1. Background of e-invoicing
You might get a pop-up in your mind, why is Government so determined to introduce e-invoicing?
The answer to this will be: if you want to understand business of a particular taxpayer then you only need two datasets:
a) What is their inward supply i.e. what kind of purchases does the entity make, at what value and from whom?
b) What is their outward supply i.e. what kind of sales do they make, at what value and to whom?
If you have access to these two datasets, that too on a ‘real-time’ basis, then you know the ‘pulse’ of the business i.e. the core of the business (which can further help in determining the genuineness or other-wise of the transactions).
2. E-invoicing globally
3. Digital India and E-invoicing
Till 1990s, inspectors used to be deputed at each factory (called as ‘Physical assessment’ era). Now, as we are in ‘digital era’, one can state that e-invoicing is equivalent of ‘digital assessment’. In a way there is transition from ‘inspector’ era to ‘e’-nspector era!
4. Introduction of e-invoicing in India
Let us now discuss the applicability of e-invoicing to a registered person on the basis of their aggregate turnover.
If in any of the previous years from 2017-18 onwards exceeds a prescribed turnover limit (as per relevant notifications), then issuing e-invoices is mandatory for the said taxpayer.
Initially, when this facility was introduced on 1.10.2020, it was made applicable if the aggregate turnover of the taxpayer was more than 500 Cr. Over a period of time, it has been made applicable to smaller entities as below:
|With effect from
|Above 500 crores
|Above 100 crores
|Above 50 crores
|Above 20 crores
|Above 10 crores
|XX.XX.20XX (near future)
|Above 5 crore?
|XX.XX.20XX (near future)
|Above 1 crore?
|XX.XX.20XX (near future)
|Above say 20 lacs?
It may be noted that in just two years, the e-invoicing threshold has been brought down from INR 500 crores to just INR 10 crores!
Further, it is pertinent to note that once e-invoicing is applicable to your organization then it will continue to apply till ‘eternity’ (or till your business continues to exist, whichever is earlier).
E-Invoice is a system in which B2B invoices are required to be reported by the taxpayers electronically on a common GST portal.
Under the electronic invoicing system, an identification number is issued against every invoice by the Invoice Registration Portal (IRP).
In e-invoicing system, first, the invoice needs to be shared with Government portal (for generating QR code) and then only the invoice can be shared with the customer (alongwith QR code).
No, presently, only the notified class of persons will be allowed/enabled to report invoices to IRP.
If your turnover exceeds the prescribed limit in the current financial year, then starting e-invoicing would be required w.e.f. beginning of next financial year. In the example given, as you had crossed the threshold during 2020-21, e-invoicing will be applicable w.e.f. 1st April 2021
5. E-invoicing applicability to various types of supply
Answer is no. E-invoicing is applicable to:
- B2B supply
- Deemed Supply (say to a Distinct person)
- Supply by a SEZ Developer
- Export of goods/ services
- Deemed exports
- Credit notes
- Debit notes
- Supply to Government \ PSU’s
E-invoicing is not applicable to:
- B2C supply
- Bill of supply
- Job work
- Exempt supply
- Financial credit note
E-invoicing is not applicable to:
- Special Economic Zone Units (Kindly note e-invoicing is applicable to Economic Zone Developers)
- Insurance companies
- Banking companies or financial institutions, including a non-banking financial company (NBFC)
- Goods Transport Agency (GTA) supplying services in relation to transportation of goods by road in a goods carriage
- Suppliers of passenger transportation service
- Suppliers of services by way of admission to exhibition of cinematograph films in multiplex screens
- Input Service Distributor
- Persons registered in terms of Rule 14 of CGST Rules (OIDAR)
If the invoice issued by notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.
For example, a taxpayer (say, a Firm of Advocates having aggregate turnover in a FY is more than Rs. 500 Cr.) is supplying services to a company (who will be discharging tax liability as recipient under RCM), such invoices have to be reported by the notified person to IRP.
On the other hand, where supplies are received by from (i) an unregistered person or (ii) through import of services, e-invoicing doesn’t arise / not applicable.
6. Various documents and e-invoicing
The documents for which e-invoicing is applicable are:
- Credit notes
- Debit notes
The aforesaid documents when issued by notified class of taxpayers to a registered persons (i.e. B2B) or for the purpose of Exports are currently covered under e-invoice.
As you all know an e-way bill can be generated by a supplier, recipient or the transporter. However, in case of e-invoice, it can only be generated by the supplier (in certain cases an electronic commerce operator can issue an e-invoice).
Where e-invoicing is applicable, there is no need of issuing invoice copies in triplicate/duplicate. This is specified in Rule 48(6) of CGST Rules
No, only the credit notes (i.e. with GST) and debit notes (i.e. with GST) issued under Section 34 of CGST/ SGST Act have to be reported
Yes. e-invoicing by notified persons is mandated for supply of goods or services or both to a registered person.
Invoice Registration Number (‘IRN’) is a unique 64 digit character hash which is generated after the invoice is uploaded to the Invoice Registration Portal and it is verified by it.
Example of IRN: 35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06bbe
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. IRN and IRN date will also be shown along with source marked as ‘e-invoice’ (except where such details were modified/re-uploaded by taxpayer).
If the e-invoice is not auto populated in the GSTR-1 of the said month then such data shall be manually filled in by the registered person. Feedback on such discrepancies can be shared here: https://selfservice.gstsystem.in/
7. Process flow and e-invoicing
Taxpayers will continue to create their GST invoices on their own Accounting/Billing/ERP Systems. These invoices will now be reported to ‘Invoice Registration Portal (IRP)’.
On reporting, IRP will generate a unique ‘Invoice Reference Number (IRN)’, digitally sign it and return the e-invoice with QR code. A GST invoice will be valid only with a valid IRN.
IRP also generates QR code containing the unique IRN along with certain other key particulars. The QR code (which can be printed on invoice) enables offline verification of the fact whether the e-invoice has been reported on the IRP or not (using Mobile App etc.)
Invoice date and e-invoicing reporting date can be different (although this situation should be avoided as e-invoice should be generated on a real time basis). As for all purposes e-invoice is considered as valid document and thus, date appearing on e-invoice (as specified by the taxpayer) may be considered.
Yes (although this situation should be avoided as e-invoice should be generated on a real time basis).
Rule 48 (q) prescribes that invoice should be signed by authorised representative (physically or digitally). Further, Proviso to Rule 46 states “Provided also that the signature or digital signature of the supplier or his authorised representative shall not be required in the case of issuance of an electronic invoice in accordance with the provisions of the Information Technology Act,2000 (21 of 2000)”
Given aforesaid, since E-invoices carry QR code, the requirement of physical/ digital signature by an authorized representative should be declared by CBIC as redundant formality and hence it should be removed. Meanwhile, to avoid dispute, its preferable to sign the invoices (digitally o physically).
The Invoice Registration Portal and the e-way bill portal are inter connected, hence Part A of the e-way bill is generated and filled automatically by the system but the supplier/ transporter is required to fill in Part B of e-way bill.
In case both Part-A and Part-B of e-way bill are provided while reporting invoice details to IRP, they will be used to generate e-way bill. In case Part-B details are not provided at the time of reporting invoice to IRP, the same will have to be provided by the user through ‘e-way bill’ tab in IRP log in or e-Way Bill Portal, so as to generate e-way bill.
All invoice information is transferred from https://einvoice1.gst.gov.in/ portal to both the GST portal and e-way bill portal in real-time. Therefore, it eliminates the need for manual data entry while filing GSTR-1 return as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to GST portal.
Yes, you can use the same data for generation of e-way bill. Ideally, only Part B of the e-way bill needs to be filled.
Yes (as only on the basis of e-invoice ITC can be availed by recipient).
8. Tool for e-invoicing
Yes. For entities not having their own ERP/Software solutions, they can use the offline utility (‘bulk generation tool’) downloadable from the e-invoice portal. Through this, invoice data can be easily reported to IRP and obtain IRN/signed e-invoice . Bulk uploading of invoices through the utility offline bulk generation tool is possible.
The Government has provided us with various mechanism:
- Offline bulk upload facility
- Direct API integration
- API integration through GSP
Taxpayers cam either use e-invoicing tool provided by Government or a tool provided by private accounting / ERP players. If the registered person is equipped with any accounting software/ ERP, then the taxpayer may use such software to generate the invoice and further the IRP portal to validate the same.
Bulk IRN generation facility is provided by the Invoice Registration Portal (IRP) where multiple invoices can be uploaded at once. Refer
Yes, it can be checked at https://einvoice1.gst.gov.in/Others/EinvEnabled
If you go onto the portal for e-invoice and check for whether the option for e-invoice is ‘enabled’ for a particular taxpayer, then one may get to know that it is enabled for the said taxpayer . However, this does not imply that the taxpayer is liable to issue e-invoices, it simply means that the facility is ‘enabled’. Taxpayers need to check the applicability provisions to see whether they are liable to issue e-invoice or not.
9. Buyer and e-invoicing
The recipients need to ensure that if their supplier is liable to issue e-invoice then the said supplier issues e-invoices, else the right to claim ITC of the recipient may get jeopardized. This is because of Rule 48 (5) read with Section 16 (2) of CGST Act. Rule 48 (5) states as under:
“(5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said subrule shall not be treated as an invoice.”
Section 16 (2) states that ITC is available only on the basis of tax invoice. Thus, basis Rule 48 (5) GST Authorities may try to deny ITC
Anyone can verify the authenticity or the correctness of e-invoice by uploading the signed JSON file or Signed QR Code into e-invoice system. The option ‘Verify Signed Invoice’ under Search option can be selected and the signed JSON file can be uploaded and verified .
Similarly, the QR Code Verify app may be downloaded and used to verify the QR Code printed on the Invoice.
10. Compliances and e-invoicing
The IRP and the e-way bill system are interconnected and therefore this may reduce the work of uploading the same data again and again. Part A of the e-way bill will be auto-populated with the help of this system. Also, GSTR-1 gets auto-populated.
Simple answer is no as many other fields still need to be verified/ amended / added / reviewed as stated below:
|Taxable outward supplies made to registered persons (including UIN-holders) other than supplies covered by Table 6
Supplies other than those
(i) attracting reverse charge and
(ii) supplies made through e-commerce operator
|Supplies attracting tax on reverse charge basis
|Supplies made through e-commerce operator attracting TCS (operator wise, rate wise)
|Zero rated supplies and Deemed Exports
|Supplies made to SEZ unit or SEZ Developer
|Amendments to taxable outward supply details furnished in returns for earlier tax periods in Table 4, 5 and 6 [including debit notes, credit notes, refund vouchers issued during current period and amendments thereof
|Debit Notes/Credit Notes/Refund voucher (Registered)
|HSN-wise summary of outward supplies
Already taxpayers need to reconcile numerous things (as below) and to that list e-invoicing is added again:
- E-invoices (B2B) and normal invoices (B2C) vis-à-vis GSTR-1
- E-invoices and normal invoices received vis-à-vis GSTR 2A/2B
- E-invoices vis-à-vis IRN generated
- E-invoices vis-à-vis E-way Bill etc
11. Printing e-invoices
Yes. It will be possible for both the seller as well as the buyer to print the invoice, using the signed JSON payload returned by the Invoice Registration Portal (IRP). The QR code will not be an image sent by the IRP but string, which the accounting/billing software or the ERP will read and convert into QR Code.
Seller must place the QR Code on the invoice. This will enable its validation.
Here are the steps to follow:
Login on the e-invoice portal using the username password and entering the captcha code.
Select ‘Print’ under 'E-Invoice' appearing on the left-hand side of the dashboard.
Enter the ACK No. or 64-character length invoice reference number and click ‘Go’
After reporting invoice details to IRP and receipt of IRN, at the time of issuing invoice to receiver (e.g. generating as PDF and printing as paper copy or forwarding via e-mail etc.), any further customization, i.e. insertion of company logo, additional text etc., can be made by respective ERP/billing/accounting software providers.
In the same way as it is being done now. For example, the large taxpayers can convert the signed e-invoice JSON into PDF and share the copy by e-mail or send printed copy by post, courier etc.
However, a mechanism to enable system-to-system exchange of e-invoices will be made available in due course by the GSTN.
12. Amending and cancelling e-invoices
No, we cannot. Once the invoice is furnished through the portal it cannot be amended. It can only be canceled within 24 hours from generation.
Yes, we can cancel an e-invoice within 24 hours from the generation of such an invoice. We cannot cancel an e-invoice after the expiry of 24 hours in any condition whatsoever. However, if the registered person still wishes to cancel / delete the invoice then such person shall delete the details from GSTR -1 as and when required.
We cannot completely delete an e-invoice, there will be a trace that an e-invoice was generated even if it gets canceled. The IRN so used in the canceled invoice cannot be used again for another invoice. This is because IRN is a string based on supplier’s GSTIN, document number, type of document and financial year.
There is a facility to the user to cancel the IRN, if active e-way bill is not there. That is, the eway bill is not generated or the e-way bill generated and later cancelled, then the user is allowed to cancel the IRN.
If taxpayer wants to cancel an e-invoice after the generation of e-way bill, then you will have to cancel the e-way bill first and then only the e-invoice can be canceled. Given that the e-way bill and e-invoice are canceled within 24 hours from the generation.
In such a case e-invoice may be cancelled, if such discrepancy is noticed within 24 hours following the generation of e-invoice. If such discrepancy is not noticed within aforementioned period, then the taxpayer is required to make changes in GSTR 1 of the said month (say through issuance of Credit Note).
E-invoice cannot be amended but only cancelled. In case its not possible to cancel the e-invoice then in such cases grievance (alongwith invoice number and specific issue) should be communicated to GST Helpdesk.
The taxpayer in any given situation cannot amend the details furnished in an e-invoice. The portal itself does not provide such option. The e-invoice can be cancelled within 24 hours from the generation. If the said 24 hours have lapsed, then credit note can be issued.
The QR code will consist of the following key particulars of e-invoice:
- GSTIN of Supplier
- GSTIN of Recipient
- Invoice number, as given by Supplier
- Date of generation of invoice
- Invoice value (taxable value and gross tax)
- Number of line items
- HSN Code of main item (line item having highest taxable value)
- Unique IRN (Invoice Reference Number/hash)
- IRN Generation Date
IRP is only a pass-through validation portal validating key fields. After the validation the IRN will generate QR code and IRN.
13. Scheme and e-invoicing
The schema contains both ‘mandatory’ as well as ‘optional’ fields.
The e-invoice which is not filled with ‘mandatory’ fields may not be regarded as an invoice at all. As regards, ‘optional’ fields, even if the optional fields are not filled, still its fine.
Examples of ‘mandatory’ are given below:
- Name of supplier
- GSTIN of supplier
- Address of supplier
- Name of buyer
- GSTIN of buyer
- Total tax amount
It may be noted that taxpayers cannot mention number the invoice as ‘001’. As a human, we understand it but the software\ machines cannot understand this numbering. Thus, taxpayers must ensure that valid nomenclature is used for e-invoices.
- Contract number
- Project reference
- Vender PO reference
- Expiry date
- Warranty date
- Amount due/ outstanding
14. Step plan for recipient
It is advised that entities should start their e-invoicing preparations early to comply with the system of e-invoicing. Entities should work with their IT/ ERP teams and see to it that they can scaled up whenever to comply with the rules and regulations, if required. For e-invoicing implementation, you should closely work with the Finance Department, Procurement Team, Sales Team, Logistics Team etc.