E-Invoice under GST

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Overview

The GST Council has approved introduction of ‘E-invoicing’ or ‘electronic invoicing’ in a phased manner for reporting of business to business (B2B) invoices to GST System.

Since there was no standard for e-invoice under GST existing in the country, standard for the same has been finalized after consultation with trade/industry bodies as well as ICAI after keeping the draft in public place. Having a standard is a must to ensure complete inter-operability of e-invoices across the entire GST eco-system so that e-invoices generated by one software can be read by any other software, thereby eliminating the need of fresh data entry – which is a norm and standard expectation today.

The machine readability and uniform interpretation is the key objective. This is also important for reporting the details to GST System as part of Return. Apart from the GST System, adoption of a standard will also ensure that an e-invoice shared by a seller with his buyer or bank or agent or any other player in the whole business eco-system can be read by machines and obviate and hence eliminate data entry errors.

The GST Council 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 GST portal. Standards are generally abstruse and thus an explanation document is required to present the same in common man’s language. Also, there are lot of myth or misconception about e-Invoice. The present article is an attempt to explain the concept of e-invoice, how it operates and basics of standards.

E-invoicing in India will be a big move, due to the volume of business transactions undertaken every day, as well as the plethora of different, non-standardised formats used in invoice generation. The main objective is to enable interoperability across the entire GST eco-system i.e. an e-invoice generated by one software should be capable of being read by any other software. Basically, through machine readability, an invoice can be uniformly-interpreted.

In addition to the above, this new system of e-invoicing aims to make invoice reporting an integral part of a business process and remove the tedious task of invoice-compilation at the end of a return period. Claiming fictitious Input Tax Credit (ITC) by raising fake invoices is also one of the biggest challenges currently faced by tax authorities.

The e-invoice system will help to curb the actions of unscrupulous taxpayers and reduce the number of fraud cases as the tax authorities will have access to data in real-time. The basic aim behind adoption of e-invoice system by tax departments is ability to pre-populate the return and to reduce the reconciliation problems.

What is E-Invoice under GST?

If an invoice is generated by software on the computer or a machine then does it become an e-invoice? Is e- invoice as a system where taxpayers can generate the invoices centrally? Many such questions are raised when e-invoice gets discussed.

E-invoice does not mean generation of invoices from a central portal of tax department, as any such centralization will bring unnecessary restriction on the way trade is conducted. In fact, taxpayers have different requirements and expectation, which can’t be met from one software generating e-invoices from a portal for the whole country. Invoice generated by every software may look more or less same;

However, they can’t be understood by another computer system even though business users understand them fully. There are hundreds of accounting/billing software which generate invoices but they all use their own formats to store information electronically and data on such invoices can’t be understood by the GST System if reported in their respective formats.

Hence a need was felt to standardize the format in which electronic data of an Invoice will be shared with others to ensure there is interoperability of the data. The adoption of standards will in no way impact the way user would see the physical (printed) invoice or electronic (ex pdf version) invoice. All these software would adopt the new e-Invoice standard wherein they would re-align their data access and retrieval in the standard format.

However, users of the software would not find any change since they would continue to see the physical or electronic (PDF/Excel) output of the invoices in the same manner as it existed before incorporation of e-Invoice standard in the software. Thus the taxpayer would continue to use his accounting system/ERP or excel based tools or any such tool for creating the electronic invoice as she is using today.

Taxpayer can enter the invoice details in bulk generation tool available on e-invoice portal which in turn will create JSON file for uploading on the e-invoice system.

What is Invoice Reference Number (IRN)?

The Invoice Reference Number (IRN) is a unique number (also known as hash) generated by the e-invoice system using a hash generation algorithm. For every document such as an invoice or debit or credit note to be submitted on the e-invoice system, a unique 64 character invoice reference number shall be generated.

The unique IRN will be based on the computation of hash of GSTIN of generator of document (invoice or credit note etc.), Year and Document number like invoice number. The hash could also be generated by the taxpayers based on above algorithm. This shall be unique to each invoice and hence be the unique identity for each invoice for the entire financial year in the entire GST System for a taxpayer.

For Eg. Typical IRN looks like 35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06bbe

What is QR Code in E-Invoicing?

E-invoice system will generate a unique 64 character length Invoice Reference Number (IRN) and digitally sign the e-invoice and the QR code (Quick response Code).The QR code will enable quick view, validation and access of the invoices from the GST system from hand held devices.

The QR code will consist of the following e-invoice parameters:

  • GSTIN of supplier
  • GSTIN of Recipient
  • Invoice number as given by Supplier
  • Date of generation of invoice
  • Invoice value (taxable value and gross tax)
  • Number of line items.
  • HSN Code of main item (the line item having highest taxable value)
  • Unique Invoice Reference Number (hash)

The digitally sign QR code will have a unique IRN (hash) which can be verified on the central portal as well as by an Offline App by officer. This will be helpful for tax officers checking the invoice on the roadside where Internet may not be available all the time.

How to register on E-Invoice portal?

The registration mechanism for the GST taxpayers for the e-invoice system is a simple process. If a taxpayer is already registered on the e-way bill portal, he/she can use the same login credentials to Log-in to E-Invoice system.

If a taxpayer is not registered in the EWB portal then he/she can register to register on the e-invoice system, taxpayer needs to have the GSTIN issued under the GST system and mobile number registered with the GST system with him.

1.Open the E-invoicing Portal i.e. https://einvoice1-trial.nic.in/.

2.The first time GSTIN can register by clicking on the ‘Registration’. Then the user will be redirected to the ‘e-invoice registration form’.

3.The user needs to enter his/her GSTIN and the displayed captcha and shall click ‘Go’ to submit the request. Once the request is submitted the user will be redirected to the e-invoice registration form.

4.The Applicant details relevant to the GSTIN will get displayed. These details are Applicant name, Trade Name, Mobile number, Email-id as registered in the GST portal.

The user can verify the details by clicking on Send OTP and will receive the one time password (OTP) on the registered mobile. User must enter the OTP

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in the registration form and click on the Verify OTP button.

5.On successful verification of the OTP, the system prompts the user to enter User name (6-15 characters) by choice and enter the Password then re-enter the same for confirmation and click on Save. The system will now allow the user to log into the e-invoice system using the created credentials.

Notes:

  1. Only GST registered taxpayers with valid GSTIN can access the e-Invoice system.
  2. GST registered taxpayers who already have e-way bill login credentials need not register for the e-invoice system again. They can use the same credentials to access the e-invoice system.
  3. If the taxpayer with registered GSTIN attempts to register again, the system will show a pop- up message stating the GSTIN is already registered.

How to generate Bulk Invoice reference number (IRN)?

For generating a Bulk Invoice reference numbers, user needs to have the EINV bulk convertor which helps the user to convert the multiple invoices excel file into a single JSON file.

In order to download this tool, visit the trial e-invoice portal. Go to Help> Tools > Bulk Generation Tools option provided in E-Invoice portal as shown below. Please make sure you are using 2010, or higher version of MS office.

E-invoicing system will display 4 different JSON preparation Tools as Format A, Format B, Format C and Format D. These formats have been made as per the requirements of different classes of tax payers and transactions.

Steps to generate Bulk E-invoice under GST are as follows:

Step 1: To generate a Bulk Invoice reference numbers, user needs to select the sub option ‘Bulk Upload’ option under ‘e-invoice’.

Step 2: Upload JSON: On click of ‘Browse’ button, the system will request to select the JSON file.

User has to upload the IRN request file (maximum allowed file size for upload is 2 MB) to the e-invoice system.

Step 3: Generation of IRN: Next on click of ‘Confirm button the system processing the JSON file and generates the e-invoices and displays the 64 character length Invoice reference number for each request. If it is not possible it will show the appropriate error for each request.

The user can export the e-invoices in excel file by clicking on ‘Download Excel”.

Notes:

  • The hash computed by e-invoice system will become the IRN (Invoice Reference Number of 64 character length) of the e-invoice.
  • The JSON must conform to the e-invoice schema (standards) that is published and have the mandatory parameters. The optional parameters can be according to the business need of the supplier.
  • Downloading the Bulk IRN Generation Tool is a one-time activity. However, the Tool may get updated in future. So, always use the latest version available on the E-Invoice Portal.

Please refer Bulk E-Invoice generation manual for more details.

How to Cancel Invoice Reference Number (IRN)?

The provision has been provided to the taxpayer to cancel the invoice reference number for various reasons like incorrect entry, duplicate entry etc.

To cancel IRN user selects the ‘Cancel’ sub-option under ‘E-invoice’ in menu.

Note : Before going for IRN Cancellation, the user should have the e-invoice in hand which he intends to cancel.

Next, the user has to select and enter the Ack No. Or IRN as per the availability and clicks go. The system will display the e-invoice and will prompt user to select the reason of cancellation, enter remark and clicks Submit.

System will display Success message and the cancelled e-invoice is displayed with a “Cancelled” watermark.

Notes:

The invoice reference number once generated cannot be deleted. However, it can be cancelled by the generator within 24 hours of generation.

How the E-invoice Looks like

E-Invoice under GST

API Registration

The API integration helps the taxpayer to integrate their IT System with the APIs of e-invoice system so that IRNs can be generated directly without any manual intervention.

If you have registered in the e-way bill portal (https://ewaybillgst.gov.in), then you can use the login credentials (username and password) of the e-way bill system to login to the e-invoice portal. If you have not registered in the e-way bill portal, then you can register in the einvoice portal at option Registration.

Note: If you have registered with a GSP for E Way Bill and would like to continue with same GSP, no need to register for GSP again. Same credentials will work for e-Invoice.

Frequently Asked Questions(FAQ’s)

1.What is e-invoice under GST?

Ans. As per Rule 48(4) of CGST Rules, notified class of registered persons have to prepare invoice by uploading specified particulars of invoice (in FORM GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN). After following above ‘e-invoicing’ process, the invoice copy containing inter alia, the IRN (with QR Code) issued by the notified supplier to buyer is commonly referred to as ‘e-invoice’ in GST.

Because of the standard e-invoice schema (INV-01), ‘e-invoicing’ facilitates exchange of the invoice document (structured invoice data) between a supplier and a buyer in an integrated electronic format.

Please note that ‘e-invoice’ in ‘e-invoicing’ doesn’t mean generation of invoice by a Government portal.

2.How is ‘e-invoicing’ different from present system?

Ans. There is no much difference indeed.

Registered persons will continue to create their GST invoices on their own Accounting/Billing/ERP Systems. These invoices will now be reported to ‘Invoice Registration Portal (IRP)’. On reporting, IRP returns the e-invoice with a unique ‘Invoice Reference Number (IRN)’ after digitally signing the e-invoice and adding a QR Code. Then, the invoice can be issued to the receiver (along with QR Code).

A GST invoice will be valid only with a valid IRN.

3.For which businesses, e-invoicing is mandatory?

Ans. Presently, it is mandated for registered persons whose aggregate turnover (based on PAN) in a financial year is more than Rs. 500 Crores.

4.From which date, e-invoicing is mandatory for the notified classes of taxpayers?

Ans. As per latest notification, e-invoicing will be mandatory w.e.f. 1st October, 2020, for notified classes of registered persons (those having aggregate annual turnover at PAN level more than Rs. 500 Crores).

5.What businesses need to do, to be e-invoice ready?

Ans. Businesses will continue to issue invoices as they are doing now. Necessary changes on account of e-invoicing requirement (i.e. to enable reporting of invoices to IRP and obtain IRN), will be made by ERP/Accounting and Billing Software providers in their respective software. They need to get the updated version having this facility.

6.Is an invoice/CDN/DBN (required to be reported to IRP by notified person), valid without IRN?

Ans. As per Rule 48(4), notified person has to prepare invoice by uploading specified particulars in FORM GST INV-01 on Invoice Registration Portal and after obtaining Invoice Reference Number (IRN). As per Rule 48(5), any invoice issued by a notified person in any manner other than the manner specified in Rule 48(4), the same shall not be treated as an invoice. So, the document issued by notified person becomes legally valid only with an IRN.

Read User Manual of E-Invoicing.

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