E-INVOICE UNDER GST

[Mr. SANJIV KAPOOR]

A.GST  E-invoice introduction :   Ever since  the concept of e-invoicing  was approved by the GST Council,  the buzz  around e-invoicing  has gained importance  among the business community.    In the 37^thmeeting of GST  council  approved a standard E-invoice  which was held on 20.09.2019  and accordingly  a notification was issued bearing No. 68/2019 –CT to 72 /2019-CT  on  13.12.2019   which lays the legal road map for E-invoice. That e-invoices under GST are the introduction of Digital invoice for Goods&Services provided by the business firms which will be generated at the Government GST portal. The main aim of E-invoice generation is to check GST evasion.

B.What is e-invoice under  GST?

E-Invoice which is known as “ electronic invoicing” is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.

Post successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by Invoice Registration Portal (IRP). Along with IRN, each invoice is digitally signed and added with QR Code. This process is collectively called as e-invoicing under GST.

All invoice information will be transferred from this portal to both the GST portal and e-way bill portal.

Hence, it will eliminate the need for manual data entry while filing ANX-1/GST returns as well as generation pf part-A of the E-way bills, as the information is passed directly by the IRP to GST portal.

C.GSTE-Invoice applicability : It would be binding for each and every businessman  to generate  the entire  GST e-invoice  which would also include the value of sale.

• Turnover 500 crores or More – Voluntary and Trial Basis start from 1st January  2020
• Turnover 100 crores    or More- Voluntary and Trial Basis start  from 1^st February 2020.

Note:

• GST e-invoicing is mandatory from 1^st April 2020 for the above businesses. The ones with turn over upto 100 crore, voluntary and trial basis start from 1st  April, 2020 as per the sources ( Not declared by the Government )
• w.e.f. 1^st April, 2020 a supplier whose aggregate turn over in a financial year  exceeds 500 crores rupees to an unregistered person (B2C invoice) shall have quick response (QR) Code.

D. What  are the misconceptions  about E-invoice  under GST?

That the biggest misconception of E-invoice in the minds of GST Registered person/Professionals/Consultant is that E-invoice means, preparing Tax invoice on GST portal. Many people think that e-invoice will be generated from government’s tax portal. However, this is incorrect. Invoices will continue to be generated using an Accounting or billing software. Under E-invoice, invoice is prepared on ERP software and then JSON file from software will be crated and that is required to be uploaded on portal.

That another misconception about E-invoice is that  it is applicable to all GST Registered persons. However, as per Notification No. 70/2019 CT dated 13.12.2019, it will be applicable.

• To Registered persons whose aggregate turn over in a financial year exceeds ₹ 100 crore and
• In  respect  of supply  of Goods/Services to Registered person (B2B)

E. What are the benefits from e-invoice under GST ?

The benefits from E-Invoice given below are contemplated by the government

• It will eliminate the fake invoices.
• It will substantially reduce the issues of input credit verification.
• It will also help in one time reporting on B2B invoice data , leading to  reduction  of reporting   in multiple format  data i.e.  one for GSTR 1  or ANX  1 and the other for e-way bill)
• That  e- way bill  can be generated using e-invoice data .

F. What is E- invoice  portal/ invoice registration portal – (IRP) ?

E- invoice  portal is going to perform  the following:

• First we have to generate a unique Invoice Reference Number (IRN).
• Then digitally sign the e-invoice
• After that, generate a QR code.
• Then send  the signed e-invoice  to the recipient  of the document on the e-mail provided in the E-Invoice.

G. What are the steps required for generation of E-invoice under GST?

The following steps are needed for generation of e-invoice.

STEP-1   Generation of  invoice  and  JSON

• That generation  of  the invoice by the seller in his own accounting or billing system  ( i.e. any software utility/ERP that generates invoices)
• That the invoice must conform to the e-invoice (standards). Further the seller should have a feature in its ERP that will output invoice data in JSON format.
• Those who do not use any accounting software or IT tool to generate the invoice, will be provided an offline tool to key-in data of invoice and then submit the same.
• The suppliers (seller’s) software should be capable to generate a JSON of the final invoice that is ready to be uploaded to the IRP. Further the IRP will only take  JSON.

STEP 2 – Uploading of  JSON

• That the seller to upload the JSON of the e-invoice into the IRP.
• The JSON  may either be uploaded directly on the IRP  or through GSPs or through third party provided Apps.

STEP-3  Validation of data by IRP

• If IRN is not generated, then IRP will generate IRN, based on JSON uploaded.
• If IRN is generated, then IRP will generate IRN, based on JSON uploaded.
• If IRN is generated, then IRP will validate the IRN (based on JSON uploaded) from Central Registry of GST System to ensure that the same invoice from the same supplier pertaining to same Financial Year is not being uploaded again.
• Further on receipt of confirmation from Central  Registry, IRP will add its signature on the invoice Data as well as a QR code  to the JSON.’

STEP 4   - Sharing  of e- invoice.

• Sharing the signed E -invoice data along with IRN to seller.
• Sharing the signed EG-invoice data along with IRN  to the GST system as well as E-Way  Bill System  will also update the ANX-1 of the seller as well as ANS-2 of the Buyer.
• That  further IRP  will sign the e-invoice  and e-invoice signed  by the IRP  will be a valid e-invoice and used  by GST/E-Way Bill System.

STEP 5  -

• That returning  the digitally signed JSON with IRN back to the seller  along with  a QR.
• That the registered invoice will also be sent to the seller and buyer on their  mail ids  as provided in the invoice.

H. What is QR  code?

That  a QR   code  will enable  quick view, validation and access of the invoices from the GST  System. It will be generated by IRP after uploading JSON of invoices.  The QR code will consist of the following e-invoice parameters.

1. GSTIN of supplier.
2. GSTIN  of Recipient.
3. Invoice number as given by supplier.
4. Date of generation of invoice.
5. Invoice  value ( taxable value and gross tax)
6. Number of line items.
7. HSN code of main item ( the line item having highest  taxable value)
8. Unique invoice Reference Number.

I. What are the modes of generation of e invoice under GST?

That there are multiple  modes which will be made available   so that  the tax payer  can use best  mode on their need.  Following modes have been envisaged under the proposed  system of e-invoice through IRP ( Invoice Registration Portal )  :

1. Web based
2. API based
3. SMS based
4. Mobile app  based
5. Office tool based and
6. GPS based.

J. What are the challenges to be addressed.?

Though  the move   towards the new system is exciting, there are some challenges  for instance  for starters in a country like India  all the internet coverage has improved significantly  during the last decade but  many parts of India  still suffer  lack of infrastructure. For instance , for MSME   with a factory at a remote location  which is grappling with a poor network connectivity  e-invoicing   may appear  to  be a compliance hassle.

Though   the  large organizations, who have implemented auto generation of the e-waybill on creation of the tax invoice has to change their existing process. Now they have to interface their system with the IRP portal rather than the e-waybill portal so that IRN issued. Also changes have to be done to their software to capture the IRN number in the database.
Further, the Taxpayers who have not up taken automation of e-waybill have to reach out their OEM’s for the configuration of the same.

That  the training has to be provided to all the concerned stakeholders for the new changes, proper budgets should be allocated for the IT and also if any impact of working capital is foreseen, proper arrangements should be made for the same.

Similarly, the manual bill books and accounting software products used today may need to undergo an overhaul. This may prove to be a time-consuming task. MSME segment  will also suffers from acute manpower shortage. Getting the right professionals with in-depth knowledge of e-invoicing will not be easy for MSMEs. Investing in manpower training may be costly too. Given such circumstances, using tried and trusted software products like ERP, distribution management systems from reputed vendors will help  them.

K. The road ahead
Further, E-invoicing provides a push towards a digital economy. Curbing tax evasion and increasing tax collections for the government may ensure that the government will not increase GST rates any further. E-invoices can be created for every document  i.e. from debit or credit notes to vehicle invoices. The resultant positive impact on efficiency will lead to minimization if not eradication of data entry errors and greater transparency.
 

(The author is practicing Advocate on GST, Central Excise & Customs, EXIM, FEMA, DGFT & allied laws and can be contacted on Email :- [email protected])

Discussions to this article

[niranjan gupta]

I think this needs an updating as the applicability provisions with regard to turnover and dates are changed.

[Bayyareddy DK]

Kindly update with latest amendments for E invoicing

[MAHESH MAIYA]

Sir,

The provisions of e-Invocing is applicable w.e.f. 1.10.2020 to the tax payers whose turnover is more than ₹ 500 Crores.