All you need to know about e-invoice under GST
- Posted on Feb 25, 2021
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- By Shrotriyo S
The Government of India has introduced the Goods and Service tax in the indirect taxation structure as a necessary reform. E-invoice under GST is the latest addition to GST.
What is e-invoicing?
E-invoicing or electronic invoicing is the system of online authentication of Business to business (B2B) transactions on the GSTN (GST network) on the common GST portal for further use.
Primarily, the e-invoicing system was introduced to prevent tax leakage and frauds using fake invoices. E-invoicing is proposed to put an end to this by mandating Authorization of every invoice in B2B transactions from the government portal. This system also proposes to facilitate ease of doing business in India. E-invoicing is a step towards One Nation, One Tax, One Market initiative of the government
Who does this system apply to? How & when has it been implemented?
E-invoicing has been implemented on 1st October 2020 for companies with an annual turnover greater than 500 crores in the previous financial years. On 1st January 2021 companies with an annual turnover higher than 100 crores have also adopted this system of E-invoicing.
In the primary week of its implementation 69.5 Lakh invoice numbers have been generated by 71,000 users.
What are the primary features of E-invoicing?
The primary features of e-invoicing are the IRN & the IRP
IRN (Invoice Reference Number)
The IRN is a unique identifying number for an invoice. This is a 64 character long number referring to a particular invoice regardless of the document type, financial year and the tax payer. IRN is issued with a QR code, post issuance of the QR code and the IRN in the GST portal, the uploaded invoice will attain the validity & the status of a government validated document.
IRP (Invoice Registration Portal)
The IRP is the Registration portal, which accepts and verifies the e-invoices prepared by the Taxpayers which is valid as per the E-invoice schema. The IRP post verification generates the unique IRN (Invoice Reference Number). The National Informatics Centre (NIC) regulated by the Government of India authorizes the IRP.
What are the mandatory fields of an e-invoice?
The following fields of an invoice must be compulsorily declared in an e-invoice:
Denotation for regular, SEZ supplies with payment, SEZ supplies without payment, deemed exports, sale from the bonded warehouse, export without payment of tax, export with payment of taxFor unique identification of the invoice, a sequential number is required within the business context, time-frame, operating systems and records of the supplier. No identification scheme is to be used
Max length: 300The sample value is ‘Mobile’
The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’
Simply put, the relevant description generally used for the item in the trade. However, more clarity is needed on how it needs to be described for every two or more items belonging to the same HSN code
Max length: 16Sample input is
“ Sa/1/2019”
Sample value is ‘10’The number of items (goods or services) that is charged on the invoice as a line item.
Max length:16Sample input is
“ Sa/1/2019”
Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes and other documents required under GST
However, the format under explanatory notes refers to ‘YYYY-MM-DD’. Further clarity will be required
Abbreviated as ‘UUID’Max length: 50
Sample input is ‘649b01ft’
A unique number will be generated by GSTN after uploading of the e-invoice on the GSTN portal. Once the e-invoice is accepted by the portal an aknowledgement will be sent to the supplier.
7Reverse Charge‘Y’ or ‘N’ as a single characterMention whether or not the particular supply is subject to reverse charge mechanism8GSTINMax length: 15The GSTIN of the buyer to be declared here9State CodeMax length: 2The place of supply state code to be declared here10PlaceMax length: 50The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any11PincodeSix digit codeThe place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any12Unique Identification Number
It can be either interstate or intrastate supply. Further, it can be outward or inward supply.
The supply can further be classified as import, export, job work, for own use, return, sales return, others, SKD/CKD/Lots, line sales, recipients not known, exhibition or fairs
13ShippingTo_GSTINMax length: 15GSTIN of the buyer himself or the person to whom the particular item is being delivered to14Shipping To_StateMax length: 100State pertaining to the place to which the goods and services invoiced were or are delivered15Supply TypeMax length: 2Sample values can be either of Supply/export/Job work16Transaction ModeMax length: 2The schema specifies that the field can have either of regular/bill to/ship toA combination of a ‘Bill To Ship To’ and ‘Bill From Dispatch From’ is also allowed17Item Description18QuantityDecimal (13,2)
| Sl. no. | Name of the field | List of Choices/ Specifications/Sample Inputs | Remarks |
|---|---|---|---|
| 1 | Invoice Type | Max length: 10Can be one of the following:
Reg/SEZP/SEZWP/EXP/EXPWP/DEXP |
Denotation for regular, SEZ supplies with payment, SEZ supplies without payment, deemed exports, sale from the bonded warehouse, export without payment of tax, export with payment of tax |
| 2 | InvoiceType Code | Max length: 50Will be auto-generated by GSTIN based on the invoice type specified by the user | A subcode may also be automatically added by the GSTN |
| 3 | Supplier_GSTIN | Max length: 15Must be alphanumeric | GSTIN of the supplier raising the e-invoice |
| 4 | Invoice Number | Max length: 16Sample input is
“ Sa/1/2019” |
For unique identification of the invoice, a sequential number is required within the business context, time-frame, operating systems and records of the supplier. No identification scheme is to be used |
| 5 | Preceeding_Invoice_Reference | Max length:16Sample input is
“ Sa/1/2019” |
Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes and other documents required under GST |
| 6 | Invoice Date | String (DD/MM/YYYY) as per the technical field specification | The date when the invoice was issued. However, the format under explanatory notes refers to ‘YYYY-MM-DD’. Further clarity will be required |
| 7 | Reverse Charge | ‘Y’ or ‘N’ as a single character | Mention whether or not the particular supply is subject to reverse charge mechanism |
| 8 | GSTIN | Max length: 15 | The GSTIN of the buyer to be declared here |
| 9 | State Code | Max length: 2 | The place of supply state code to be declared here |
| 10 | Place | Max length: 50 | The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any |
| 11 | Pincode | Six digit code | The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any |
| 12 | Unique Identification Number | Abbreviated as ‘UUID’Max length: 50
Sample input is ‘649b01ft’ |
A unique number will be generated by GSTN after uploading of the e-invoice on the GSTN portal. An acknowledgement will be sent back to the supplier after the successful acceptance of the e-invoice by the portal |
| 13 | ShippingTo_GSTIN | Max length: 15 | GSTIN of the buyer himself or the person to whom the particular item is being delivered to |
| 14 | Shipping To_State | Max length: 100 | State pertaining to the place to which the goods and services invoiced were or are delivered |
| 15 | Supply Type | Max length: 2Sample values can be either of Supply/export/Job work | It can be either interstate or intrastate supply. Further, it can be outward or inward supply
Moreover, the supply can further be classified as import, export, job work, for own use, return, sales return, others, SKD/CKD/Lots, line sales, recipients not known, exhibition or fairs |
| 16 | Transaction Mode | Max length: 2The schema specifies that the field can have either of regular/bill to/ship to | A combination of a ‘Bill To Ship To’ and ‘Bill From Dispatch From’ is also allowed |
| 17 | Item Description | Max length: 300The sample value is ‘Mobile’
The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’ |
Simply put, the relevant description generally used for the item in the trade. However, more clarity is needed on how it needs to be described for every two or more items belonging to the same HSN code |
| 18 | Quantity | Decimal (13,2)Sample value is ‘10’ | The number of items (goods or services) that is charged on the invoice as a line item. |
| 19 | Rate | Decimal (10,2)Sample value is ‘50’ | The unit price, exclusive of GST, before subtracting item price discount, can not be negative |
| 20 | Assessable Value | Decimal (13,2)Sample value is ‘5000’ | The price of an item, exclusive of GST, after subtracting item price discount. Hence, Gross price (-) Discount = Net price item, if any cash discount is provided at the time of sale |
| 21 | GST Rate | Decimal (3,2)Sample value is ‘5’ | The GST rate represented as a percentage that is applicable to the item being invoiced |
| 22 | IGST Value, CGST Value and SGST Value Separately | Decimal (11,2)Sample value is ‘650.00’ | For each individual item, IGST, CGST and SGST amounts have to be specified |
| 23 | Total Invoice Value | Decimal (11,2) | The total amount of the Invoice with GST. Must be rounded to a maximum of 2 decimals |
What is the process of getting an e-invoice?
- Taxpayer must ensure to use the reconfigured ERP system as per PEPPOL standard. He must 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, at least. It should be capable of generating the JSON file for multiple invoices together. Those taxpayers not having any software will be provided offline utility. Also, small taxpayers having annual turnover below Rs 1.5 crore have the option to choose from 8 different accounting and billing soft wares all tied up with the GSTN. It is available free of cost. It is available both as online (cloud-based) as well as offline (installed on the computer system of the user). - The taxpayer must thereafter raise a normal 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.
- Upload the details of invoice especially mandatory fields onto the IRP using the JSON file only. It can be done directly or GSPs or through APIs(apps or software providers). The IRP will act as the central registrar for e-invoicing and its authentication. There are several modes of interacting with IRP such as web-based, API-based, SMS based, mobile app-based, an offline tool-based, and GSP based.
- IRP will validate the key details of the B2B invoice, checks for any duplications and generates an invoice reference number (hash) for reference. The taxpayer could generate the hash beforehand (Format of IRN or hash: Seller GSTIN, Invoice number, and FY in YYYY-YY). But then, it becomes valid and effective only once registered on IRP.
- IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. The recipient of the supply will also get intimated of the e-invoice generation through email (if provided in the invoice).
- IRP will send the authenticated payload to GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. ANX-1 of seller and ANX-2 of the buyer gets auto-filled for the relevant tax period. In turn, it determines the tax liability.
Presently, the taxpayer can print his invoice with the logo, this system can continue. E-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.
Benefits of e-invoicing
The primary benefits of e-invoicing is the prevention of tax leakage in the GST collection by the Union Government. This system also provides uniformity in the invoices generated for the B2B transactions. Furthermore, some of the key benefits of e-invoicing under GST is as follows :-
- Uniform Standard of e-invoice
- One time reporting of invoicing details for all your GST fillings
- Reduction of transcriptional errors & mismatches during reconciliation
- Auto Reporting to the GST portal
- Auto population of the GST return
- Seamless invoice transmission, real time tracking.
E-invoicing could be a revolutionary step in the unification and monitoring of tax and prevent tax leakage in the economy. This system proposes some great benefits even though it is in the preliminary stage.
- Posted on Feb 25, 2021
- |
- By Shrotriyo S
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- 0 Comments
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