E-Invoicing System: Everything You Need to Know in 2023

Looking for information on the GST E-Invoicing System? Then you’ve come to the correct spot to learn about it, but before we get started, let us have a quick overview of what GST is. It is a multi-stage, all-encompassing tax system that applies to the sale of goods and services. The fundamental goal of this taxing scheme, which is applicable throughout India, is to reduce the cascading effect of other indirect taxes. 

The GST (Goods and Services Tax) is a tax on both goods and services. It is an indirect tax that was implemented to replace a variety of other indirect taxes such as VAT, service tax, purchase tax, excise duty, and so on. GST is a tax applied in India on the supply of certain goods and services. It is a single tax that is imposed across the country.

When it comes to GST in 2020, e-invoicing has been the most significant and widely discussed shift. Industry-specific invoicing practices have existed. Despite the different means of preparing invoices, the overall taxpayers were supportive of a single approach to e-invoicing. 

You can learn more about E-invoicing and other compliances under GST with the Best GST Course in India

Let’s look at the E-Invoicing system in the context of GST and its applicability using the following headings and parameters: 

1. E-invoicing System: Where It All Began And Where It Is Now 

In May 2019, the first committee was formed to discuss the usability of GST E-Invoices and to design an e-invoicing implementation plan for India, taking into account global implementations. Several draughts of the E-invoicing system have been released since the committee’s recommendations.

E-Invoicing specifications were presented in numerous iterations before the E-Invoice scheme was released in January 2020. However, at the 39th GST Council meeting on 14th March 2020. The mandate was put back to 1st October 2020. In a gradual implementation, the mandate went live on October 1, 2020.

2. Why Should You Use E-invoicing? 

Governments around the world are progressively requiring the e-invoicing system, owing to the prevalence of GST evasion. 

Even before the GST era, the government was attempting to combat tax leakage and fraud through false invoices. In India, the e-invoicing system is being offered as a solution to this problem by demanding approval of each invoice via a government portal. Fraudulent changes/ adjustment is discouraged when invoices are reported in real-time.

 In addition to preventing tax evasion, the deployment of the e-invoicing system under the GST will benefit taxpayers.

 The Following Are Just Some of The Most Significant Benefits: 

● For all of your GST filling, you’ll only have to report the invoicing details once. 

● E-way Bill creation with part A and B slips is seamless.

● The compatibility of numerous software programmers is ensured by the standard invoicing system. 

● Invoices prepared by the supplier are tracked in real-time. 

● During reconciliation, there were fewer invoice inconsistencies.

● ITC claim that is simple and precise 

3. What Is The Difference Between An E-invoice And An E-invoice Under GST? 

E-invoicing, often known as electronic invoicing, is a GST- compliant electronic authentication technique. All B2B and export invoices generated by a business must be registered with the government system, the invoice registration portal (IRP), and each invoice must be assigned a unique identification number called an Invoice Reference Number (IRN).

In addition to IRN, the IRP will create a digitally signed QR code with selected invoice details and digitally sign the invoice data that is provided.  As a result, an e-invoice is a document that contains an IRN and a digitally signed QR code printed on it.

The information of an IRN will be made available on the GST portal once it has been generated and the invoice has been verified real-time access to the EWB portal. 

4. Who Requires the Creation of GST E-invoices?

Based on AATO (Aggregate Annual Turnover):

GST E-Invoices have been gradually introduced in the country, based on the companies’ aggregate annual turnover. On October 1, 2020, the first phase went live for enterprises with a turnover of more than Rs.500 crore. For enterprises with a turnover of more than Rs.100CR, the second phase became live.

Based on The Fiscal Year: 

As stated in the Not. Notification No. 13/2020 was amended by notification No. 13/2020.Not.70/2020 and No.70/2020 any previous financial year from 2017-18 onwards must be evaluated to determine the applicability of the E-invoicing mandate under No. 88/2020, AATO. The AATO is calculated based on GST returns. On the E-invoice portal, the GST system has also made it possible to examine the applicability. 

Based on the Entity Type: 

Suppliers are the only ones who can generate an e-invoice. E-invoices cannot be generated by receipts or transporters. On behalf of the sellers on their platforms, e-commerce operators can generate e-invoices. The E-invoicing system is something that E-commerce operators should be aware of. 

5. Who Doesn’t Need to Create GST E-invoices? 

 The following individuals are exempt from issuing GST E-invoices: 

● A company that provides insurance 

● A financial institution  

● Institution of finance 

● NBFCs 

● GTA

6. What Type of Documents Must Be Reported to the GST System as Part of the E-invoicing Process? 

The following papers must be reported to the e-invoice system by the taxpayers. 

● Suppliers Invoice 

● Suppliers Credit Note 

● Suppliers Debit Note 

 As a result, E-Invoicing does not require the reporting of bills of supply and delivery challan/job work challan. 

 7. What Types of Transactions Must Be Recorded as Part of the E-invoicing System? 

Only B2B (including B2G – Business to government) transactions are eligible for electronic Invoicing. Domestic and international B2B Supplies, as well as exports (including considered exports), supply to SEZ B2B Reverse charge invoices, and supplies via E-commerce operators are all covered by the E-Invoicing system.

 E-Invoicing and RCM transactions are both applicable.

● If an E-commerce transaction is covered by RCM, then GST E-invoicing also applies. In addition, an e-commerce operator can generate an IRN for the product. 

● As we can see, GTA is an RCM notified service, but it is currently exempt from the E-invoicing system. Although SEZ units are free from E-Invoicing, the SEZ developer is required to generate IRN because they are subject to the E-Invoice regulation. 

For B2C (Business to consumer) transactions, e-invoicing is not required. However, invoices for taxpayers having an AATO of more than Rs 500 crore must include a self-generated QR code. Import transactions are not covered by E-Invoicing either.  

8. What Is the Process for Creating GST E-Invoices? 

The taxpayer’s system generates an invoice, which is subsequently sent to the Invoice Registration portal (IRP) for approval. The invoice data is updated with IRPS digital signature and a QR code, as well as the Invoice Registration Number, once it has been authorized (IRN). An E-invoice is a name for this.

9. What Information Is Required to Generate GST E-invoices?

The e-invoice scheme and e-invoicing template provide the data points needed to construct an e-invoice. In the e-invoice standard schema, there are around 140 data fields, of which approximately 50 are obligatory or necessary subject to certain criteria.

 Details such as customer and supplier information, invoice value, tax rate, product description and HSN, taxable value, and tax amounts are all required. Payment-related data elements, such as bank account number, manner of payment, pre-tax values, reference document number, and so on, are optional data fields. 

Per e-invoice, the maximum number of line items allowed is 1000. If any of the essential fields require no value, a Nil value should be given to the field to ensure a successful IRN generation. 

10. Can you create an E-Way Bill in addition to an E-Invoice?

 E-way bill generation is now entwined with E-invoicing. For the documents that qualify, IRP can be utilized to create not only IRN but also E-way bills. As a result, the IRP system returns either an IRN or an E-way Bill Number, or both, depending on the data sent. If the taxpayer provides transportation details together with invoice details, IRP connects with the E-way Bill gateway in real-time and generates an E-way bill. See E-invoicing and E-way Bill: Generating E-way Bill Using IRP for further details.

11. What Exactly Is A QR Code? What Role Does It Play in the E-invoicing Mandate?

 When invoices are successfully registered on the IRP, the IRP generates a digitally signed QR Code, as well as a unique IRN and digitally signed full invoice data. Selected information from the invoice is included in the IRN QR Code created for B2B transactions. For every document that has been registered with IRN and generated by any organization, the structure of QR code for B2B invoice or transaction remains the same. The values assigned to these standard fields vary depending on the invoice’s content. 

12. Is the B2C Invoice QR Code Related to E-Invoicing System?

While the availability of QR codes on B2C invoices was announced at the same time as E-Invoice alerts, the two are unconnected. Taxpayers with an AATO of moreover Rs 500 crore must include a self-generated QR Code on B2C invoices to allow customers to use simple payment options such as scan and pay. In order to move towards a digital economy, e-invoicing and QR codes for B2B invoices were mandatory.  

13. What Should GST E-invoices Receiver Look for?

The extra information relating to invoice reference numbers will now be included in the e-invoices received from suppliers (to whom the mandate applies) (IRN).

As a result, recipients of e-invoices must be aware of the mandate’s applicability to their vendor list. Not only that, but recipients must also be aware of which documents, such as CDNs, DBNs, and invoices, are anticipated to contain IRN. 

14. What Impact Will GST E-Invoices Have on the Procurement Cycle?

As a recipient of standard e-invoices, the accounting systems can now automate the recording of purchase invoices, resulting in increased efficiency and accuracy of data in source systems. Furthermore, because IRN is unique to each invoice, it may be used to find similar invoices, which can help with reconciliation and ITC calculations. 

15. Under GST, What Software/Application Can Be Utilized To Generate An E-invoice?

An E-invoice can be generated using any software/tool that supports the supplied e-invoicing format, contrary to popular perception. It is critical to get the system ready to send and receive invoice data. It’s crucial to remember that taxpayers will continue to generate invoices. Taxpayers have the choice of using systems that can be integrated into their present invoicing procedures or manually creating IRN.

However, because there are numerous duties after IRN generation, such as getting an invoice printed with a QR code and validating its auto-population in GSTR 1, it is advisable to choose a solution that can meet all of your e-invoicing and GST compliance demands.

IRIS Onyx is an all-in-one e-invoicing solution that may make your e-invoicing experience a breeze. It’s a cloud-based advanced e-invoicing solution that can connect to your billing systems in a variety of ways and enable you to produce IRN without disturbing your current operations. 

 What Are the Advantages of Electronic Invoicing? 

●     The technology will improve the automation of the GST return filing process by making it easier, faster, and more accurate: The return filing process can be made easier, faster, and more accurate with e-invoicing.  

●      Updating GST Returns saves a lot of time and eliminates: Human errors in data entry, as well as avoiding substantial reconciliation concerns.  

●     Elimination of data entry mistakes: When data is fed from invoice to e-way bill and GSTR-1, this will also assure the elimination of data entry errors. 

●     Offer data to the department: In circumstances where invoices are issued and then canceled, or revisions are made in the return forms or invoices are canceled, or credit notes are issued, etc., E-invoicing will provide data to the department to determine the genuineness and to avoid fraudulent invoicing. 

●     Reduced fraud and phone GST invoices: Due to the real-time tracking of invoices by vendors and the government, fraud and fake GST invoices would be reduced. 

●     Input credit can be matched with output tax details: GSTN can trace false tax credit claims easier now that input credit can be connected with output tax details. 

●     Switch to desk audits: Rather than physical audits, switching to desk audits will benefit the department. As a result, assessors will save a significant amount of time and effort.

Frequently Asked Questions:

1. What are GST e-invoices?

It is a process on the part of the business or service providers to incorporate a digital invoice that is generated at the government GST portal.

2. Who is eligible for E-invoice?

All the GST registered persons are eligible for this whose aggregate turnover exceeds Rs. 50 crores in the financial year.

3. Is e-invoicing mandatory for all?

This is mandatory for all those people whose aggregate turnover crossed the amount of Rs. 50 crores in previous financial years.