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E-invoice under GST is not very different from a normal invoice, except that the e-invoice carries an IRN and QR Code on it.
Since e-invoicing under GST has been announced in 2020, taxpayers are contemplating the effects of the mandate on their day-to-day business. What started as a compliance requirement, GST and then e-invoicing have changed how businesses work. Compliance is now no longer a cost centre in CFO’s checklist, but with e-invoicing coming in, this has fast transformed into a core business process.
This article will help you to understand the basics of e-invoice, Rules related to e-invoicing, amendments and ways how to generate an e-invoice.
What is e-invoice under GST?
E-invoice, or electronic invoice, is a system-generated invoice which is pre-registered with the government on Invoice Registration Portal before it is shared with the vendor. The IRP authenticates the invoice data thus received from the taxpayer with a unique IRN (Invoice Reference Number) which needs to be printed on the invoice. Additionally, IRP also supplies a QR code for every invoice data to make it system-readable.
What is Rule 48(4) of CGST Rules 2017
The CGST Rules 2017 govern the implementation of GST in India. Rule 48 of CGST Rules 2017 states the manner of issuing a tax invoice under GST. This rule was amended and new invoicing rules have been added after the commencement of e-invoicing in the country. We have covered it all here.
Rule 48 states that:
- The invoice shall be prepared in triplicate, in the case of the 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. - 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. - The serial number of invoices issued during a tax period shall be furnished electronically through the common portal in FORM GSTR-1.
Following amendments were introduced to Rule number 48 to introduce e-invoicing:
Sub-rules (4), (5) and (6) inserted vide Central Tax GST Notification 68/2019 dated 13/12/2019. This amendment notified about generating invoice reference numbers as per the conditions and format prescribed.
Rule 48 (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.
(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).
Who needs to generate e-invoices?
While the notification laid out the onus of generating e-invoices on a certain class of taxpayers, further notifications clarified who will be covered under the mandate.
The class of registered persons were notified vide the following notification:
GST Notification No. 13/2020 laid out that the primary factor to decide who must generate the e-invoices depends upon the aggregate annual turnover of the company. Introduced in a phased manner, this notification is amended further to lower the threshold to cover entities with INR 10 Cr AATO now. If the Annual Aggregate Turnover (AATO) of a company crosses the e-invoicing threshold limit, then the company is required to generate e-invoices. Once a company starts generating e-invoices, even if the turnover reduces from the threshold limit, the company is required to continue generating e-invoices.
Note: The principal notification No. 13/2020 – Central Tax, dated the 21st March, 2020 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 196(E), dated the 21st March, 2020 and was last amended vide notification No. 01/2022-Central Tax, dated the 24th February 2022, published vide number G.S.R. 159(E), dated the 24th February, 2022
As per the sub rule (4) of rule 48 of the Central Goods & Services Tax Rules, 2017, the latest addition from the government made an amendment to notification no. 13/2020, as “In the said notification, in the first paragraph, with effect from the 1st day of October, 2022, for the words “twenty crore rupees”, the words “ten crore rupees” shall be substituted.”
Who Need Not Generate an E-Invoice Under GST?
A certain class of entities have been exempted from the e-invoicing mandate. ING Rule was added to Rule 48 of CGST Act 2017
“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”.
The entities listed below are exempt from generating e-invoices with respect to the GST notification no. 13/2020 - Central Tax.
- Insurance Companies
- NBFCs
- Banks
- Financial Institutions
- Goods & Transport Agency
- Supplier of Passenger Transport Services
- Supplier of Services by way of admission to the exhibition of films.
- Special Economic Zones (SEZ) Units.
What Documents are Required to be registered under E-Invoice System
As taxpayers, you are required to report the below-listed documents to the e-invoicing system.
- Invoice from the supplier
- Credit note by the supplier
- Debit note by the supplier
Data Points Required for E-invoice
To generate an e-Invoice under GST, the data points are based essentially on the e-invoice schema and template. So, there are approximately 140 data fields in the standard schema. Out of the 140, about 50 data fields are mandatory to be filled.
The 50 mandatory fields ask for details like buyer and supplier information, invoice value, tax rate, description, HSN of goods and/or services, taxable value and tax amounts. The rest of the 140 fields address information related to payment, for instance, bank account numbers, mode of payment, reference document number, etc.
Read here to know ‘How to cancel an e-invoice?’
What if the Turnover Limit is Crossed?
The latest addition to the e-invoicing under GST system was the group of companies with a revenue of over INR 10 Crores. This was done to embrace small and medium businesses under the umbrella and help them streamline their invoicing process.
In case the turnover of your business crosses one of the categories we discussed above, you will have to ensure your accounts team, vendors, and clients are informed. You will have to verify and prepare your systems as well. If turnover is crossed in the current FY then E-invoicing is required to be done from the next FY.
Additionally, it is recommended to find an e-invoicing solution provider like IRIS IRP.
There are essentially 5 things to be taken care of when your business crosses the categories. You can learn more about the checklist here: E-invoice Turnover Limit.
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