Systems before & after e-invoicing

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Before e-invoicing could apply, businesses generated invoices through various software, and the details of these invoices were manually uploaded in the GSTR-1 return or using ERP.

Once the respective suppliers file the GSTR-1, the invoice information gets reflected in GSTR-2B for the recipients. On the other hand, the consignor or transporters had to generate e-way bills by again importing the invoices in Excel or JSON manually or via ERP.

Under the e-invoicing system, the process of generating and uploading invoice details will remain the same. It’s done by importing using the Excel tool/JSON or via API integration, either directly or through a GST Suvidha Provider (GSP). The data will seamlessly flow for GSTR-1 preparation and for the e-way bill generation too. The e-invoicing system will be the key tool to enable this.

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Process of getting an e invoice

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The following are the stages involved in generating or raising an e-invoice.

1. The taxpayer has to ensure to use of the reconfigured ERP system as per PEPPOL standards. He could coordinate with the software service provider to incorporate the standard set for e-invoicing, i.e. e invoice schema (standards) and must have the mandatory parameters notified by the CBIC, at least.

2. Any taxpayer has got primarily two options for IRN generation:

   • The IP address of the computer system can be whitelisted on the e-invoice portal for a direct API integration or integration via GST Suvidha Provider (GSP) such as fastzeal.

   • Download the bulk generation tool to bulk upload invoices. It will generate a JSON file that can be uploaded to the e invoice portal to generate IRNs in bulk.

3. The taxpayer must thereafter raise a regular invoice on that software. He must give all the necessary details like billing name and address, GSTN of the supplier, transaction value, item rate, GST rate applicable, tax amount, etc.

4. Once either of the above options is chosen, raise the invoice on the respective ERP software or billing software. Thereafter, upload the details of the invoice, especially mandatory fields, onto the IRP using the JSON file or via an application service provider (app or through GSP) or through direct API. The IRP will act as the central registrar for e-invoicing and its authentication. There are several other modes of interacting with IRP, such as SMS-based and mobile app-based.

5. IRP will validate the key details of the B2B invoice, check for any duplications and generate an invoice reference number (hash) for reference. There are four parameters based on which IRN is generated: Seller GSTIN, invoice number, FY in YYYY-YY, and document type (INV/DN/CN).

6. IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. On the other hand, the seller of the supply will get intimated about the e invoice generation through email (if provided in the invoice).

7. IRP will send the authenticated payload to the GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. The GSTR-1 of the seller gets auto-filled for the relevant tax period. In turn, it determines the tax liability.

A taxpayer can continue to print his invoice as being done presently with a logo. The e-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.

Benefits of e-Invoicing to businesses

Businesses will have the following benefits by using e-invoice initiated by GSTN-

• e-Invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.

• e-Invoices created on one software can be read by another, allowing interoperability and helping reduce data entry errors.

• Real-time tracking of invoices prepared by the supplier is enabled by e invoice.

• Backward integration and automation of the GST return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating part-A of e-way bills.

• Faster availability of genuine input tax credit.

• Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

• Faster and easy access to formal credit routes such as invoice discounting or financing, especially for small businesses.

• Improved customer relations and growth in prospects for small businesses to do business with large enterprises.

How can e-invoicing curb tax evasion?

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It will help in curbing tax evasion in the following ways-

• Tax authorities will have access to transactions as they take place in real-time since the e invoice will have to be compulsorily generated through the GST portal.

• There will be less scope for manipulating invoices since the invoice gets generated before carrying out a transaction.

• It will reduce the chances of fake GST invoices, and only genuine input tax credit can be claimed as all invoices need to be generated through the GST portal. Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.

What are the mandatory fields of an e-invoice?

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e-Invoice must primarily adhere to the GST invoicing rules. Apart from this, it should also accommodate the invoicing system or policies followed by each industry or sector in India. Certain information is made mandatory, whereas the rest of it is optional for businesses. Many fields are also made optional, and users can choose to fill up relevant fields only. It has also described every field along with the sample inputs for the interested users. One can see that certain required fields from the e-way bill format are included now in the e-invoice, such as the sub-supply type.

Below is the gist of the contents of the latest e-invoice format as notified on 30th July 2020 via Notification No.60/2020 – Central Tax:

1. 12 sections (mandatory + optional) and six annexures consisting of a total of 138 fields.

2. Out of the 12 sections, five are mandatory, and seven are optional. Two annexures are mandatory.

3. The five mandatory sections are basic details, supplier information, recipient information, invoice item details, and document total. The two mandatory annexures are details of the items and the document total.