Everything about E-invoicing under GST

E-invoicing under GST has came into effect from October 01, 2020 for businesses with aggregate turnover exceeding Rs. 500 crore in any preceding FY from 2017-18 onwards.

There is a common misconception among the people that GST e-invoicing means the business will have to generate an invoice through the GST portal. But, the reality is, GST e-invoicing is the process in which any business to business (B2B) invoice generated by a business has to be authenticated on the GST portal. Once authenticated, every invoice will get a separate Invoice Reference Number (IRN). This is done on the Invoice Registration Portal. 

E-invoice is mandatory for the businesses with threshold Turnover for preparing E-Invoice is Rs 500 Crores. The threshold for mandatory issuing of electronic invoices is increased from the earlier limit of Rs. 100 Crore turnover providing relief to small scale companies. The turnover for the purpose of E-Invoicing is to be computed at PAN Level (for all GSTINs combined).

Read Also: CBIC notified special procedure for taxpayers for issuing GST e-Invoices : Notification

Invoice Registration Portal (IRP)

There is a need for separate registration by the taxpayers again on the E-invoice system Portal. All the registered users under GST who wish to generate IRN need to register on E-invoice system using his GSTIN.

Once GSTIN is entered, the system sends an OTP to his registered mobile number registered with GST Portal and after authenticating the same, the system enables him to generate his/her username and password for the E-invoice system. After generation of username and password of his/her choice, he/she may proceed to make entries to generate IRN

Documents covered in E-Invoicing under GST

The taxpayers will be required to report the following documents to the e-invoice system

• Invoice by Supplier
• Credit Note by Supplier
• Debit Note by Supplier

Different Supply required to be reported in e-Invoice portal

The different supply types that can be reported are-

• B2B: Business to Business,
• SEZWP: To SEZ with Payment,
• SEZWOP: To SEZ without Payment,
• EXPWP: Export with Payment,
• EXPWOP: Export without Payment,
• DEXP: Deemed Export

Reverse Charge Mechanism under GST- The Working & Guidelines

Benefits of E-Invoicing under GST

1. E-invoicing will help eliminate the mismatch errors that occur during various return filings as Supplier and recipient will have the same copy of the e-invoice.
2. Different accounting software generates invoices in different file format, reducing inter-operability. But, e-invoice is in a standard format, so all software can read it.
3. It simplifies and speeds up the process of claiming legit Input Tax Credit for the businesses. 
4. All data will be readily available for tax-authority, reducing the possibility of audits.
5. Invoices prepared by the suppliers can be easily tracked.
6. It will simplify the process of e-way bill generation as the details in “Part-A” of the bill will be auto-filled with the details form the Portal

 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. the features of IRN are as follows-

• Each Invoice uploaded by the tax payer will get the unique number called as Invoice Reference Number (IRN).
• IRN is of 64 Characters length.
• This IRN is unique number in the GST system, irrespective of tax payer, financial year and document type.
• IRN is generated by the e-invoice system once the tax payer uploads the invoice details.
• The IRN is generated using the computer algorithm (RSA256) based on the combination of the Supplier GSTIN, Document Type, Document Number and year of the Invoice (Financial Year).
• IRN is hash of Supplier GSTIN + Fin. Year + Doc Type + Doc Number.
• Financial Year is calculated based on the date of invoice. That is, the financial year starts with 1st April and ends on 31st March and represented as YYYY-YY. If the date is 03.01.2020, the financial year is 2019-20.
• Document types are INV for Invoice, CRN for Credit Note, DBN for Debit Note.
• Document Number is a number printed on the Document, being issued to the purchaser, and it is to be of maximum of 16 alphanumeric and / -.
• It should not be starting with 0, / and -. Also, alphabets in document number should not have alphabets in lower cases. If so, then request is rejected.
• For example, tax payer with 01AAAAA9999A19N has issued the Invoice with Number ABC01234 on 12.12.2019 to his supplier, string used for hashing is 01AAAAA9999A19N2019-20INVABC01234.

Essential information required for generation of E-invoice

Essential information to be filled or required in the generation of E-invoice are:-

• Supplier GSTIN
• Supplier’s invoice number
• Financial year
• Details of supplier and consignee
• Type of supply: – whether it is B2B or B2C, TDS/TCS/RCM attracts, it is an Export, Supply made to SEZ or Deemed Export.
• Details of Supply :- Item Description, Quantity, Rate i.e., cost per piece or quantitative term used, Assessable Value or Taxable value, GST Rate i.e., percentage rate of GST taxable, IGST Value i.e., Integrated Goods and Service Tax, CGST Value i.e., Central Goods and Service Tax, SGST Value i.e., State Goods and Service Tax
• Authorization by designed authority

How is E-invoice generated under GST?

1. Invoice should be generated in the standard format i.e., JSON prescribed by GST network.

2. Next, update the invoice on Invoice Registration Portal (IRP).

3. The invoice can be updated on IRP by parties directly or through third party.

4. IRP will assign an Invoice Registration Number (IRN) to the invoice along with signing it digitally.

5. A QR Code will be generated by IRP that will have all the important information.

6. E-Invoice will be emailed to the seller and recipient of the invoice.

Important points to Notes

1. E-invoice is not required to sign again once digitally signed by IRP.
2. E-invoice only valid if it has valid IRN.
3. A maximum of 100 items can be included in e-invoice.

The author of above article is Krittika Pahwa.

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