice data would be used by the GST system for generation of the e way bill (Part 1) and updating Form GST ANX-1 of the seller and Form GST ANX-2 of the buyer.
The QR code contains GSTN of the seller, buyer invoice no., invoice date, number of line items, HSN of major commodities.
Benefits of E-invoicing under GST
- Elimination of the fake invoices and its generation.
- Substantial reduction in input credit verification issues.
- One time reporting on B2B invoice data, to reduce reporting in multiple formats (for GST ANX-1 and for the e-way bill).
- By uploading the E-invoice data it will help you generate part A of the e-way bill.
- Real-time tracking of invoices prepared by the supplier.
- Assist in the automatic preparation of GST Returns(ANX 1 and ANX 2).
- E-invoicing system will auto-match input credit liability with output tax.
- It saves time, human errors for data entry and also avoids major reconciliation issues.
With that, we have come to an end of this post on E-invoicing under GST. Share with us your queries and opinion in our comment section below.