E-INVOICE UNDER GST

[NIRMALA RANAWAT]

Introduction:

We are now in the era where technology shall be leveraged by the tax administrators to check evasion. Adoption of a E-invoicing, dynamic QR code is a step in that direction.it was a good initiative toward better governance, accountability and transparency. To ensure that businesses get enough time to adapt to the new system of electronic invoicing, the GST Council has approved the introduction of e-invoicing in a phased
manner

• Businesses with a turnover of ₹500 crores and more, e-invoice is already introduced from 1st October 2020.
• Businesses with a turnover of ₹100 crores and more, it is applicable from 1st January, 2021.
• For businesses with a turnover of ₹50 crores and more, e-invoicing is applicable from 1st April,2021
• For businesses with a turnover of ₹20 crores and more, e-invoicing is applicable from 1st April, 2022

Phase Turnover limit From the date of application

1  ₹500 crores and more From 1st October 2020
2  ₹100 crores and more From 1st January, 2021
3  ₹50 crores and more From 1st April,2021
4  ₹20 crores and more From 1st April,2022

Government has issued Notification No. 01/2022 – CT reducing the turnover criteria to determine the applicability of E-invoicing from the present ₹ 50 crores to ₹ 20 crores.

The same will be applicable from 01.04.2022.

e-Invoicing only applies to Business-to-Business (B2B) transactions. Notified taxpayers with an annual aggregate turnover falling in the above turnover range in any previous financial year between 2017-18 to 2021-22 must comply with the system.

The fourth phase of e-invoicing may be challenging as it covers more than 1,80,000 small businesses. MSMEs have smaller teams controlling most of the business operations. They find it sufficient to ensure compliance and issue e-invoices to their customers on time while not exploring options to automate or improve business operations.

Further, it is enough for them if their GSTR-1 gets auto-filled with accurate e-invoice details.

Applicability of E-invoice:

As Per Rule 48(4) that e invoice shall be prepared by notified class of registered persons,by uploading such particulars as contained in Form GST INV-01 on the common GST Electronic portal and obtain an IRN( Invoice Reference Number) in prescribed manner and subject to prescribed conditions and restrictions.

Every invoice, issued by above persons, in any manner other than the manner specified in rule 48(4) shall not be treated as an invoice. No need to issuing invoice copies in triplicate/ duplicate, if einvoicing applicable on taxpayer.

Presently invoices, credit notes, debit notes, when issued by notified persons to registered persons or for the purpose of exports are covered under e-invoice.

Class of persons notified to mandatorily issuing E-invoice

E-invoicing shall be mandatory from 01.04.2022 for all registered taxpayers whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 20 crores. notified persons shall prepare e-invoice in respect of B2B supplies(supply of goods or services) or for exports.

B2C invoices are not required to report on IRP, e-invoicing also not applicable to invoice issued by ISD( Input Service Provider), for supplies made by notified person on which tax payable under reverse charge mechanism under section 9(3), e-invoicing applicable. On the other hand supplies are received by notified person from unregistered persons (attracting reverse charge under section 9(4) or through import of services, e-invoicing not applicable, e-invoicing is also not applicable for import of goods.

Exemption from E-invoicing:

Following entities exempt from the applicability of E- invoicing, these entities are not required to issue e-invoice even if there turnover exceeds ₹ 20 crore in the preceding financial year from 2017-18 onwards :

• Special Economic Zone units (Not SEZ Developers)
• Insurer or banking company or financial institution including NBFC.
• Supplies of passenger transportation service.
• GTA supplying services in respect of transportation of goods by road in a goods carriage.
• Person supplying services by way of admission to exhibition of cinematograph films in multiplex screens

In case supplies made by notified person to SEZ units, e-invoice need to be issued.

How E-invoice is Generated

Today, there are hundreds of accounting /billing software that generates invoices and all of them have their own formats to store the information. Owing to this, the GST system can’t read and understand these invoices, although the information in the invoice remains the same.To cut the long story short, today the same information is presented in different invoice formats and there is no way a system can understand it.  Hence, a need was felt to standardize the format in which electronic data of an invoice will be shared with others to ensure there is interoperability of the data.

Here’s a quick checklist for your business to be e-invoicing ready-

• Connect with the NIC, choose the most suitable mode of e-invoice generation
• Re-configure your present invoicing system for the mandatory fields in e-invoice format
• Segregate B2B documents from the rest, including those needing e-way bills
• Conduct tests to check system reliability to reduce e-invoicing failures
• Reconcile between e-invoice data and GST returns before filing GSTR-1
• Keep up with changing tax rules
• Set up continuous staff training

[The CGST Notification no. 1/2022 dated 24th February 2022]

The taxpayer first prepare and generate his invoice using his own ERP/ accounting/ billing system or manual system

The invoice must conform to the e-invoice schema and must have mandatory parameters.

Details of that invoice are uploaded/reported by the taxpayer to the invoice registration portal

On uploading IRP returns the E-invoice with a unique IRN (Invoice Reference Number)

After digitally signing the e-invoice and a Quick response Code (QR Code)

Then the supplier shares the e-invoice with the receiver (along with QR code)

IRP sends the e-invoice data along with IRN to the GST system as well as to E-way bill system.

The GST system will auto populate them into GSTR-1 of the supplier and GSTR-2A of respective receivers

Cancellation/amendments of reported invoice

If needed the supplier can cancel IRN for an e-invoice already reported to IRP within specified time. Amendment of e-invoice already uploaded on IRP will be done only on GST portal ( while filling GSTR-1) amendment of invoices is not possible through the IRP QR code consists of the following E-invoice parameters:

• GSTIN of Suppliers
• GSTIN of Receivers
• Invoice number as given by supplier
• Invoice value GST amount along with breakup i.e. CGST, SGST, IGST, Cess, etc.
• Date of invoice generation
• HSN code of main item
• Number of line items
• Unique invoice reference number
• Date of generation of IRN

Dynamic QR code should be such that it can be scanned to make a digital payment, if the supplier has issued dynamic QR code for payment the said invoice shall be deemed to have complied with Dynamic QR code requirements.

Conclusion:

E-invoicing has many advantage for businesses, it will facilitate standardization and interoperability leading to reduction of disputes among transacting parties, improve payment cycles, reduce processing costs and improving business efficiency. Better internal control, governance and transparency could be maintained. Introduction of this step is beneficial for business as well as for taxation administration, it will reduce tax evasion and corruption and contribute toward nation growth