GST e-invoicing is the submission of electronic invoices for goods and services through the government GST portal. The GST Network will authenticate the B2B invoices and assign a unique identification number to each invoice for businesses with more than ₹50 crore turnover. India's GST e-invoicing took effect on October 1, 2020.
The GST e-invoice generation system aims to reduce GST evasion in India. It has numerous benefits over paper invoices, including cost reduction, global acceptance, and increased accuracy. Businesses who rely on e-invoicing for processing accounts payable get to save a lot of time.
This article provides information on the GST e-invoicing in India, including who it applies to, how it works, and the consequences for not using it.
Let’s get started!
- Who does e-invoicing GST apply to in India?
- Is e-invoicing mandatory in India?
- How to register on the GST e-invoicing system
- How to generate an e-invoice with IRP
- What happens if you don’t use GST e-invoicing?
- Why did the Indian government introduce e-invoicing?
- How does e-invoicing ensure GST compliance?
- Getting started with GST E-invoicing
- Explanation of e-invoice fields
- Mandatory fields of the e-invoice
- More Information about GST e-invoicing in India
Who does e-invoicing GST apply to in India?
GST e-invoicing applies to all businesses whose aggregate turnover is more than ₹50 crore. Initially, it only applied to businesses whose total turnover exceeded ₹500 crores in the financial years from 2017/2018 to 2019/2020. But on April 1, 2021, CBIC amended GST e-invoicing.
According to the CBIC Notification No.13/2020 – Central Tax, e-invoicing does not apply to some people regardless of their turnover. Those categories of people include:
- Goods Transport Agencies (GTAs)
- A financial institution, an insurer, or a banking company, including an NBFC
- Registered people supplying passenger transportation services
- An (SEZ) Special Economic Zone unit
- Registered people offering services through admission to cinematographic films exhibitions in multiplex services
- Government departments and local authorities (excluded through CBIC Notification No. 23/2021)
Is e-invoicing mandatory in India?
Taxpayers whose turnover exceeds the specified limits in any financial year from 2017/2018 to 2019/2020 must comply with e-invoicing. On October 1, 2020, the aggregate turnover limit was ₹500 crore per Notification No 61/2020-Central Tax and 71/2020-Central Tax. Later, the CBIC changed the limit to ₹50 crores.
The aggregate turnover includes the turnover of all GSTINs under a single PAN across India.
How to register on the GST e-invoicing system
Any GST registered taxpayer who wants to generate IRNs can register on the trial e-invoice system with a GSTIN.
If you are registered on the e-way bill portal, you don't need to register on the e-invoice system again. You may simply log in with your EWB credentials.
Here are the required steps for registration on the e-invoice system:
Step 1: Visit the IRP portal.
Use the same login credentials on the e-way bill portal to login onto the e-invoice registration portal (IRP).
If you’re not registered on the e-way bill portal, use your GSTIN and the mobile number registered with the GST system. The screen will open once you enter the URL of the e-invoice system.
Step 2: Navigate to the 'Registration' tab.
Click on the e-invoice registration tab to register. The e-invoice registration form will open, prompting you to enter your GSTIN and the captcha code displayed. Once done, click ‘Go’ to submit the request.
After submitting your request, you will be redirected to the e-invoice registration form.
Step 3: Verify your details.
Now, you will see personal details such as applicant name, address, trade name, mobile number, email, and more, as registered on the GST portal. Click on ‘Send OTP’ to verify these details.
You will receive a message containing a one-time password (OTP) on the registered mobile number. Enter the OTP in the registration form and click the ‘Verify OTP’ button.
Upon successfully verifying the OTP, you will be prompted to enter a username of choice (consisting of 6-15 characters).
Once done, click on the ‘Save’ button. Now, you can log into the e-invoice system using the credentials you created.
How to generate an e-invoice with IRP
Step 1: Choose any of the two options for IRN generation below:
- Download the bulk generation tool and use it to bulk upload invoices. The tool will generate a JSON file that you can upload on the e-invoice portal for bulk IRN generation.
- Have the IP address of the computer system whitelisted on the e-invoice portal for direct API or integration via GST Suvidha Provider (GSP).
Step 2: Now, raise a regular invoice on your ERP software or billing software. It must contain all the necessary details such as GSTN of the supplier, tax amount, billing name and address, item rate, transaction value, GST rate applicable, etc.
Step 3: Use the JSON file or through One API or an application service provider to upload the details of the invoice onto the IRP. Ensure that all mandatory fields are uploaded.
You can also use mobile app-based or SMS-based modes to interact with IRP, which serves as a registrar for e-invoicing authentication. IRP validates the key details of the B2B invoice.
Step 4: Check for any duplications, then generate the invoice reference number (IRN) for reference.
IRP will generate the invoice reference number (IRN) based on Seller GSTIN, FY in YYYY-YY, invoice number, and document type (INV/DN/CN).
IRP then digitally signs the invoice and creates a QR code in Output JSON for the supplier. The supply seller will receive an email on the generation of the e-invoice (if provided in the invoice).
The IRP forwards the details to the GST and e-way bill portals. The seller’s GSTR-1 will be auto-filled for the respective tax period.
What happens if you don’t use GST e-invoicing?
Failure to issue an invoice and issuing an incorrect invoice is considered an offense under GST and attracts penal provisions. The penalty for non-issuance of the invoice is ₹10000 or 100% of the tax due, whichever is higher. Incorrect invoicing attracts a ₹25000 penalty.
The e-invoice system requires you to upload an invoice on the IRP (invoice registration portal). It intimates all your B2B supply transactions to the government. First, you will need to generate an invoice or the credit or debit note on your accounting software/ERP.
Also, you need to upload the invoice on the IRP to get your unique Invoice Reference Number (IRN). Failure to do that means non-intimation of supply transactions to the government, and any invoice issued without the IRN is considered invalid under the GST law.
Failure to generate IRN is considered as non-issuance of invoice per the sub-rule (5) of rule 48 of the CGST Rules.
Why did the Indian government introduce e-invoicing?
The main reason for introducing e-invoicing by the Indian government is to curb the fake tax credit menace and make invoicing transparent. E-invoicing aims to help Indian businesses grow by improving how they interact with each other.
Not only has e-invoicing played a major role in the growth of businesses in India, but it has also helped make the planet greener. It is cloud-based and thus eliminates the need for pen and paper for invoicing.
The e-invoicing system has reduced audit risks. It streamlined invoice management for many enterprises, increasing team efficiency in accounts receivables management. No manual intervention is required, and it allows higher invoice processing.
Through e-invoicing, businesses of different sizes can embrace digitization. There will be fewer accounting and tax filing errors with ERP and tech-based solutions for billing. Companies will pass data to the GST system seamlessly.
With the e-invoicing system, enterprises can generate invoices electronically and automate different processes. It's fuel for businesses to grow.
With e-invoicing, the need for data reconciliation between the books and GST returns filed is almost eliminated. You can report B2B invoices on generation, which eliminates the possibility of reporting in multiple formats.
Storing data in form GSTR-1 and preparing them for filing is pretty easy with an e-invoicing system. With e-Invoice data, you can generate e-way bills seamlessly. The input tax credit can be available more quickly, and you can enable real-time tracking of invoices prepared by a supplier.
How does e-invoicing ensure GST compliance?
E-invoicing ensures GST compliance with a GSTN system that captures all transactions at the incipient invoice generation stage. Also, the GSTN auto-populates the sale and purchase returns of GST registered sellers and buyers. It captures all GST-applicable B2B transactions in real-time.
If a B2B invoice does not have an IRN, you cannot use it to avail ITC (Input Tax Credit). This mitigates fraud by enterprises. E-invoicing is running in many countries globally, allowing countries to follow contemporary global standards of invoice format for business transactions.
E-invoicing is mandatory for all GST-registered businesses, except for goods and passenger transport, financial institutions, SEZ units, B2C, and GST-exempted transactions. It improves account reconciliation, provides accurate ITC claims, reduces data input errors, and shortens payment cycles.
The government can track invoices in real-time, reducing errors of the input tax credit. E-invoicing has not only reduced the burden of businesses matching invoices but has also availed correct ITC on time. The government no longer suffers losses due to unscrupulous practices of fake and fraudulent tax invoices.
The burden of GST compliance for trade has reduced thanks to the automated population of e-invoices in the GST returns of sellers and buyers. However, the government needs to ensure that there are no technology glitches in e-invoicing.
Electronic invoicing aims to transform GST compliance into an auto-regulated system. It supports a clean environment by providing for the retention of records in a cloud environment.
Getting started with GST E-invoicing
The GST e-invoicing system mandates businesses to generate ‘e-invoice’ for every sale on the government GST portal. The system only applies to taxpayers whose turnover exceeds the threshold limit set by the government.
If your business falls under the ₹50 crore aggregate turnover threshold, you will receive a unique number whenever an e-invoice needs to be generated. Then, you can match the number with the invoices written in the sales return and pay taxes for verification.
While you can manually upload your JSON files to the IRP portal, it helps to automate the process with one API integration. You only need to connect by API, and you will be set for GST e-invoicing.
Explanation of e-invoice fields
Mandatory fields of the e-invoice
Here are the mandatory fields of an invoice as per the notified e-invoice schema in January 2020:
More Information About GST E-invoicing in India?
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