FAQ on E-invoicing under New GST Returns

• What is e-invoicing
• How does e-invoicing model work?
• What types of documents are required to be reported in the Invoice Registration Portal?
• What is the workflow of e-invoice?
• How will the system of e-Invoicing be integrated with GST Returns?
• When will e-invoicing get implemented?
• What will be the data contained in an e-Invoice?
• Amendment / cancellation of e-invoices
• What are the benefits of e-Invoicing?

E-invoicing has become a reality for businesses with a turnover of Rs. 500 crores and above, in the preceding year (2019-20), from 1^st October 2020. As per the recent notification issued, e-invoicing will be applicable for businesses with a turnover of 20 crores and above from 1st April,2022.

To help get a quick understanding of e-invoicing system, here are some FAQs that get quick answers to your doubts. 

What is e-invoicing?

e-Invoice known as ‘Electronic invoicing’ is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.

Post successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by IRP. Along with IRN, each invoice is digitally signed and added with a QR code. This process is collectively called as e-invoicing under GST Know more on IRN, Format and process to generate it.

How does e-invoicing model work?

Today, a transaction between the supplier and recipient is done directly without the government having any proof of the exchange. Under the e-invoicing model, while the businesses will continue to generate invoices on their respective ERPs just as was being done in the past, only the standard, schema and format for the generation of invoices will be specified. This is to ensure a level of regularity and the machine-readability of these invoices.

Taxpayers are responsible for the generation of the invoice. While generating, it needs to be reported to the Invoice Registration Portal (IRP) of GST. As soon as the invoice is reported to the IRP system, it will generate a unique Invoice Reference Number (IRN), adds the digital signature for the e-Invoice and also provides the OR code. This QR Code will include vital parameters of the e-invoice and return the same to the taxpayer who reported this transaction. The IRP will also send the signed e-invoice to the seller on the registered email ID.  

What are the types of documents that are to be reported into the IRP?

The following documents will be covered under e-Invoicing for now:

• Invoices by the Supplier
• Credit Notes by the Supplier
• Debit Notes by the Recipient
• Any other document as required by law to be reported by the creator of the document

What is the workflow of e-invoice?

Step 1 – Generation of e-invoice:

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 mandatory fields of an invoice for the supply of goods are listed below:

• Invoice type
• Code for invoice type
• Invoice Number
• Invoice Date
• Supplier details like Name, GSTIN of Supplier, Supplier address (including place, pin code, state)
• Details of the buyer such as name, GSTIN, state code, address, place, pin code, payee name, account number, payment mode and IFSC code
• Dispatch details
• Invoice item being dispatched
• Total tax amount, paid amount and payment due
• Tax scheme (whether GST, Excise Custom, VAT)
• ‘Shipping To’ details like Name, GSTIN, address, pin code, state, supply type, transaction mode (whether regular, ‘bill to’ or ‘ship to’)
• Details of goods like Sl. no., quantity, rate, assessable value, GST rate, amount of CGST/SGST/IGST, total invoice value, batch number/name

The seller has to ensure that his accounting/billing software is capable of generating a JSON of the final invoice. The seller can create a JSON following the e-invoice schema and mandatory parameters by using the following modes:

• Accounting and billing system that offers this service
• Utility to interact with either accounting/billing system, ERP, excel/word document or a mobile app
• Offline Tool to generate e-invoice by keying-in invoice data

Step 2 – Generation of unique IRN:

The supplier has the option to generate ‘hash’ based on specific parameters usually three of them such as Supplier’s GSTIN, Supplier’s invoice number, Financial Year (YYYY-YY). The prescribed algorithm, such as SHA256 must be used for the hash generation. If the hash is validated, it would later become the Invoice Reference Number (IRN) of the e-invoice.

Step 3 – Uploading the JSON:

The following modes may be used to upload the JSON of the final invoice:

• Directly on the IRP
• Through GST Suvidha Provider (GSP)
• Third-party provided apps (including through API)
• The supplier can also upload the hash along with the JSON onto the IRP, if generated by him

Step 4 – Hash generation/validation:

Hash will have to be generated by the IRP in respect of the invoices uploaded without the hash. In such a case, the hash generated by the IRP would become the IRN. Where the supplier has also uploaded hash, a de-duplication check will be performed. It is done by validating the hash/IRN against the Central Registry of GST System to ensure that the IRN is unique. Once validated, the hash/IRN is stored in the Central Registry. IRP will then generate a QR Code and digitally sign the invoice and make it available to the supplier. The IRP also sends the e-invoice via e-mail mentioned on the invoice to the buyer and seller.

Source: last FAQ doc released by GSTN

How will the system of e-invoicing be integrated with GST Returns?

An e-Invoice will be uploaded into the relevant GST return only once it has been validated and registered by the invoice registration system. After the validation has been done, it will be visible to the recipient for viewing and taking action (in the new return system).

The main aim of the tax department is to enable the pre-population of GST returns, which will reduce reconciliation-related problems. Once e-Invoicing has been implemented, the data in the invoices can be pre-populated into the relevant tables of the tax returns without the need for fresh data entry.

When will e-invoicing get implemented?

The first phase of e-invoicing was implemented from 1st October 2020 for taxpayers with an aggregate turnover exceeding Rs.500 crore. Followed by, e-invoicing for businesses with 100 and 50 turnovers. 

From 1st April 2022, e-invoicing will be extended to businesses with an aggregate turnover exceeding 20 crores.  The aggregate turnover will include the turnover of all GSTINs under a single PAN, across India.

What data will be included in an e-invoice?

As per the draft format generated by the GSTN, an e-Invoice will contain the following parts-

• E-invoice schema: This part will consist of the technical field name and the description of each field. It will also specify if a field is mandatory or not, and has a few sample values along with explanatory notes
• Masters: Masters will specify the set of inputs for certain fields, that are pre-defined by GSTN itself. It includes fields like UQC, State Code, invoice type, supply type, etc
• e-Invoice template: The template is as per the GST rules and enables the reader to correlate the terms used in other sheets. The mandatory fields are marked in green and optional fields are marked in yellow.

Amendment / cancellation of e-invoices

Can an e-invoice be cancelled partially/fully?

An e-invoice cannot be partially cancelled, it has to be cancelled fully. Once you cancel an e-invoice, it has to be reported into the IRN within 24 hours. No cancellation post 24 hours of upload is allowed on the IRN and needs to be manually cancelled on the GST portal before the returns are filed.  

How can an e-invoice be amended?

All amendments to an e-invoice can be made only on the GST Portal.  

What are the benefits of e-invoicing?

• One-time reporting of B2B invoices while generation, which reduces reporting in multiple formats
• Sales and Purchase Registers can be generated from this data, and GST returns can be kept ready for filing under the new return system
• E-way bills can also be generated using e-Invoice data
• There is minimal need for data reconciliation between the books and GST returns filed
• Real-time tracking of invoices prepared by a supplier can be enabled, along with the faster availability of input tax credit. It will also reduce input tax credit verification issues
• Automation of the tax-filing process
• Reduction in the number of frauds as the tax authorities will also have access to data in real-time
• Elimination of fake GST invoices getting generated

Video on e-invoicing in TallyPrime

Know more about e-invoices in GST