GST e-Invoicing

GST eInvoice

GST eInvoice has been introduced in India to usher in the digital era from conventional paper-based systems. eInvoicing can help businesses achieve tremendous cost savings, efficiency and speed up business operations. eInvoicing will help reduce compliance burden for most businesses by eliminating the requirement for duplication or transfer of the same information from one system to another. With eInvoicing, the invoice information provided to GSTN for generating Invoice Reference Number (IRN) would be used to auto-populate various other systems GST returns, input tax credit reconciliation, eWay bill and GST refunds. Hence, GST eInvoicing will significantly improve the ease of doing business and reduce the compliance burden.

eInvoicing Implementation Date

The proposal for implementing eInvoicing was placed before the 35th GST Council Meeting in June, 2019. The GST Council provided an in-principle launch of a pilot project on voluntary basis for online generation of B2B e-invoices from January 2020.

Timeline Turnover Supply Type Implementation
January, 2021 GST registered entities having an aggregate turnover of more than INR 100 crores. B2B Voluntary
April, 2021 GST registered entities having an aggregate turnover of more than INR 50 crores. B2B Voluntary
April, 2021 onwards GST registered entities having an aggregate turnover of more than INR 20 crores. B2B Mandatory

The Government has provided exemption to certain classes of persons from implementation of eInvoicing through Notification No.13/2020-Central Tax dated 21st March, 2020. As per the notification, the following entities are exempted from the above implementation timeline:

  • An Insurer, Banking Company or Financial Institution including NBFC
  • Goods Transport Agency
  • Passenger Transport Service
  • Admission to exhibition of Cinematograph Films in Multiplex Screens

Advantages of GST eInvoice

GST eInvoicing will completely transform the business process as currently there are no standards defined for invoices. With the implementation of eInvoicing, invoicing would be standardised across the entire GST eco-system. So an eInvoice generated by one software can be read by another software – eliminating the need for data transfer or re-entry. Finally, with eInvoicing will eliminate the process of compilation of invoices at the end of the month and make input tax credit flow seamless.

Key Concepts of eInvoicing

The following are some of the key concepts with respect to GST eInvoicing:

Generating eInvoice

GST eInvoice is not an invoice generated on the Government Portal, as such a portal can become a choke point in trade. GST eInvoicing is a way process by which the taxpayer will generate a unique Invoice Reference Number (IRN) for each invoice and mention the same on the invoice issued.

Invoice Reference Number (IRN)

Invoice Reference Number is a unique number for each invoice provided by the GST Invoice Registration Portal on successful upload of an eInvoice. Invoice Reference Number must be mentioned on the invoice by the supplier to comply with eInvoicing regulations.

eInvoice Format

There is no specific format for eInvoice that has been provided by the GSTN. There will also be no changes to the invoice that is prepared and printed today. Under eInvoicing, certain data in the GST invoice will be transmitted to the GSTN Invoice Registration Portal (IRP) electronically and a Invoice Reference Number will be generated along with a QR code. The QR code needs to be printed on the invoice generated by the supplier. Hence, suppliers can continue to generate invoices from their billing softwares with a look and feel that suits their requirements and compliant with the GST invoicing rules. The only change will be generation of Invoice Reference Number from the GST Invoice Registration Portal and printing of eInvoice QR code on the invoice.

Invoice Registration Portal (IRP)

Invoice Registration Portal (IRP) or eInvoice Registrar is the platform issuing the Invoice Reference Number. NIC has been proposed as the first IRP. As the number of taxpayers under eInvoicing increases, more IRPs will be added to increase availability, speed and created a distributed architecture.

Generating GST eInvoice

The process of generation of a GST eInvoice can be divided into four phases:

Generation of Invoice

In the first phase, the seller will generate an invoice in his/her accounting or billing or ERP system. The invoice created must take into consideration the eInvoice standards that have been published by the GSTN and should contain certain mandatory parameters. The invoice prepared on the software should then be transmitted to the Invoice Registration Portal as a JSON format.

Uploading JSON to Invoice Registration Portal

The sellers accounting software through APIs or GSP/ASP or offline tool will be required to transmit the invoice in JSON format to the Invoice Registration Portal. The JSON can be uploaded directly from an accounting software through APIs.

Processing of Data by IRP

The IRP will check the JSON invoice received for correctness and ensure that the same invoice from the same supplier is not duplicated. On validation of the JSON invoice, the IRP will add its digital signature on the invoice, assign a IRN (Invoice Reference Number) and a QR code to the JSON file. This digitally signed JSON with IRN is sent back to the seller and will become a valid GST eInvoice for the seller and buyer.

Transmission to GSTN & eWay Bill Platform

IRPs will also share the signed eInvoice data with the GSTN system and eWay Bill portal to reduce compliance burden for the taxpayers.

Invoice Reference Number (IRN)

Each invoice uploaded by a seller to the Invoice Registration Portal and validated will receive a number called Invoice Reference Number (IRN). IRN is a 64 characters long, unique number in the GST system – irrespective of taxpayer, financial year and document type.

IRN will be issued by the Invoice Registration Portal on uploading of the JSON invoice file. IRN will be generated based on a combination of the supplier GSTIN, document type, document number and year of invoice. Document types are INV for invoice, CRN for credit note, DBN for debit note.

eInvoice QR Code

The IRP will digitally sign a JSON invoice submitted by the seller and also generate a QR code containing the unique IRN along with other invoice data so that it can be readily verified online. This QR code can be scanned by the buyer or any tax offer using an app to check the validity of invoice issued. The eInvoice QR code will contain the following information:

  • GSTIN of supplier
  • GSTIN of recipient
  • Invoice number as given by supplier
  • Invoice date
  • Invoice value
  • Number of line items
  • HSN code of main item (Item with highest value)
  • Unique Invoice Reference Number (IRN)

GST eInvoice Format

The GST eInvoice will be similar to the existing GST invoice format. It has been clarified by the GSTN that writing of IRN (64 characters) is not required by the seller. However, the IRN will be included in the QR code provided by the Invoice Registration Portal. The QR code will contain details of the invoice and the IRN. Thus, it is better to make digitally signed QR code as a response which will be proof of registration of invoice and print on invoices issued by a business.

Time Limit for Generating eInvoice

The time limit for generating an eInvoice will be notified by the Government. Without registration of an invoice with Invoice Registration Portal and generation of QR code, it will not be valid. Hence, before the movement of goods or delivery of goods or service or filing of GST returns, eInvoicing must be completed.

Cancellation of eInvoice

An eInvoice once generated can be fully cancelled within 24 hours on the Invoice Registration Portal. After 24 hours, cancellation of eInvoice on the Invoice Registration Portal will not be possible and the same will have to be done on the GST Portal before filing of GST return.

Once a GST eInvoice is cancelled, the same invoice number cannot be used again to generate another invoice.

Amendment of eInvoice

Amendments to eInvoice can be done on the GST Portal. All amendments to the eInvoice generated on the Invoice Registration Portal can be done only on the GST Portal. An amended invoice if again sent to IRP as a JSON file will get rejected as the IRN will be duplicate.