E-invoice under GST – What is e-Invoicing? GST E-Invoice Generation and Applicability

E-invoicing is the submission and validation of a regular B2B invoice generated by an ERP or accounting software to the e-invoice portal. A common misconception is that e-invoicing is the generation of invoices on the GST portal. In this article, we take a look at what is e-invoicing along with other details about the e-invoice system under GST such as e-invoice generation, applicability and more.

The Indian government is implementing e-invoicing in a phased manner. CBIC issued Notification No. 68/2019 – Central Tax, which inserted sub-rules (4), (5) and (6) under rule 48 of the CGST Rules, 2017 for the implementation of e-invoicing.

What is e-Invoicing under GST?

E-invoicing under GST is the introduction of the digital invoices for goods and services provided by businesses to be generated at the GST portal. Under e-invoicing or electronic invoicing, regular B2B invoices are submitted to the e-invoice portal and authenticated by the GSTN. Under e-invoicing, every invoice uploaded is given a unique identification number by the Invoice Registration Portal (IRP). E-invoicing is applicable for companies with an annual turnover above a predetermined limit set by the government. Different companies use various accounting and GST return filing software, all having their own formats. So, the government has introduced a standard format required to be used by all accounting software which is to be used to upload to the GST portal for authentication and validation.

The National Informatics Centre (NIC) launched the IRP at einvoice1.gst.gov.in. This IRP will update the invoice information in both – GST and e-waybill portals in real-time. This in turn eliminates manually uploading of data for the filing of GSTR-1 returns and for part-A of the e-waybills as the information is automatically made available to these portals by the IRP.

Note: From 1^st April 2021, the e-invoice system is applicable for companies having a turnover greater than 50 crores.

What is GSTN’s e-Invoicing initiative?

GSTN released the draft excel template of an e-invoice format for public feedback in August 2019. GSTN had associated with ICAI and drafted the format which was GST compliant as also with the other Indian tax laws. The final format was subsequently approved by the GST Council during its 37th meeting held on 20 September 2019. The approved format adheres to international and various industry standards and the same e-invoice format caters to different industries and businesses.

GSTN has referred to the Pan European Public Procurement Online standard (PEPPOL) that works on the Universal Business Language (UBL) version of electronic XML for e-invoicing. Currently, PEPPOL is the most widely used standard across the world. It enables different business applications and trading communities to exchange information using a common or a standard format. The data then seamlessly flows across different portals with the help of an IRP.

Going forward, all invoicing software such as SAP, Tally etc must follow the PEPPOL for invoice generation. With is, companies will be able to generate compliant invoices at the source itself.

The e-invoicing implemented by GSTN consists of three main sections:
(1) Schema – consisting of the technical details such as field name, description of the field and if the field is mandatory or not. The schema also has sample values along with notes explaining them.
(2) Masters – to specify the set of inputs for fields such as UQC, State Code, invoice type, supply type etc which are pre-defined by GSTN.
(3) E-invoice template – which is designed keeping in mind the various GST rules. The mandatory fields are highlighted in green whereas optional fields are in yellow.

For whom is e-Invoicing applicable? Is e-invoicing mandatory?

E-invoicing is applicable from 1st October 2020 for all businesses having an aggregate turnover of more than 500 crores in any of the preceding financial years from 2017-18 to 2019-20. CBIC Notification No.61/2020 – Central Tax prescribed the turnover limit for the implementation of e-Invoicing from 1st October 2020 and Notification No.71/2020 – Central Tax prescribes the period considered for determining eligibility for e-Invoicing. From, from 1st January 2021, e-Invoicing was made applicable to businesses with a turnover greater than 100 crores in any of the financial years between 2017-18 to 2019-20, as per Notification No.88/2020 – Central Tax.

As per CBIC Notification No.13/2020 – Central Tax, the following have been exempted from e-invoicing irrespective of their turnover:

• An insurer or a banking company or a financial institution, including an NBFC
• A Goods Transport Agency (GTA)
• A registered person supplying passenger transportation services
• A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services
• An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)

Next, on 8th March 2021, CBIC again notified that e-Invoicing will be made applicable from 1st April 2021 for all businesses having a turnover greater than 50 crores as intimated in Notification No. 5/2021 – Central Tax.

What are the benefits of e-invoicing?

On the face of it, the e-invoice system seems to have added an additional process to be followed. However, e-invoicing has multiple benefits:

1. An e-invoice ensures quick availability of genuine input GST credit as well as single reporting of your invoicing details for all relevant GST filings.
2. Information availability – E-invoicing enables real-time tracking of invoices prepared by a supplier.
3. Fewer worries – E-invoicing will reduce the chances of audits/surveys by the authorities as they already have all the transaction-level information readily available with them.
4. Lesser reconciliation errors – E-invoicing solves a major problem faced by businesses of data reconciliation under GST. This will minimize mismatch errors and help them to easily claim input credit.
5. Precision due to interoperability – E-invoices created using one software can be read by another. Data entry errors will reduce significantly.
6. Simplified GST compliance – as the relevant details of the invoices would be auto-populated in various returns. This is especially useful for generating Part-A of e-way bills.

When will e-Invoicing get implemented?

India is implementing e-invoicing in a phased manner so as to enable a smooth rollout and minimum hassle to taxpayers. To begin with, in the first phase, companies with an aggregate turnover exceeding 500 crores were brought under the ambit of e-invoicing from 1st October 2020. The government reduced this threshold to 100 crores from 1st January 2021 in the second phase. In the third phase of e-invoicing beginning from 1^st April 2021, businesses with an aggregate turnover higher than 50 crores will be brought under its scope. The law considers the turnover across all GSTINs under a single PAN, across India for the purpose of aggregate turnover

Will e-Invoice under GST reduce tax evasion?

The e-invoice system will help reduce tax evasion in the following ways:

• The department will get access to all transactions just as they take place – in real-time. This, because an e-invoice can only be generated through the GST portal.
• The e-invoice will be generated prior to carrying out the actual transaction. Due to this, invoice manipulation will see a big reduction.
• Fake GST invoicing will drastically reduce as all invoices have to be compulsorily generated through the GST portal. Businesses can only claim the genuine input tax credit as the system automatically matches input credit with output tax details. Thus, it becomes easier for the authorities to track fake tax credit claims.

 What is the process of getting an e-invoice in GST?

If you are using Tally Prime, you can read our earlier article on e-invoicing in Tally Prime.

You need to do the following steps to be ready for the e-invoice system and to generate an e-invoice.

1. First, you have to ensure that your accounting software / ERP is e-invoicing ready and has been configured as per the PEPPOL standard. Your vendor should be able to help you with the same. Also, there are various solutions available in the market that integrate with the most commonly available accounting software and ERPs. You can contact us in case you are facing any problems in finding one.
2. Once your ERP software is e-invoicing ready, you have to generate an invoice in the prescribed format. The generated invoice must contain all mandatory details as notified by CBIC. These include billing name, address and GSTN of the supplier, transaction value, tax amount etc.
3. The software has to upload the invoice details to the IRN after generation. There is an option to do this through API integration or via JSON file upload. If you are doing it via JSON, the accounting software will generate a JSON for each B2B invoice and then upload it to the IRP. If the upload is through API instead of JSON, the accounting software will manage it for you. There are other modes too with which you can interact with the IRP, such via SMS or mobile app.

What happens after you upload the invoice to IRN?

The IRP will then validate the invoice’s key details and check for any duplication.

Next, the IRP will generate an invoice reference number (IRN) and digitally sign the invoice and create a QR code in the output JSON for the supplier. The IRN is based on four parameters: Seller GSTIN, Invoice number, Financial Year and Document Type (INV/DN/CN). This IRN will be the unique identity of that e-invoice for the entire financial year.

The IRN and QR code is updated in the seller’s accounting software. The seller also receives an email. The seller can then print the details anytime as required, from the accounting software.

IRP sends the invoice information to the GST portal. In the process, it auto-populates the GSTR-1 of the seller for the relevant tax period. for GST returns. Also, if applicable, the details will be updated in the e-waybill portal too.

Note: An e-invoice is not a soft copy of a GST invoice like PDF etc. Also, it does not mean that you have to generate your invoices from a government portal

Our FAQ on e-invoicing under GST will help you further clarify your doubts.

Tally is the most widely used accounting software across India. More than 2 million users rely on Tally for their accounting needs. It has a smooth and hassle-free API based e-invoicing module. Tally Solution is an official GST Suvidha Provider (GSP) and communicates directly with the e-invoice system to upload invoices in real-time. In addition to e-invoicing, Tally Prime can also generate e-waybills if applicable. You also get a holistic view of the status of transactions and manage exceptions with the help of an exclusive e-invoice report and IRN register.