The Goods and Services Tax (GST) regime in India has seen significant advancements in recent years, with the introduction of various digital initiatives aimed at simplifying tax compliance and promoting transparency. One such transformative measure is E-Invoicing, an electronic billing system designed to streamline business operations and enhance the overall efficiency of the GST framework.
E-Invoicing, also known as Electronic Invoicing, is a process that involves the generation and exchange of invoices between suppliers and buyers in an electronic format. It aims to eliminate manual intervention in invoice preparation, reducing errors, promoting seamless data integration, and ensuring real-time reporting to the GST system.
Key Components of E-Invoicing:
1. Invoice Registration Portal (IRP):
The Invoice Registration Portal (IRP) is the core infrastructure for implementing E-Invoicing. It serves as a centralized platform where businesses upload their invoice details in a standardized format. The IRP then validates and registers the invoice, generating a unique Invoice Reference Number (IRN) and a QR code. This IRN and QR code are essential for further processing and verification.
2. Standardized Schema:
E-Invoicing follows a standardized schema, the eXtensible Markup Language (XML), to ensure uniformity and compatibility across different business systems and applications. The XML format contains crucial invoice information such as supplier details, buyer information, invoice value, GSTIN, item-wise details, and tax amounts.
3. QR Code:
Each E-Invoice generated through the IRP is assigned a unique QR code. This QR code contains the critical details of the invoice and can be scanned using a mobile application to verify the authenticity of the invoice.
4. Real-time Reporting:
E-Invoicing enables real-time reporting to the GST system. Once an invoice is registered on the IRP, the invoice details are automatically shared with the GST Network (GSTN). This real-time reporting ensures accurate and timely data availability for both businesses and the tax authorities.
Benefits of E-Invoicing:
1. Enhanced Efficiency:
E-Invoicing significantly reduces the manual effort involved in invoice generation, processing, and reconciliation. It streamlines the entire invoicing process, leading to quicker payment cycles and better cash flow management.
2. Minimized Errors and Discrepancies:
Automation in the invoice generation process minimizes human errors, such as data entry mistakes or incorrect tax calculations, thereby reducing the chances of disputes and reconciliation issues.
3. Compliance and Transparency:
E-Invoicing promotes compliance and transparency in the GST ecosystem. It enables tax authorities to monitor transactions more effectively, reducing the possibility of tax evasion and fraud.
4. Seamless Data Integration:
E-Invoicing facilitates seamless data integration between various business systems, such as Enterprise Resource Planning (ERP) software, accounting systems, and tax software. This integration streamlines business operations and improves overall data accuracy.
“(1) The invoice shall be prepared in triplicate, in the case of supply of goods, in the following manner, namely,-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
(2) The invoice shall be prepared in duplicate, in the case of the supply of services, in the following manner, namely,-
(a) the original copy being marked as ORIGINAL FOR RECIPIENT; and
(b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
(3) The serial number of invoices issued during a Tax period shall be furnished electronically through the Common portal in FORM GSTR-1.
(4) The invoice shall be prepared by such class of Registered persons as may be notified by the Government, on the recommendations of the Council, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the notification.
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt a person or a class of Registered persons from issuance of invoice under this sub-rule for a specified period, subject to such conditions and restrictions as may be specified in the said notification.
(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice.
(6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in the manner specified in sub-rule (4).”
Implementation and Threshold:
NOTIFIED ANNUAL Aggregate turnover WITH DATES
ANNUAL Aggregate turnover
Date of E-Invoicing
Above Rs 500 Cr
Rs 100 Cr to Rs 500 Cr
Rs 50 Cr to Rs 100 Cr
Rs 20 Cr to Rs 50 Cr
Rs 10 Cr to Rs 20 Cr
Rs 5 Cr to Rs 10 Cr
Less than 5 Cr
Who is liable to issue e-Invoice-
Every registered Taxable person whose aggregate annual turnover exceeds Rs. 5 Cr in any of the financial year since 2017-18 is liable to issue e-invoice by way of uploading its tax invoice in json file on 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.
Registered person whose aggregate annual turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 20 Cr are liable for e-Invoicing.
E-Invoicing applies to supply of goods or services or both.
E-Invoicing applies to export (with or without payment) also. (Not. No. 70/2020 CT dt 30.09.20)
Applies to B2b transactions only.
Applies to supplies to SEZ Unit
Applies to Deemed Export
Documents covered under e-Invoicing
Exemption from e-Invoice
Entity Level Exemption –
As per Notification No. 13/2020-CT dt 21.03.2020 Registered persons covered by sub-rule (2), (3), (4) & (4A) of Rule 54 are exempt from issuing e-invoice, such as –
Insurance, Banking or Financial Institution including NBFC [Rule 54(2)]
Goods transport agency transporting goods by road [Rule 54(3)]
Supplier of passenger transportation service [Rule 54(3)]
Person supplying services by of admission to exhibition of cinematographic film in multiplex screen
SEZ Unit as per Notification No. 61/2020 CT dt 30/07/20 exempted.
Document Level Exemption-
Bill of Supply
Self Invoice in case of RCM u/s 9(4)
Financial Debit/ Credit note
Transaction Level Exemption-
Non-GST Supplies (alcoholic liquor, Petrol, Diesel etc)
Bill of Entry in case of Import
Nil rated or exempted supplies
Can e-invoice be cancelled
Yes, it can be cancelled within 24 hours of reporting to IRO through “Cancel API”. After cancellation the GSTR-1 will be updated. However if the connected e-way bill is active and verified by the authority during transit, then cancellation of e-invoice will not be permitted by the IRP.
Amendment in e-invoicing
IRP does not allow amendment in e-invoices. However amendment, if any, needed can be done as usual on the e-filing portal while filing GSTR-1. However such changes will be flagged to Proper officer for information.
Will the e-invoice details be pushed to GST System? Will they populate in the return?
Yes. On successful reporting of invoice details to IRP, the invoice data (payload) including
IRN, will be saved in GST System. The GST system will auto-populate them into GSTR-1 of the supplier and GSTR-2A of respective receivers.
With source marked as ‘e-invoice’, IRN and IRN date will also be shown in GSTR-1 and GSTR-2A.
Where e-invoicing is applicable, is carrying e-invoice print during transportation of goods mandatory?
No. As per Rule 138A(2) of CGST Rules, where e-invoicing is applicable, “the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer, in lieu of the physical copy of such tax invoice.”
Govt. department is having a GSTIN (as entity supplying goods/services/ deducting TDS), the same has to be mentioned as recipient GSTIN in the e-invoice. Meaning thereby that even if Govt department is registered for the purpose of deducting TDS, Supplier shall be liable to issue e-Invoice.
In cases where e-Invoice is not required to be issued despite the facts that AATO exceeds the specified threshold limit the following declaration is required to be mentioned in the Tax Invoice, (Rule 46(s)-
(s) a declaration as below, that invoice is not required to be issued in the manner specified under sub-rule (4) of rule 48, in all cases where an invoice is issued, other than in the manner so specified under the said sub-rule (4) of rule 48, by the taxpayer having Aggregate turnover in any preceding financial year from 2017-18 onwards more than the Aggregate turnover as notified under the said sub-rule (4) of rule 48-
“I/We hereby declare that though our Aggregate turnover in any preceding financial year from 2017-18 onwards is more than the Aggregate turnover notified under sub-rule (4) of rule 48, we are not required to prepare an invoice in terms of the provisions of the said sub-rule.”
Dynamic QR Code-
What is dynamic QR Code? Does it has any relevance for B2B e-invoicing?
Notification No. 14/2020-Central Tax dated 21st March, 2020 (as amended) mandates entities with Aggregate turnover > Rs. 500 crores in any preceding financial year from 2017-18 onwards, to include a dynamic Quick Response Code (QR Code) on their B2C invoices. It is also specified that a Dynamic QR code made available to buyer through digital display (with payment cross-reference) shall be deemed to be having QR code.
The Dynamic QR Code has no relevance or applicability to ‘e-invoicing’, as envisaged under Rule 48(4). The said rule applies to B2B Supplies and exports by notified class of taxpayers.
CA Pranay Jain is a young and aspiring Chartered accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
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