GST

Step-by-Step Process to Generate an e-Invoice and IRN

Step-by-Step Process to Generate an e-Invoice and IRN

The Goods and Services Tax, or GST e-invoice, has been made mandatory in India to discourage tax evasion and enable a national invoicing standard. The fundamental goal of implementing GST invoicing was to pre-populate taxpayers’ GST forms with the necessary data and electronically check all B2B transactions.

For all firms with an annual revenue of Rs. 500 crores, developing a GST e-invoice was required in October 20230. Businesses with a combined annual revenue of Rs 5 crore or more must start generating the GST e-invoice as of August 1, 2023.

The Central Board of Indirect Taxes and Customs said through Twitter that “GST taxpayers whose aggregate turnover exceeds Rs 5 crore in any financial year, they need to generate e-invoices for both supply of goods or services or both, or for exports will be mandatory from August 1.”

What is a GST E-invoice?

E-invoice is a procedure through which the GST Network (GSTN) electronically validates all B2B invoices; it is not an invoice that you can download or produce through the GST Portal. Directly generating an e-invoice via the common site is not practical.

To make sure the invoices produced by your accounting software are legitimate and may be used for procedures like creating e-way bills and completing GST returns, e-invoicing or authentication is necessary. In order to have them checked uniformly, the process entails submitting business invoices made using various accounting software to the GST Portal1.

The program cannot collect all of the invoices straight to the GST system since various GST return filing applications may have produced them and may have different forms. As a result, the government made the decision to adopt a standard format (Schema), which mandates that all accounting software adhere to a consistent structure before being submitted to the GST site for authentication and certification.

In conclusion, an electronic invoice (E-invoice) is a common mechanism or schema for data interchange across various GST billing programs of various manufacturers.

Introduction of IRP on GST E-invoicing

‘E-Invoicing’ or ‘electronic invoicing’ is mandatory for B2B and B2G transactions for large and medium-sized taxpayers from October 1, 2020; nevertheless, optional adoption began on January 1, 2020. Along with other ways, the National Information Centre has made the e-invoice registration capabilities available via the API via the Invoice Registration Portal (IRP). These APIs allow taxpayers and GSPs to integrate the e-invoice method with their own business processes and systems for simple and error-free invoice registration and creation.

The Invoice Registration Portal (IRP) enables users to register for access to the APIs and assists developers or taxpayers’ system integrators in understanding how to integrate the e-invoicing system with their business operations. IRP simplifies API documentation by offering every detail that an application developer needs in order to connect the systems, including URLs, calling methods, JSON Schema of the request payloads, example request payloads, and sample answers.

Developers may mimic the use of APIs from beginning to end with the aid of the IRN site. This involves understanding the creation of request payloads, encrypting and decrypting requests and answers, and assessing the encryption’s correctness.

Benefits of GST E-invoicing System

  • GST ANX-1 and ANX-2 will be automatically created in the new format when B2B invoices are reported and authenticated through the shared site. GSTR 1 for B2B supplies is also automatically prepared by IT.
  • E-invoicing may also be used to generate e-way invoices by giving simple vehicle information.
  • For reconciliation, automatically shared invoices from suppliers that have uploaded them for verification will be shared with purchasers.
  • The system will automatically match the output tax and input credit obligation. Debit/Credit Notes, invoicing, and other permissible papers can all be converted to electronic invoicing.
  • Debit/Credit Notes, invoicing, and other permissible papers can all be converted to electronic invoicing.
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Steps to generate an e-invoice

The process to generate an e-invoice is listed below for interested businesses:

Step 1: Invoice creation on the taxpayer’s ERP

In the course of conducting business, the taxpayer will continue to produce invoices. There are requirements for electronically reporting these bills. It must be completed in accordance with the e-invoice structure and all necessary criteria. For individuals who wish to learn how to make an electronic invoice, this is a one-time step.

The vendor or seller must make sure that his accounting/billing program can create a JSON file representing the final invoice. The following modes can be used by the seller to make a JSON file that adheres to the e-invoice structure and necessary parameters:

  • A billing and accounting system that provides this service
  • A tool, such as a Word or Excel document or a mobile app, to interface with the accounting and billing system or ERP.
  • An offline tool for entering invoice data to create electronic invoices

Step 2: Creation of the distinct IRN

Reporting to the Invoice Registration Portal (IRP) is the following step in “how to make an e-invoice.” The e-invoice system uses a hash generation technique to create the IRN, also known as a hash, which is a singular integer. Each document that is uploaded will have a special 64-character IRN created for it. The e-invoice system now offers offline and API as the two ways to produce the IRN (Invoice Reference Number). The following choices are available to inform taxpayers who require the creation of electronic invoices:

Using Offline Tool

Anyone looking for instructions on how to create an electronic invoice manually can input invoices in the required format into a spreadsheet, which will automatically produce the IRN. The process for creating a bulk upload request for IRNs may be seen by users at the e-invoice portal by going to Help -> Tools -> Bulk Generation tools. The bulk upload request file must be uploaded after it has been created in order to produce the IRNs. The IRN form with all the details may be downloaded after it has been produced.

Using API (via integration with GSPs)

System integration may be accomplished via API through GSP integration with the aid of registered GSPs (GST Suvidha Providers). The API integration with the selected GSP must be evaluated in a sandbox environment before using this mode. The GSP will be required to submit the test summary report on the sandbox site following the test. If not already registered, the GSP must register on the e-invoice site.

The same login information can be used if the same GSP is being used as on the e-way bill site, eliminating the need to register afresh. A username and password must be entered in order to establish an API user. These credentials may be used to produce a token and an IRN request.

Using an API (by way of direct integration)

The systems of the taxpayers can be immediately connected by using API. It will be necessary to test the API integration in a sandbox setting. The taxpayer must submit the test summary report on the sandbox portal following the test.

If not already enrolled, the taxpayer must register on the e-invoice site. The same login information may be used if you are registered on the e-way bill site. The same API credentials can be used if the taxpayer is already linked with the e-way bill system’s API. If not, he will have to use IP whitelisting to register APIs.

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The same client-ID credentials can be used if a sister concern with the same PAN has already registered for API and had IP whitelisting performed. The new API user will nonetheless need to register.

Using API (through the GSTIN of an enabled sister firm)

If the same has been enabled for API, systems can be connected via API through the taxpayer’s sister firm, which has the same PAN. It will be necessary to test the API integration in a sandbox setting. The taxpayer must submit the test summary report on the sandbox portal following the test. When gaining access to the e-way bill and e-invoice production APIs, the sister company and the concerned taxpayer should be using the same IP address.

If not previously enrolled on the e-way bill site, the taxpayer must register on the e-invoice portal. The same login information may be used if you are registered on the e-way bill site. The same API credentials can be used if the taxpayer is already linked with the e-way bill system’s API. Otherwise, he will have to make a new API user.

API-capable Taxpayers for E-way Bills

For taxpayers who have access to e-way bills, system integration using API can be done. The taxpayer will have to use a sandbox environment to test the API integration. The taxpayer must submit the test summary report on the sandbox portal following the test. The same credentials can be used if the taxpayer has previously allowed API access to the e-way bill system. There is no need to take any other actions.

Step 3: Create the QR code.

The QR code and the e-invoice will both be digitally signed by the e-invoice system after it has generated the IRN. The invoices may be quickly viewed, verified, and accessed from mobile devices, thanks to the QR code. The following parameters make up the QR code:

  • The supplier’s GSTIN
  • The recipient’s GSTIN
  • The supplier-provided invoice number
  • The time at which the invoice was created
  • The invoice value, which includes the gross tax and taxable value
  • The number of line items.
  • The line item with the greatest taxable values, or the major goods’ HSN code
  • A particular IRN (hash)

The unique IRN (hash) that the digitally signed QR code will contain may be used by offline apps and the main portal to verify it. This will be useful for tax officials who need to review invoices in locations without internet access, such as on the road.

Conclusion

The government has prepared the system to include an increasing number of taxpayers in the e-invoicing category. Businesses will benefit from a smooth and effective flow of GST Output and Input Tax Credit thanks to the e-invoicing method. Tax authorities can trace important transactions and prevent tax evasion since all transactions will be verified and digitally authenticated by the IRP.

Frequently asked questions

  1. How do I generate an e-invoice for IRN?

    There are two ways to generate an IRN for an e-invoice:
    Using the e-invoice portal: You can generate an IRN by uploading your invoice details to the e-invoice portal. The portal will then generate the IRN and provide you with a download link for the e-invoice.
    Using the API: You can also generate an IRN using the API. The API allows you to generate IRNs in bulk.

  2. How do I create an e-invoice from the E-invoice portal?

    To create an e-invoice from the e-invoice portal, you will need to:
    • Login to the e-invoice portal using your GSTIN and password.
    • Click on the “Create E-Invoice” button.
    • Enter the details of your invoice, such as the supplier GSTIN, recipient GSTIN, invoice number, date, and items.
    • Click on the “Generate IRN” button.
    • Once the IRN is generated, click on the “Download E-Invoice” button to download the e-invoice.

  3. What are the requirements for an IRN invoice?

    • The requirements for an IRN invoice are as follows:
    • The invoice must be generated in the prescribed format.
    • The invoice must contain the IRN.
    • The invoice must be digitally signed by the supplier.
    • The invoice must be uploaded to the e-invoice portal.

  4. How do I download an e-tax invoice?

    To download an e-tax invoice, you can follow these steps:
    • Login to the e-invoice portal using your GSTIN and password.
    • Click on the “Download E-Invoice” button.
    • Enter the IRN of the invoice you want to download.
    • Click on the “Download” button.

  5. Is it mandatory to print IRN on the invoice?

    Yes, it is mandatory to print the IRN on the invoice if the invoice is being generated for B2B transactions. However, it is not mandatory to print the IRN on the invoice if the invoice is being generated for B2C transactions.

  6. How is an IRN number generated?

    The IRN number is generated using a hash algorithm. The hash algorithm takes the following information as input:
    • The supplier GSTIN
    • The document type (invoice, debit note, credit note)
    • The document number
    • The financial year
    The hash algorithm then generates a 64-character alphanumeric string, which is the IRN number.

  7. How do I manually generate my IRN number?

    You can manually generate your IRN number using the following steps:
    • Go to the e-invoice portal.
    • Click on the “Manual IRN Generation” link.
    • Enter the following information:
    • Your GSTIN
    • The document type (invoice, debit note, credit note)
    • The document number
    • The financial year
    • Click on the “Generate IRN” button.
    The e-invoice portal will then generate the IRN number and display it on the screen.

  8. Is it mandatory to generate IRN?

    Yes, it is mandatory to generate an IRN for all B2B invoices under GST. However, it is not mandatory to generate an IRN for B2C invoices.

  9. What are the rules for IRN invoices?

    The rules for IRN invoices are as follows:
    • The invoice must be generated in the prescribed format.
    • The invoice must contain the IRN.
    • The invoice must be digitally signed by the supplier.
    • The invoice must be uploaded to the e-invoice portal within 30 days of the date of issue.

  10. Is IRN mandatory in GST?

    Yes, IRN is mandatory for all B2B invoices under GST. However, it is not mandatory for B2C invoices.

  11. How to do an electronic invoice?

    To do an electronic invoice, you can follow these steps:
    • Generate the IRN for the invoice.
    • Upload the invoice details to the e-invoice portal.
    • Digitally sign the invoice.
    • Download the e-invoice and send it to the recipient.

  12. How do I make an electronic invoice?

    To make an electronic invoice, you can use an e-invoice software or a web-based e-invoice portal. The e-invoice software or portal will help you generate the IRN, upload the invoice details, and digitally sign the invoice.

READ  GST Registration Requirements (Goods and Services)

References

  1. https://www.gst.gov.in/

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