A) Background:-
1) The GST Council, at its 37th meeting held at Goa on 20th September, 2019 approved the introduction of E Invoicing System. Accordingly the government has issued Notification No 68/2019 - CT to 72/2019 - CT to make applicable all the provisions relating to E Invoicing w.e.f. 1st April, 2020. (Now it Extended till 1st Oct, 2020 in 39th Meeting held on 14th March, 2020)
2) E-invoicing in India will be a big move, due to the volume of business transactions undertaken every day, as well as non-standardised formats used in invoice generation. The main objective is to enable an
e-invoice generated by one software should be capable of being read by any other software. Basically, through machine readability, an invoice can be uniformly-interpreted.
3) In addition to the above, this new system of e-invoicing aims to make invoice reporting an integral part of a business process and remove the tedious task of invoice-compilation at the end of a return period. Claiming fictitious Input Tax Credit (ITC) by raising fake invoices is also one of the biggest challenges currently faced by tax authorities.
4) The e-invoice system will help to reduce the number of fraud cases as the tax authorities will have access to data in real-time. The basic aim behind adoption of e-invoice system by tax departments is ability to pre-populate the return and to reduce the reconciliation problems.
B) What is E Invoicing:-
1) E Invoicing means generation of documents such as a Tax Invoice, Credit Note, Debit Note, etc through a government portal, by transferring each data relating to such document in JSON file on the portal.
2) Most of People believe that E Invoicing means invoice will be prepared through government portal, but it is not true. Invoices will continue to be generated through regular accounting or invoicing software. But the difference is that, a JSON file containing all details of the invoice will be generated after preparing invoice and uploaded on the government portal. The portal will verify the correctness of the data entered therein and generate a unique Reference Number known as Invoice Reference Number (IRN).
3) Taxpayer can enter the invoice details in bulk generation tool available on e-invoice portal which in turn will create JSON file for uploading on the e-invoice system.
C) Applicability of E-Invoicing:-
1) As per Notification No. 70/2019 Central Tax Dt. 13th December, 2019, the provisions relating to E Invoicing has been made applicable to,
(a) Registered person whose aggregate turnover in a financial year exceeds Rs. 100 Crores and
(b) In respect of all supplies made to Registered Person (B2B Supplies) only.
2) As per Notification No. 72/2019 Central Tax Dt. 13th December, 2019, Invoice issued by a registered person, whose aggregate turnover in a financial year exceeds five hundred crore rupees, to an unregistered person (hereinafter referred to as B2C invoice), shall have Quick Response (QR)code.
D) Invoice Reference Number (IRN):-
1) The Invoice Reference Number (IRN) is a 64 character unique number generated by the e-invoice system for every document such as an invoice or debit or credit note to be submitted on the e-invoice system.
2) This shall be unique to each invoice and hence be the unique identity for each invoice for the entire financial year in the entire GST System for a taxpayer.
E) QR Code:-
1) E-invoice system will generate a unique 64 character length Invoice Reference Number (IRN) and digitally sign the e-invoice and the QR code (Quick response Code). The QR code will enable quick view, validation and access of the invoices from the GST system from hand held devices.
2) The QR code will consist of the following e-invoice parameters:-
(a) GSTIN of supplier.
(b) GSTIN of Recipient.
(c) Invoice number as given by Supplier.
(d) Date of generation of invoice.
(e) Invoice value (taxable value and gross tax).
(f) Number of line items.
(g) HSN Code of main item (the line item having highest taxable value).
(h) Unique Invoice Reference Number.
3) The digitally sign QR code will have a unique IRN which can be verified on the central portal as well as by an Offline App by officer. This will be helpful for tax officers checking the invoice on the roadside where
Internet may not be available all the time.
F) Benefits of E-invoice System:-
(a) One time reporting on B2B, B2G and export invoice data in the form it is generated to reduce reporting in multiple formats.
(b) Reconciliation and data verification between suppliers and recipient will be seamless and thus provide better control over input tax credit computation and claim.
(c) Reduction in overall compliance burden. Substantial reduction in input credit verification issues as same data will get reported to tax department as well to buyer in his inward
supply (purchase) register.
(d) Auto-generation of Sales and Purchase Registers (ANX-1 and ANX-2). To generate Sales and purchase register (ANX-1 and ANX-2) from this data to keep the Return (RET-1 etc.) ready for filing
under New Return.
(e) Reduction of tax evasion, System level matching of input credit and output tax.
(f) Near real-time availability of information to all the relevant participants in the supply chain.
(g) On receipt of info thru GST System as buyer can do reconciliation with his Purchase Order and accept/reject in time under New Return
(h) Environment friendly - The need of the paper form of the multiple copies of way bill is eliminated. Hence, the tons of paper are saved per day.
G) How E-invoice will be beneficial to taxpayers:-
(a) Save time:- With e-invoicing, many unnecessary steps are cut out of the invoicing process. Both you and your customer will be saving time using e-invoicing system.
(b) Reduce costs:- With paperless invoicing, you do not have to pay for paper or for postal fees. Further, by saving time with e-invoicing instead of using templates and emailing PDFs, you save working time.
Concentrate on other value-adding tasks instead. We all know time is money!
(c) Reduce mistakes:- By minimizing manual input and increasing automation, mistakes and typos are reduced.
(d) Offer better customer service:- It is more convenient for customer to get an e-invoice to their desired platform receiving an e-invoice instead of a paper invoice saves up to 90% on processing costs.
(e) Easier to keep track of invoices:- Know when an invoice has been sent, viewed, and paid when using einvoicing system. You will know for sure that the invoice is sent and received.
(f) A higher degree of control and insight into the invoicing process: If you use online invoicing software, everything is saved on one platform which is accessible from anywhere on any device.
H) How to generate E Invoice:-
1) Step 1 : Invoice & JSON File Generation.
(a) Registered dealer is required to generate invoice as per its routine practice in its own accounting software.
(b) The invoice must confirm to the e-invoice standard. The seller's software should support creation of json file containing all details.
(c) If the supplier's software does not have feature of json file creation, they can do so by downloading offline utility for JSON file creation and then submit the same.
(d) Taxpayer must thereafter raise a normal Tax Invoice on that software. It must provide all the mandatory fields such as vendor name and address, GSTN of the supplier, transaction value, Item rate, GST rate
applicable, and Tax amount.
(e) Final JSON file will be uploaded on the IRP (Invoice Registration Portal). IRP will only take JSON.
2) Step 2 : Uploading of JSON.
(a) The supplier first needs to register on any one of the 10 IRPs identified by the government. Registration process would be simple with basic details required. The government has identified following IRPs.
i) www.einvoice1.gst.gov.in
ii) www.einvoice2.gst.gov.in
iii) www.einvoice3.gst.gov.in
iv) www.einvoice4.gst.gov.in
v) www.einvoice5.gst.gov.in
vi) www.einvoice6.gst.gov.in
vii) www.einvoice7.gst.gov.in
viii) www.einvoice8.gst.gov.in
ix) www.einvoice9.gst.gov.in
x) www.einvoice10.gst.gov.in
3) Step 3 : Data Validation by IRP.
(a) Once the data is successfully validated by the IRP, it will register the invoice on the portal and generate a Unique Invoice Number which is known as the Invoice Registration Number (IRN).
(b) The IRP will validate the IRN from Central Registry to ensure that same invoice of that supplier is not repeated.
(c) Once the data is confirmed by the Central Registry, IRP will add its signature on the Invoice Data as well as a QR Code to the JSON.
(d) Invoice with a valid digital signature of IRP will be a valid invoice.
4) Step 4 : Invoice Sharing
(a) The IRP will have the facility to directly e-mail the signed invoice to the buyer's e-mail address.
(b) The IRP will also transmit the invoice data from its portal to E Way Bill Portal and also the ANX 1 of the Supplier and ANX 2 of the buyer.
I) Features of the E-invoice system:-
(a) User friendly System:- The system is user friendly with lots of easy to use operations by the users.
(b) Easy and quick generation of methods:- There are a number of methods are provided using which the users can easily and quickly generate the e-invoices.
(c) Multiple modes for e-invoice generation:- This system support different modes of e-invoice generation. The user can register the mode of e-invoice generation and use them for invoice generation.
(d) Creating own masters:- The user has a provision to create his own masters like customers, suppliers, products and transporters. The system facilitates to use them while generating the e-invoice.
(e) Managing sub-users:- The taxpayer or registered person can create, modify and freeze the sub-users for generation of the e-invoice and assign them to his employees or branches as per need. This system
also facilitates him to assign the roles/activities to be played by the sub-user on the system.
(f) Monitoring the IRN generated:- The system facilitates the registered person to know the number of INR, generated by them on a specific date
(g) Generating the GSTR-1 from the e-invoices:- Based on the e-invoice generated, the system pulls the GSTR-1 related information and pushes it to the taxpayers GSTR-1 returns. This avoids the taxpayers in
uploading these transaction details.
(h) QR bar code on the e-invoice:- The QR code on the e-invoice helps for easier and faster verification of the e-invoices.
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