GST

An Overview of E-Invoicing Under GST

Transporting goods from one place to another requires the filing of e-way bills on the GST portal. Similarly, recently the GST council decided to implement the e-invoicing system. It shall be applicable to a particular category of people. E-invoicing doesn’t mean the generation of invoice on GST portal, but it implies submission of an already generated standard on a common e-invoice portal. Let’s now have a better understanding of e-invoicing under GST.

What do you mean by e-invoicing under GST?

E-invoicing is a system where B2B invoices are authenticated electronically by GST Network for further use on the common GST portal. Under the e-invoicing system, an identification number is issued against every invoice by the Invoice Registration Portal, which is managed by the GST Network.

The first Invoice Registration Portal was launched by the National Informatics Centre. The invoice information is transferred from the portal to the GST portal and e-way bill portal. Hence, there is no need to enter manual data while filing GSTR-1 return and generation of part A of the e-way bills because the information is directly passed by the Invoice Registration Portal to the GST portal.

Applicability of E-Invoicing

E-invoicing is applicable to businesses whose aggregate turnover has gone beyond 500 crore rupees limit in any of the preceding financial year from 2017-18 to 19-20.

Moreover, from January 1, 2021, e-invoicing shall apply to businesses whose turnover has exceeded 100 crore rupees limit in any of the financial years 2017-18 to 19-20.

However, regardless of the turnover, e-invoicing will not be applicable to the below-mentioned category of persons:

• A goods transport agency;
• An insurer or a banking company or a financial institution, including NBFC;
• A registered person who supplies passenger transportation services;
• A registered person who supplies services through admitting to the exhibition of cinematographic films; and
• A SEZ unit.

What is the benefit of e-invoicing under GST?

Businesses can benefit in the following ways:

• E-invoicing resolves and fills a major gap in reconciliation under GST and thereby reduces mismatch errors.
• E-invoices that’s created on a software can be read by another, thereby allowing interoperability and helps in reducing data entry errors.
• Through e-invoicing, real-time tracking of invoices prepared by supplier is enabled.
• Faster availability of authentic input tax credit.
• Lesser chance of audits or surveys from tax authorities as the information is available at the transaction level.

How will e-invoicing under GST help in curbing tax evasion?

E-invoicing can help in curbing tax evasion in the following ways:

• Tax authorities could access transactions as they happen in real-time since the e-invoice shall be generated compulsorily through the GST portal.
• There would be a lesser chance of manipulation of invoices as the invoice is generated before carrying out a transaction.
• It can also reduce the occurrence of fake GST invoices. Only authentic input tax credit could be claimed as all invoices has to be generated through the GST portal.

Procedure of getting an e-invoice

 The following procedure can be followed for raising or generating an e-invoice:

• The taxpayer should use the reconfigured IRP system according to the PEPPOL (Pan European Public Procurement Online) standard. He can ask the software service provider to incorporate the standard set for e-invoicing.
• A taxpayer has two options for IRP generation-
• The IP address of the computer system may be whitelisted on the portal of e-invoice for direct API integration or integration through GST suvidha provider.
• Download the bulk generation tool to upload the invoices. It will generate a JSON file. It can be uploaded on the e-invoice portal.
• Then the taxpayer should raise a normal invoice on the software. He should provide all details such as billing name and address, transaction value, GST rate applicable, etc.
• When one of the options is selected, raise the invoice on the respective ERP software or billing software.  Upload the invoice details to the IRP through JSON file or through application service provider, or through direct API.
• IRP will validate the details of the B2B invoice and check for any duplications and then generate an invoice reference number for reference.
• IRP generates the invoice reference number, digitally signs the invoice, and generates a QR code in output JSON for the supplier. The seller of the supply shall know of the e-invoice generation via mail.
• IRP shall send the authenticated payload to GST portal for GST return. The details would be sent to the e-way bill portal, if applicable. The GSTR-1 of the seller gets auto-filled for the relevant tax period.

It is worth mentioning that the taxpayer can continue to print his invoice as being done now. The e-invoicing system just mandates taxpayers to report invoices on Invoice Registration Portal in electronic format.

Myths and Facts regarding e-invoicing under GST

There are certain myths doing the round about e-invoicing. In this segment, we have looked to bust these myths.

Myth-1

E-invoice should be generated through the GST portal^[1].

Fact

The tax invoice shall continue to be generated through the existing ERP system. It has to be registered on IRP.

Myth-2

E-invoicing applies to all.

 Fact

As stated at the beginning of this article, e-invoicing is applicable to businesses whose aggregate turnover has went beyond 500 crore rupees limit in any of the preceding financial year from 2017-18 to 19-20. Those above 100 crore rupees should follow from January 1, 2021.

Myth-3

New software is required for e-invoicing under GST.

Fact

No new software is needed. Existing software can be geared up to implement additional e-invoicing features.

Conclusion

According to Cygnet GST Suvidha Provider, one of the GST Suvidha Provider, e-invoicing is expected to provide better services to taxpayers by restraining multiple reporting and simplifying the filing of new returns. As e-invoicing under GST is going to become mandatory for all businesses from 1^st April 2021, it won’t be a bad idea to start preparing in advance for the change.

Read our article: Power of Inspection, Search, and Seizure under GST