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What is E-invoicing GST

GST e-invoice refers to the implementation of digital invoices for products and services rendered by a business that is issued at the government GST portal. The idea of a GST e-invoice generation scheme has been considered to reduce GST evasion.

The GST officers have decided by supplying companies with a mechanism that will require them to produce an ‘e-invoice’ for any transaction on the government GST portal. This scheme would only apply to those whose turnover rate exceeds the determined limit, i.e. those for which the government would set a threshold cap.

According to an official, companies that fall below a certain level will be assigned a specific number if an e-invoice is generated. For authentication, companies may cross-reference this amount with invoices written in the revenue return and paying taxes.

E-invoicing Applicability and Non-Applicability

E-invoicing Applicability: E-invoicing Non-Applicability:
From 1st October 2020, all companies with annual revenue of more than Rs.500 crore in each of the previous fiscal years from 2017-18 to 2019-20 will be required to use e-invoicing. Notification No.61/2020 – Central Tax defined the turnover threshold for the introduction of e-Invoicing beginning October 1, 2020. The period considered for deciding eligibility under e-Invoicing is defined in Notification No.71/2020 – Central Tax.

Furthermore, effective January 1, 2021, e-Invoicing will be mandatory for companies with a turnover of more than Rs.100 crore in each of the fiscal years 2017-18 to 2019-20, as mentioned in Notification No.88/2020 – Central Tax.

On March 8, 2021, the CBIC announced that e-Invoicing would be mandatory beginning April 1, 2021, for companies with a turnover of more than Rs.50 crores (in any fiscal year beginning in FY 2017-18 or later), as stated in Notification No. 5/2021 – Central Tax.

According to GST notification No. 13/2020-Central Tax dated March 21, 2020, the following Taxable Entities are prohibited from issuing e-invoices:

  • Insurance company
  • Banking company
  • Financial Institution
  • NBFCs
  • GTA
  • Service provider of air transportation
  • Provider with facilities including access to the screening of cinematograph films in multiplex windows.
  • Units of Special Economic Zones (SEZs) (Notified by Notification Nos. 13/2020 and 61/2020-Central Tax)
  • According to the updates, the exclusion is for SEZ Units, not SEZ Developers.

Major Changes of E-invoicing under GST

  • If the invoice is discovered to be unregistered on the IRP, it will not be deemed a legal tax invoice on all GST-related matters, and a liability of 10,000 will be imposed on each instance of noncompliance.
  • Transportation of goods without a legitimate tax invoice can result in the detention of goods and vehicles, as well as the imposition of fines.
  • Customers may refuse to recognize and/or pay for merchandise if a legitimate tax invoice is not available, as this may jeopardize the receiver’s eligibility for ITC benefits.
  • Furthermore, the government intends to implement a search that will prevent the generation of an e-way bill if the IRN is not present.

Process of E-invoice Generation

Step 1: Create an invoice using existing resources, but keep in mind that the invoice must have all mandatory fields required by the E-invoice schema. If all mandatory fields are not synchronized in the current infrastructure, taxpayers are advised to invest in IT-enabled infrastructure.

Step 2: Authorization of invoices and development of a unique IRN (Invoice Registration Number). The prepared invoice must be submitted to the E-invoicing site for IRN generation. For this purpose, taxpayers should visit the government-recommended websites.

Step 3: Following that, the taxpayer must generate a standard invoice for the software. He must include all required information, such as billing name and address, GSTN of the provider, purchase value, item cost, GST rate appropriate, tax number, and so on.

Step 4: Following that, upload the details of the invoice, especially the mandatory fields, to the IRP using the JSON file, an application service provider (app or GSP), or a direct API. The IRP will serve as the central registrar for e-Invoicing authentication. There are also other ways to communicate with IRP, including SMS and smartphone apps.

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Step 5: IRP validates the B2B invoice’s main information, scans for duplicates, and creates an invoice identification number (hash) for future reference. The IRN is created based on four parameters: the seller’s GSTIN, the invoice amount, the fiscal year (YYYY-YY), and the document sort (INV/DN/CN).

Step 6: IRP produces the invoice reference number (IRN), digitally signs the invoice, and generates a QR code for the supplier in Output JSON. On the other hand, the supply seller will be notified of the e-invoice generation via email (if provided in the invoice).

Step 7: The authenticated payload will be sent to the GST portal for GST returns via IRP. Information may also be sent to the e-way bill portal, if necessary. The seller’s GSTR-1 is automatically filled out for the applicable tax year. This, in essence, decides the tax obligation.

E-invoicing under GST – FAQs

Q1.Could an e-Invoice be partly or fully canceled?

An e-Invoice cannot be canceled in half, but it may be canceled entirely. When a reservation is canceled, it must be announced to the IRN within 24 hours. All subsequent attempts to cancel cannot be made on the IRN and must be done manually on the GST portal before the returns are filed.

Q2. Can the popular GST platform support the generation of e-invoices?

No, invoices will continue to be created on the individual ERP software that companies already use.

The invoice must follow the e-Invoicing template format and contain all necessary criteria. The direct generation of invoices on a shared portal is not currently scheduled.

Q3. What are the different kinds of records that must be reported to the IRP?

The following records will be protected by the e-Invoicing system:

  • Invoices issued by the Supplier
  • Supplier’s Credit Notes
  • Recipient’s Debit Notes
  • Any other document required by GST law to be registered as an e-invoice by the document’s author.

Q4. Will it be possible to bulk-upload invoices for IRN generation?

No, invoices must be uploaded into the IRP one at a time. A company’s ERP must be configured in such a way that it can position an order for the upload of individual invoices.

Q5. Who would be affected by e-Invoicing?

The GST enrolled persons whose gross revenue in the fiscal year exceeds Rs.100 crore will be subject to the e-Invoicing scheme. Special Economic Zones (SEZ) units, insurance, banking, financial institutions, NBFCs, GTA, passenger transportation service, and the selling of movie tickets are exceptions.

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