The term “e-Invoicing” as used in the GST law refers to electronic invoicing. Similar to how a firm that has registered for GST utilises an e-way bill when moving products from one location to another. Similar to this, certain recognised GST-registered firms are required to produce an electronic invoice for B2B transactions.
B2B invoices are electronically validated by GSTN using the e-Invoice system before being used on the public GST site. Every invoice will receive an identification number under the electronic invoicing system from the Invoice Registration Portal (IRP), which will be run by the GST Network (GSTN).
Real-time information exchange between the einvoice1.gst.gov.in portal, the GST site, and the e-way bill portal. As a result, since the data is sent immediately from the IRP to the GST site, there is no need for manual data entry when filing a GSTR-1 return or creating part-A of an e-way bill.
What does e-Invoicing under GST mean?
B2B invoices and a few other documents are validated electronically by GSTN for use on the common GST site in a system known as “e-Invoicing” or “electronic invoicing.”
The GST Council resolved to introduce an electronic invoicing system for a select group of people, primarily major businesses, during its 35th meeting. Later, it was expanded to include small and medium-sized firms as well.
A standard invoice that has previously been prepared must be submitted on a common e-invoice portal; e-invoicing does not necessitate the creation of invoices on the GST site. By automating multi-purpose reporting, invoice information is only ever input once. Through Notification No. 69/2019, the CBIC informed a number of common portals to generate an electronic invoice.
Every invoice will receive an identification number under the electronic invoicing system from the Invoice Registration Portal (IRP), which is run by the GST Network (GSTN). The first IRP was made available at einvoice1.gst.gov.in by the National Informatics Center.
Real-time transmission of all invoice data occurs from this gateway to the e-way bill and GST portals. Consequently, it removes the requirement for manual data entry while filing GSTR-1 returns and creating part-A of e-way bills because the data is sent straight from the IRP to the GST site.
Process of getting an e-Invoice
The following are the stages involved in generating or raising an e-invoice.
1. The taxpayer must guarantee that the revised ERP system is used in accordance with PEPPOL guidelines. He might work with the software service provider to implement the e-invoice schema (standards), which are a set of requirements that must at the very least have the CBIC notify them of.
2. For the production of IRNs, a taxpayer generally has two options:
- For direct API connectivity or integration via GST Suvidha Provider, the IP address of the computer system can be whitelisted on the e-invoice portal (GSP).
- For mass uploading of invoices, download the bulk creation programme. To create IRNs in mass, you can upload the generated JSON file to the e-invoice gateway.
3. Following that, the taxpayer must submit a regular invoice for that programme. He must include all pertinent information, such as the name and address for the billing address, the GSTN of the supplier, the transaction value, the item rate, the appropriate GST rate, the amount of tax, etc.
4. After selecting one of the aforementioned alternatives, create the invoice using the appropriate ERP or billing programme. Next, use a JSON file, an application service provider (app, GSP, or direct API) to submit the invoice’s contents, particularly those pertaining to the required fields, to the IRP. For e-invoicing and its authentication, the IRP will serve as the central registrar. There are several other ways to connect with IRP, including SMS-based and mobile app-based methods.
5. IRP will verify the essential information on the B2B invoice, search for any duplications, and provide an invoice reference number (hash) for future use. Seller GSTIN, invoice number, FY in YYYY-YY, and document type (INV/DN/CN) are the four factors that determine the generation of an IRN.
6. When it comes time to file GST returns, IRP will transmit the authenticated payload to the GST portal. Any eligible e-way bill site will also get the information. For the applicable tax period, the seller’s GSTR-1 is automatically filled out. The tax liability is then established as a result.
E-Invoicing Advantages to Businesses
- To eliminate mistakes caused by mismatches in data reconciliation under GST, e-invoice closes and plugs a significant gap.
- By enabling interoperability and lowering data input mistakes, e-invoices produced on one piece of software may be read by another.
- E-invoice enables the real-time tracking of invoices created by the supplier.
- Backward integration and automation of the tax return filing process—the pertinent information from the invoices would be auto-populated in the different forms, particularly for producing the part-A of e-way bills—would be implemented.
- Genuine input tax credits are available more quickly.
- Since the tax authorities may obtain the necessary information at the transaction level, there is a lower likelihood of audits or surveys.
Steps to generate an e-Invoice
Step 1 – Creation of the Invoice on the Taxpayer’s ERP
The taxpayer will continue to generate invoices in the normal course of business. However, the reporting of these invoices electronically has criteria. It needs to be done as per the e-invoice schema along with mandatory parameters.
The seller has to ensure that his accounting/billing software is capable of generating a JSON file of the final invoice. The seller can create a JSON file following the e-invoice schema and mandatory parameters by using the following modes:
- An accounting and billing system that offers this service
- A utility to interact with the accounting/billing system, or ERP, such as an excel/word document or a mobile app
- An offline Tool to generate e-invoices by keying-in invoice data
Step 2 – Generation of the unique IRN
The IRN (also known as hash) is a unique number which is generated by the e-invoice system using a hash generation algorithm. For every document submitted, a unique 64 character IRN will be generated. At present, the e-invoice system provides the two modes to generate the IRN (Invoice Reference Number), i.e offline and API. Notified taxpayers who need to generate e-invoices, can generate them using these options:
- Using the offline tool
- Using API (Through GSPs integration)
- Using API (Through direct integration)
- Using API (Through an enabled sister concern’s GSTIN)
- E-way Bill API-enabled Taxpayers
Step 3 – Generation of the QR Code
The e-invoice system will generate the IRN, and then digitally sign the e-invoice and the QR code (quick response code). The QR code will enable a quick view, and validation and access of the invoices from handheld devices.
The QR code will consist of the following parameters:
- The GSTIN of supplier
- The GSTIN of recipient
- The invoice number as given by supplier
- The date of generation of the invoice
- The invoice value (taxable value and gross tax amount)
- The number of line items
- The HSN code of the main items (the line item having the highest taxable values)
- The unique IRN (hash)
A Valid back-end e-Invoice’s Processing
The signed electronic invoice data will be transmitted to the GST system, where GSTR-1s for the supplier and the buyer will be updated in accordance with the information provided in the invoice. Anywhere necessary, information from invoices will be utilised to amend “Part A” of the E-Way Bill. As a result, all that is required to produce an E-Way bill is the vehicle number in “Part B” of the system.