e-Invoice 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 IRP. Along with IRN, each invoice is digitally signed and added with a QR code. This process is collectively called e-invoicing under GST
In spite of invoices generated by each software look more or less the same, the computer system can’t understand it, though the business users can understand them fully. For example, an invoice generated by accounting Software “A” cannot be read by a machine that is using “B” accounting software.
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.
The basic aim behind the adoption of the e-invoice system is to pre-populate the returns and reduce the reconciliation challenges. This is achieved by the design of the IRP system which shares the invoice data to the GST system and e-way bill system. Thus, continuous uploading of invoices will ensure that most of the details required in returns as well in the e-way bill get auto-populated.
The following are some of the key benefits of e-invoicing:
Many benefits of e-invoicing exist and one of them is its ability to curb tax evasion. With an e-invoice, the chances of editing invoices will be low because before any transaction is done, the invoice gets generated. Another reason why e-invoice system is helpful is that it ensures the authorities have information about all the transactions in real-time. E-invoicing greatly minimizes fake GST invoices and ensures that input tax credit is claimed on real GST invoices due to automation and thorough checks. If someone tries to claim a fake tax credit, then it is easy for GSTN to track them.
The following are the 30 mandatory fields of an e-invoice. Earlier, 50 fields were to be mandatorily filled by the taxpayer.
| Field name | Description |
|---|---|
| Document Type Code | Every type of document has a code and this must be specified in this portion. |
| Supplier Legal Name | The name of the supplier according to the PAN card details. |
| Supplier GSTIN | The supplier GSTIN for e-invoice. |
| Supplier Address | The full address of the supplier including flat number, building no. etc. |
| Supplier Place | The city/village/town of the supplier must be specified here. |
| Supplier State Code | The state must be selected. |
| Supplier Pin code | The six-digit pin code of the supplier’s address. |
| Document Number | A unique invoice number that makes sense to the business. It has to be sequential for easy identification. |
| Preceding Invoice Reference and Date | The original invoice details are being edited using a document such as a credit note. |
| Document Date | The date on which the invoice was issued. |
| Recipient Legal Name | The name of the buyer is specified as per his PAN card. |
| Recipient’s GSTIN | The buyer’s GSTIN needs to be specified. |
| Recipient’s Address | The detailed address of the buyer has to be specified. |
| Recipient’s State Code | The detailed address of the buyer has to be specified. |
| Place of Supply State Code | The state of the recipient has to be selected. |
| Pincode | The location of the recipient has to be selected. |
| Recipient Place | The village/town/city of the recipient has to be specified. |
| Invoice Reference Number or IRN | The supplier leaves the field empty at the time of registration, and after that, GSTIN generates a unique number when the e-invoice is uploaded on the GSTN portal. As the e-invoice is accepted, acknowledgment is sent. Before the use of an e-invoice, the IRN has to be displayed on it. |
| Shipping To GSTIN | GSTIN of the person the item is being delivered to. |
| Shipping To State, Pincode and State Code | This field specifies the place where the goods and services are delivered. |
| Dispatch From Name, Address, Place, and Pincode | The name of the dispatching entity, along with the city/town/village specifics. |
| Is Service | If the supply of service has to be specified. |
| Supply Type Code | The type of supply and its responding code is specified. It can be supplied to SEZ, B2B, etc. |
| Item Description | The item’s description. |
| HSN Code | The particular code for the goods or services. |
| Item Price | The GST exclusive unit price prior to the item price discount being subtracted. This value must be positive. |
| Assessable Value | The item’s price excluding GST and after the item price discount has been subtracted. |
| GST Rate | The rate of the specific item for which the invoice has been generated. |
| IGST Value, CGST Value and SGST Value Separately | Every item must have IGST, SGST, and CGST. |
| Total Invoice Value | The total value, including GST. |
TTo 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.
| Annual turnover | New date of mandatory implementation of e-invoice |
|---|---|
| Exceeding 500 crore | 1st October 2020 |
| Exceeding 100 crore | 1st January 2021 |
| Exceeding 50 crore | 1st April 2021 |
| Exceeding 20 crore | 1st April 2022 |
| Exceeding 10 crore | 1st October 2022 |
| Exceeding 5 crore | 1st August 2023 |
In the recent update, from 1st August 2023, e-Invoicing will be essential for all the registered persons whose aggregate turnover (based on PAN) in any prior fiscal year from 2017-18 onwards exceeds 5 crores.
The following documents will be covered under e-Invoicing for now:
An e-Invoice will be uploaded into the relevant GST return only once it has been validated and registered by the invoice registration system. After the validation has been done, it will be visible to the recipient for viewing and taking action (in the new return system).
The main aim of the tax department is to enable the pre-population of GST returns, which will reduce reconciliation-related problems. Once e-Invoicing has been implemented, the data in the invoices can be pre-populated into the relevant tables of the tax returns without the need for fresh data entry.
As per the draft format generated by the GSTN, an e-Invoice will contain the following parts-
An e-invoice cannot be partially canceled, it has to be canceled fully. Once you cancel an e-invoice, it has to be reported to the IRN within 24 hours. No cancellation post 24 hours of upload is allowed on the IRN and needs to be manually canceled on the GST portal before the returns are filed.