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E-Invoice System under GST

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Laxmi Navlani

Last updated on April 22nd, 2021

The GST Council has approved the introduction of ‘E-invoice’ or ‘electronic invoice’ in a phased manner for reporting of business to business (B2B) invoices to GST System, starting from 1st January 2020 on a voluntary basis.

Moreover, The GST Council has also approved the standard of e-invoice in its 37th meeting held on 20th Sept 2019 and the same along with schema has been published on the GST Portal.

Also, GST Council has set the standard for the same after consultation with trade/industry bodies as well as ICAI after keeping the draft in a public place.

What is E-Invoice & How it works?

E-Invoice is the system under which the taxpayer needs to register the GST Invoice on the Invoice Registration Portal i.e. IRP. The IRP will issue a unique Invoice Registration Number i.e. IRN for every invoice. The IRP will populate the details of such an invoice on the GST Portal and E-Way Bill Portal on a real-time basis. Thus, it will make the compliance process easy for the taxpayer. The taxpayer can use the invoice details to file returns on the GST Portal and generate Part-A of the E-Way Bill on the EWB Portal.

Therefore, E-Invoice does not mean generating the invoice on the GST Portal. Rather, it means registering the invoice on IRP and using the invoice information to manage multiple compliances.

The taxpayer can enter the invoice details in bulk generation tool available on the e-invoice portal which in turn will create JSON file for uploading on the e-invoice system. Then the designated portal i.e IRP will authenticate the data.

Then, On successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by IRP. Along with IRN, each invoice is digitally signed and added with QR code. This process is collectively called as e-invoicing under GST

All invoice information will get transfer from this portal to GST Portal and E-way bill portal. Also, there will not be any need for manual data entry while filing GST returns and generating E-way bills.

Applicability & Implementation of e-invoicing

The e-invoice under GST was originally planned to be implemented on 1st April 2020. However, as per the 39th GST Council meeting held on 14th March 2020, Government has pushed the implementation deadline to 1st October 2020

To ensure that businesses get enough time to adapt to the new system of electronic invoicing, the GST Council has approved the introduction of e-invoicing in a phased manner. The introduction will be on a voluntary basis, to begin with.

Also, Government is up with the GST e-invoicing trial version of the popular invoicing mechanism

Sample E-invoice under GST

sample e invoice

Documents necessary while reporting to IRP

Below is the list of documents which taxpayer has to provide while reporting the e-invoices to IRP:

Modes of generating e-Invoice

Here’s how you can register your e-invoice.

Web-based registration

Invoice Registration Portals operate through a website for assigning Invoice Reference Numbers (IRN) to each invoice/credit note/debit note.

When the taxpayer generates an e-invoice in accordance with the prescribed schema, the taxpayer can upload the invoice on the Invoice Registration Portal for generating the Invoice Reference Number (IRN) of the invoice uploaded.

Only invoices with an authorized IRN will be valid as per GST law.

Application Programming Interface (API) based registration

Using the API mode, the large businesses as well as accounting software providers can interface their systems and pull the Invoice Registration Number after sharing the relevant invoice information in JSON format.

An API request will handle one invoice request at time to generate the IRN.  Since large companies tend to generate a large quantity of invoices, this mode can be used for bulk requirement (users can pass the request one after the other and get the IRN response within a fraction of a second) as well. This is the same methodology applicable under the current e-way bill system.

SMS based registration

Taxpayers will be able to enter invoice details while adhering to a specific format. They can then send these details to the Invoice Registration Portal via SMS for processing and electronic authentication.

Mobile based registration

In this mode, IRP will provide a Mobile App so taxpayers can process the invoice.

Taxpayers will need to adhere to a specific format for processing and electronic authentication of their invoice.

Offline tool based registration

The Goods and Services Tax Network will provide an Offline Tool where data of an invoice generated can be entered into the system which in turn will create a JSON file that can be uploaded to the IRP.

GST Service Provider/GST Suvidha Provider based registration

Lastly, Taxpayers could consult with GST Service/Suvidha Providers to register and help with compliance in reference to e-invoice.

Benefits of E-invoice to taxpayers

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FAQs

Is there a limit for incorporating line items in each e-invoice?

Yes, the maximum of 100 items can be incorporated in each e-invoice.

Does GST portal support e-invoice generation?

There is no such mechanism of generating e-invoice directly on the GST portal.
Moreover, Small and medium businesses can take help from eight free accounting/billing software currently listed by the GSTN.

How will the e-Invoicing mechanism get merged with the GST Return system?

The invoices will get auto-populate on the relevant GST returns once invoice registration system signs and verify them.
Then, the invoices will get directed to the recipient for re-confirmation.

How QR code of E-invoice will be used?

QR code will help in quick view of E-Invoice. Also, It shall contain – GSTN of buyer and seller, invoice number, invoice date, number of line items, HSN of major commodities, invoice value, invoice reference number (IRN).

Is is compulsory to sign the E-invoice?

Once the IRP digitally signs the E-Invoice, it is optional for taxpayer to sign the same.

Whether Taxpayer can cancel E-invoice?

Taxpayer can cancel E-Invoice within 24 hours of its generation. Moreover, After cancellation, its invoice number cannot be used again.

Got Questions? Ask Away!

  1. Hey @HarshitShah

    In order to calculate e-invoicing eligibility, the preceding year’s turnover, beginning from FY 2017-18, must be considered. Hence, if the turnover of the business’ exceeds the prescribed limit in a financial year, it would be required to generate e-invoices from the beginning of the next financial year. For example, if the threshold turnover was exceeded in FY 2020-21, then e-invoicing will be applicable from 1st April 2021.

    Hope this helps!