Invoice is an integral document for businesses and “Electronic invoicing” or “E-invoicing” under GST is a new-fangled and imperative reform related to it. Thus, understanding the e-invoice concept and preparing business is the focal point for companies in India considering the fact that less than two months has been left for its implementation date.
The Government of India has mandated the concept of “Electronic invoicing” or “E-invoicing” under GST during last year in September 2019 in the 37th GST council meeting. Accordingly, the implementation of e-invoicing across the GST eco-system in India was to start from 01st April 2020. However, in view of coronavirus pandemic, said implementation was deferred to 01st October 2020 by GST council in the 39th meeting held in March 2020. Further various sectors were also exempted from issuing e-invoice. Recently in July 2020, Central Board of Indirect Taxes and Customs (CBIC) has notified germane amendments in e-invoicing format, applicability on various taxpayers and further exemptions to taxpayers on issuing e-invoice.
This article lays emphasis on the concept of e-invoice under GST, relevant provisions under law for its applicability and exemption of various entities for applicability of said concept.
What is E-invoicing under GST
Prior discussing “E-invoice” under GST, it is pertinent to understand that E-invoice does not mean preparing Tax invoice on GST Portal. In fact, invoices will continued to be generated by taxpayers in their own software.
E-Invoice is a system in which all the business to business (B2B) invoices generated by taxpayers are uploaded and authenticated electronically by Goods and Service Tax Network (GSTN) for further use in the GST portal.
Under said system, a unique Invoice Reference Number (IRN) is generated against each invoice by Invoice Registration Portal (IRP) managed by GSTN.
Further, each invoice is digitally signed and added with QR code along with IRN.
Said process is e-invoicing under GST.
Applicability of E-invoice system on Tax payers
E-invoice will be applicable to all the business whose aggregate turnover in a financial year exceeds “Five Hundred Crore Rupees’.
Note:- Earlier the limit was “One Hundred Crore Rupees” which has been recently increased to “Five Hundred Crore Rupees” vide Notification No. 61/2020-Central Tax dated 30th July 2020.
Taxpayers exempted from e-invoice system
Exemption from e-Invoicing and QR code has been granted to below taxpayers
- Insurer or a banking company or a financial institution, including a non-banking financial company (NBFC)
- Goods transport agency supplying services in relation to transportation of goods by road in a goods carriage
- Taxpayer supplying service by way of passenger transportation service
- Taxpayer supplying services by way of admission to exhibition of cinematograph films in multiplex screens
- Special Economic Zones (SEZ) units
Note:- Sectors such as insurance, banking, financial institutions, NBFCs, GTA, passenger transportation service and movie tickets has been exempted from following e-invoice system vide Notification No. 13/2020-Central Tax dated 21st March 2020. Recently, SEZ units has also been exempted vide Notification No. 61/2020-Central Tax dated 30th July 2020.
Glimpse of how the e-invoice system will work
E-invoice system will have no impact on the current practice of issuing invoice except now the invoice will be authenticated by Invoice Registration Portal. The process of generating the GST e-invoice is similar to e-way bill. However, it is to be noted that IRN can be generated by the supplier only and not by buyer or transporter.
Below is the glimpse of how e-invoice system will work w.e.f. 01st October 2020 for taxpayers whose aggregate turnover in a financial year exceeds “Five Hundred Crore Rupees’.
1. Creation of Invoice:- The seller of goods or supplier of service will create the invoice in prescribed format with mandatory fields using their relevant software. Jason file will then be generated for B2B supplies using their own software. Said Jason file so generated will have to be uploaded to the Invoice Registration Portal.
2. Generation of Invoice Reference Number (IRN):- The IRN has to be generated for the documents of Invoices, Debit Notes and Credit Notes for the local, interstate and export transactions. Few methods for IRN generation are mentioned below for the ready reference of readers
a) Offline tool - Upload the invoices in standard format and generate the IRN in one go
b) API – Direct integration - System-to-System integration using API directly from taxpayers system
c) API - Through enabled sister concerned GSTIN - System-to-System integration using API through the sister company of the taxpayers having same PAN if it has been enabled for API.
d) E-Way Bill API enabled Taxpayers - System-to-System integration using API for already E-Way Bill enabled Tax Payers
It is to be noted that there is a facility to the user to cancel the IRN, if active e-way bill is not there.
3. Uploading of invoice:- The tax payer has to upload the complete invoice details, prepared manually or through internal ERP/accounting system i.e. Jason file along with IRN generated for each invoice to be uploaded in Invoice Registration Portal (IRP).
4. Validation of invoice:- Post uploading of invoice by taxpayer in Invoice Registration portal, the system will validate Jason file with IRN code and authenticate the file with GST central registery.
5. Signed Invoice and QR Code:- After due validations of the data, the system returns the IRN with the signed invoice and QR code back to the taxpayer. The IRN, ACK No, Date and QR code has to be printed by the tax payer on the invoice being issued to the buyer. The E-invoice will be sent to registered email id of buyer by Invoice Registration Portal.
6. Realtime link:- All uploaded invoice will be transferred from IRP to the GST as well as e-way bill portal in real-time. Since, the information is transferred and linked real time to IRP, GST portal and e-way bill portal, therefore it will eradicate the need for manual filing of data for ANX-1/GST returns and Part-A of e-way bills.
7. Signed Invoice and QR Code:- After due validations of the data, the system returns the IRN with the signed invoice and QR code back to the taxpayer. The IRN, ACK No, Date and QR code has to be printed by the tax payer on the invoice being issued to the buyer. The E-invoice will be sent to registered email id of the buyer by IRP.
The buyers, taxpayers, external agencies like financial institutions can check the authenticity of the QR Code and contents printed on the invoice through a Mobile App (for Android and iOS). One can also upload the IRN generated and signed invoice file and get it verified on the portal for the authenticity of the IRN.
Conclusion
The E-invoicing system will serve as an effective tool benefiting the business across country as well as Government of India.
On one hand, the businesses will get the benefit of freedom from multiple data entries, effective filing of returns, automatic major reconciliations, etc. thereby saving lot of time and errors which exist in current system. This will help in productive and efficient tax process of the businesses and substantial decrease in issues related to verification of input tax credit and lesser disputes and interaction with tax authorities.
On the other hand, the e-invoice system will benefit the Government of India in the form of reduction in tax losses due to tax fraud i.e. in case of issue of fake invoices for claiming input tax credit. This new system will definitely help the Government in increasing the productivity in tax administration.
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