Due to regular mismatches and errors in the format of the invoice, the system of e-invoice came into the picture. Earlier, the format for tax invoices was not standardized, but due emergence of “E-invoice” the Registered person under GST gets a format of the invoice that can be used at the time of every supply of goods and services.
So, we can state that the e-Invoice System is for GST-registered persons for uploading all the B2B invoices to the Invoice Registration Portal (IRP). The IRP generates and returns a unique Invoice Reference Number (IRN), digitally signed e-invoice, and QR code to the user.
What is GST E-invoice?
The GST E-Invoice is the self-help system developed by Authorities to make it easier for the Registered person to obtain digitally signed electronic invoices. The Invoice Registration Portal (IRP) issues a specific identification number against every invoice. E-invoice is the system that electronically authenticates the B2B invoices by GSTN.
Why GST Invoicing is beneficial?
- GST e-Invoice provides a bridge between data filled in the GST portal and the invoice details.
- It reduces the multiple data entry which automatically eliminates the manual error while data entry.
- The tracking of the invoices prepared by the supplier is on a real-time basis.
- E-invoicing system auto-populates the details and hence provides backward integration. Also, the relevant information in part A of the e-way bills is filled with help of an e- invoice.
- E-invoicing has enabled time reduction and quick availability of Input Tax Credit.
Who needs to get E-Invoice?
Via Notification number 17/2022 by Central Board of Indirect Taxes and Customs dated 1st August 2022, the e-invoicing shall be mandatory for all assessees having a turnover of more than ₹ 10 crores.
Talking about 2020, E-invoicing for business-to-business (B2B) transactions, the threshold was very high, when firms with a turnover of over ₹ 500 crores came under its ambit.
In the further phase, businesses with a turnover exceeding ₹100 crores were mandated to issue e-invoices from January 1, 2021.
In the third phase, firms with a turnover of over ₹ 50 crores had to generate e-invoices from April 1, 2021. It was then amended to firms with a turnover of ₹ 20 crores from April 1, 2022.
And now the new threshold limit is ₹ 10 crores applicable from 1st October 2022.
So, every registered taxable person whose aggregate annual turnover exceeds ₹ 10 Cr in any of the financial years since 2017-18 is liable to issue E-invoice by way of uploading its tax invoice in a JSON file on the Invoice Registration Portal (IRP) in accordance with e-invoice schema in INV-01 and getting back digitally signed JSON from IRP with IRN and QR Code.
Who is exempted from e-invoicing?
The following entities are exempt from the mandatory requirement of e-invoicing:
- Special Economic zone (not SEZ developers).
- Insurer or Banking company or financial institution including NBFC.
- Goods Transport Agency (GTA) supplying services in relation to transportation of goods by road in a goods carriage.
- Supplier of passenger transport service.
- Person supplying services by way of admission to exhibition of cinematograph films in multiplex screen.
How E-invoice is generated and process of E-Invoicing
The taxpayer first generates an invoice using his own ERP/ Accounting system. The invoice must conform to the E-invoice schema (a standard notified format). The details of the invoice are uploaded/reported by the taxpayers to the E-Invoice Registration Portal. In this way, the taxpayer registers their supplies transaction on the IRP.
On uploading the IRP returns the E-Invoice with a Unique Invoice Reference Number (IRN). After Digitally signing the E-Invoice and adding a QR Code. Then the supplier shares the e-invoice with the receiver.
IRP sends the E-Invoice data along with IRN to GST System as well as to the e-way bill system. The GST system will auto-populate them into GSTR 1 of the supplier and GSTR-2A of respective receivers. With the source marked as “e-invoice”, IRN and IRN date will also be mentioned in GSTR 1 and GSTR 2A.
