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All You Need To Know About E-Invoicing From 1 October

E-invoicing is here to change the tax paradigm and will be benefiting business in the following manners:

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From 1st October 2020, e-invoicing will be a mandatory and intrinsic part of the GST regime.

GST e-invoice is the digital version of an invoice for goods and services by businesses that will be usually generated on the government regulated IRP portal and have been introduced to primarily avoid tax evasion.

This novel e-invoicing will be mandated for companies with an annual turnover of ₹500 crores or more. Businesses generating the e-invoice will be issued a unique identification number provided by the Invoice Registration portal (IRP) that will directly be managed by the GST Network (GSTN).

How is this different from the conventional invoice system?

Currently, businesses are generating invoices via various softwares and the details of which were later uploaded in the GSTR-1. These invoices were uploaded by the suppliers and are reflected as the GSTR-2A, which the recipients could only view.

However, the latest e-invoicing process mandates the cosigners or transporters to send the invoice again by importing them in an excel or JSON format. Another way the e-invoice can be submitted is via the API integration, directly through the GST Suvidha Provider (GSP).

How does e-invoicing work?

The e-invoicing workflow is slightly different than the conventional, mainly because of the digital element and the need to embrace transparency among all stakeholders. The e-invoice will be generated using Government approved GST softwares and solutions and will be uploaded on the Invoice Registration Portal (IRP). The e-invoicing workflow can be broken down into two parts.

  1. Invoice communication between the taxpayer and the IRP

  2. Invoice communication between IRP, GST and E-way bill system

Invoice communication between the taxpayer and the government

Taxpayers will upload mandatory information from the invoice in JSON format on the IRP via a myriad of communication channels like GSP/API, Web Portal, and Offline Tools. The platform will generate the IRN, check the GST system for imitations, check for the e-invoice data, add a digital signature, and finally add the QR Code. The supplier can now view the final invoice data.

Invoice communication between IRP GST and the E-way bill system

Here the process is quite similar till the bill reaches the Invoice Regulation Portal. The turn comes in when the final payload goes to the GST system and as well as the e-way bill system where the latter will generate the e-way bill. The GST system has two pathways for the invoice – ANX-1 for the seller and ANX-2 for the buyer. This makes it easier for the buyer to view the invoice data as well as receive the QR code for printing.

How to generate an e-invoice?

Generating e-invoice will be similar to the traditional method except that reporting will now be undertaken electronically. Here is a list of new and mandatory as well as optional prerequisites:

  • Document details: type, number, and date

  • Item related details like service/ goods, HSN code, total amount, GST rate, Assessable amount, total item value.

  • Supplier information like legal name, GSTN address, location, PIN code, and state code.

  • Buyer information like legal name, GSTN number, address, location, state code, and PIN code

  • Transaction details like tax scheme, supplier type

  • Dispatch from address details

  • Shipping details

  • Invoice details include assessable values and the total invoice value.

Once the e-invoice is finalised, the billing software creates a JSON format of this invoice and uploads it on the IRP.

Followed by the upload, the IRP will tally the important parameters submitted by the supplier like GSTIN, document number, document type, and the fiscal year with the central repository to check for duplicates. Once cleared, the IRP will add its digital signature and QR code to the e-invoice and allot a unique Invoice Reference Number.

What are the benefits of e-invoicing?

E-invoicing is here to change the tax paradigm and will be benefiting business in the following manners:

  • There are prevailing gaps between data collection under GST. This e-invoicing will help plug those gaps and reduce errors.

  • Moreover, stakeholders can now view these invoices instead of banking solely on the supplier’s words, which improves transparency and reduces data entry errors.

  • The data input is less likely to be faulty, paving the way for genuine input tax credit and faster invoice rolls out.

  • Since e-invoices are digital elements, they are easily traceable, require less time, and even less need for tax authorities’ audits or intervention since the information here is available at the transaction level.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Manish Balani

The author is Business Head – GST, Vayana Network

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