E-Invoice Mandate

E-Invoicing mandate under GST refers to the process of electronically generating and submitting invoices to the Invoice Registration Portal (IRP) system for authentication and recording. E-invoicing under GST was introduced 2 years back in 2020 to facilitate automation and compliance for businesses.

What is e-invoicing under GST?

E-invoicing, or electronic invoicing, is a system designed for B2B (Business to business) invoices and several other documents to be electronically authenticated with the GSTN (Goods and Services Tax Network) system.

It is how businesses submit an already generated standard invoice to a common portal and get it registered with the government systems to generate a unique identifier – Invoice Registration Number (IRN). In addition to the IRN, the IRP also provides a QR (Quick Response) code to each invoice for easy interoperability of physical invoices.

Applicability of e-invoicing under GST?

It all began in the 35th meeting of the GST Council as they took a decision to implement a system of e-invoicing. Initially, it covered only specific categories of taxpayers, mostly large corporations based on Aggregate Annual Turnover (AATO). Eventually, it expanded to cover small and medium businesses as well. The mandate was scheduled to go live from April 1, 2020, but it was pushed to October 1, 2020, starting in a phased manner.

The mandate has expanded to cover larger taxpayer base over the years in the following manner

E-Invoicing Applicability Timeline

GST Notification No. Companies with AATO (FY 17-18 onwards) Effective Date to start e-invoicing
61/2020 dated 20-07-2020
Rs. 500 Cr+
1st October 2020
88/2020 dated 10-11-2020
Rs. 100 Cr+
1st January 2021
05/2021 dated 08-03-2021
Rs. 50 Cr+
1st April 2021
01/2022 dated 24-02-2022
Rs. 20 Cr+
1st April 2022
17/2022 dated 01-08-2022
Rs. 10 Cr+
1st October 2022
10/2023 dated 10-05-2023
Rs. 5 Cr+
1st August 2023

The applicability of e-invoicing should be ascertained based on 2 aspects:

Based on the Financial Year

As per the GST Notification No. 13/2020 amended vide GST Notification No. 70/2020 and GST Notification No. 88/2020, AATO in any preceding financial year from 2017-18 onwards needs to be considered to ascertain the applicability of e-invoicing mandate. The AATO is as per GST Returns.

Based on Entity Type

Only Regular and SEZ Developers can generate e-invoice. Also, E-commerce operators can generate e-invoices on behalf of the sellers on their platforms. : E-invoice can be generated only by suppliers. The recipients and transporters cannot generate e-invoice.

Check Your E-Invoice Applicability Here

How does e-invoicing under GST work?

E-Invoicing under GST facilitates real-time information transfer making manual data-entry redundant when it comes to filing GSTR-1 returns since the information is directly passed to the GST portal by the IRP.

Issue of IRN

In the e-invoicing system, an identification number is issued to every invoice. The identification number is called an Invoice Reference Number, or the IRN.

De-duplication

Each time an identification number is generated it is passed through de-duplication system to check for duplication by comparing with other already produced IRN data held in the Central Depository. This is done by all the Invoice Registration Portals through which e-invoice is being generated.

Data Sharing

Once identification number is generated the registered invoice data is simultaneously shared with the supplier, the GST portal and EWB system by the respective IRP.

Auto-population

From the GST portal, this info is auto populated in the buyer’s GSTR 2B.

Benefits of Einvoicing | How does einvoicing help businesses?

In addition to preventing tax fraud, e-invoicing under GST also possesses numerous benefits to businesses. Let us explore some of the advantages.

Easy Reconciliation

Since the introduction of GST, companies are struggling to match their purchase data with supplier’s returns in GSTR 2A. The computer readability and auto-population of einvoices reduces mismatch errors and aids in data reconciliation.

Easy Credit

With invoice data available in a consumable format, it opens credit opportunities for businesses as many lenders have already started building their credit models around GST data. This gives simpler access to credit avenues like bill discounting or financing.

Inter-operability

The IRN and QR code and JSON Response make invoice data interoperable. Hence, einvoices created on one software can also be accessed by another, thereby reducing data-entry errors.

Automation

Easier GST filing since most details get auto populated.

Real-Time

The status of invoices can be tracked in real-time.