E-invoicing under GST

E-invoicing under GST

– All you need to know

In this article we discuss about the features of new facility in GST i.e, E-invoicing.

What is e-invoicing?

Is it generating e-invoice in the GST portal itself? Though the name e-invoice suggests that, actually it is not so. E-invoice is a mechanism in which a registered tax payer will issue an invoice using his accounting software or ERP system itsef, and thereafter upload the details of such invoices in the dedicated portal for invoices i.e, Invoice Registration Portal (IRP).

Therefore, in simpler terms, e-invoicing includes two steps –

  • Prepare invoice using your accounting software or ERP platform itself; and
  • Upload the details of the invoice in the invoice portal i.e, Invoice Registration Portal (IRP)
  • Generate necessary documents such as IRN, QR Code and e-invoice.

The IRP will validate the information provided in the invoices, and return the digitally signed e-invoices with a unique ‘Invoice Reference Number (IRN)’ along with a QR Code to the taxpayer.

Who all are exempted from E-invoicing?

The following persons are exempted from the requirement of issuing e-invoices –

  • Insurance company;
  • Banking company;
  • Financial institutions;
  • Non-banking Financial Companies;
  • Goods Transport Agencies (GTAs);
  • Supplier of passenger transportation services;
  • Supplier of services by way of admission to the exhibition of cinematographic films in multiplex screens;
  • Special economic zones; and
  • Registered persons with annual turnover less than Rs. 50 Cr

How to determine the turnover for e-invoicing applicability?

As we already discussed, e-invoicing is mandatory if the annual turnover is less than Rs. 50 Crores in the financial year. Now, which financial year to be considered for determining the turnover criteria? The government has notified that the turnover criteria to be checked for all the financial years from FY 2017-18. In other words, if the annual turnover of the registered person exceeds Rs. 50 Cr in any financial year from FY 2017-18, e-invoicing is mandatory from 1st April, 2021.

Procedure for generation of e-invoice.

Step 1: Prepare the invoice using any accounting software and ERP

You can prepare the invoice using any of the accounting or the ERP softwares, in the normal manner.

Step 2: Create the ‘json’ file of the invoice.

Once the invoice is prepared in the prescribed format, the final invoice should be converted into ‘json’ format using –

  • The accounting or ERP software itself, if the facility exists; or
  • Third party applications / softwares for converting into json; or
  • Offline utility tool.

Step 3: Generate Invoice Reference Number (IRN) using IRP

The json file of the final invoice should be uploaded to the ‘Invoice Registration Portal’ and generate unique Invoice Reference Number (IRN).

What is IRN?

It is a unique 64 character number which is unique to each e-invoice generated.

How to generate IRN?

IRN can be generated from the IRP using two methods –

  • Using the offline tool

This is a separate tool for generating IRN by uploading the invoice data. It can also be used to generate IRN in bulk, using the bulk upload option.

  • Using API (Through GSPs integration)

The Government has established GST Suvidha Providers (GSPs), who will assist the registered tax payers with the procedures. IRN can be generated by using APIs through integrating it with the GSPs.

  • Using API (Through direct integration)

If the tax payer does not want to get the assistance of GSPs for API integration, IRN can be generated using API by direct integration also. The procedure is very similar to that of e-way bill generation.

Other methods to generate IRN includes –

  • Using API (Through an enabled sister concern’s GSTIN)
  • E-way Bill API-enabled Taxpayers

Step 4: Generate QR Code for the e-invoice

The Government proposes to generate a QR code for each e-invoice. This will enable easy verification of the invoice details even when the internet connectivity is poor. The authorities or other persons may scan the QR code to receive the details of the invoice. Such QR codes can be verified on the invoice portal as well as using offline apps / scanners.

Step 5: Sign the e-invoice using Digital Signature Certificate (DSC)

Step 6: Final processing of valid e-invoice

The signed e-invoice data will be sent to the GST system where GSTR-1 of the supplier and GSTR-2B/2A of the buyer will be updated based on the details entered in the invoice. Wherever applicable, details of invoices will be used to update ‘Part A’ of the E-Way Bill. As a result, only vehicle number needs to be entered in ‘Part B’ of the E-Way Bill system to create an E-Way bill.

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