E-invoicing Under New GST Return

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Introduction of GST e-Invoicing

The concept of electronic invoicing system (e-Invoicing) has been introduced by GST Council in its 35th GST Council Meeting. Further, the standard format of e-invoice was approved in its 37th GST Council Meeting held on 20.09.2019. It has also been decided to be implemented from 01.01.2020 on a voluntary basis.

Further, e-Invoicing system will become mandatory from 01.04.2020 to record Business to Business (B2B) invoices to GST System.

Meaning of e-Invoice in GST

The process in which a supplier and a buyer exchanges invoice documents electronically is termed as Electronic Invoicing i.e. e-Invoicing.

In other words, Electronic Invoicing is a system in which Business-to-Business (B2B) invoices, Export invoices and Credit/Debit Notes to Registered invoices are validated electronically by GSTN for further use on the common GST portal.

An e-invoice authenticates only above-mentioned transactions and provides one unique identification number (Invoice Registration Number or IRN) to each invoice that will further be managed by the Invoice registration portal (IRP) by GSTN.

The IRN must have GSTIN, Type of document (Regular B2B Invoice, Export or Credit/Debit Note), Number of document and Financial Year of the seller and along with it check from the Central Registry of the GST System in order to assure that the same document (invoice etc.) from the same supplier referring to the same Financial year is not uploaded again

It will also sign the e-invoice digitally and generate a QR code. Further, all the important guidelines of an e-Invoice will be included in the QR Code and return it to the taxpayer who has generated the document. Also, the receiver will be provided the signed e-Invoice document by IRP to an email which is already been provided in the e-invoice.

The information related to invoices will be sent in real-time from Invoice Registration Portal (IRP)  to both GST & e-Way bill Portal.

Why e-Invoicing is Introduced?

The main objective behind the introduction of e-Invoicing by the tax departments is to ease the whole process of invoicing i.e. to reduce all the reconciliation problems related to data and auto-populate the returns that will help the taxpayers to easily get the Input Tax Credit.

Applicability of e-Invoice

Every GST registered person whose aggregate turnover crosses Rs. 100 crore rupees is required to issue an e-invoice with effect from 1st April 2020.

Modes of Generation of e-Invoice under GST

Under GST, IRP (Invoice Registration Portal) has provided multiple modes for all the taxpayers for creation of an e-Invoice which are as follows:

  • Web-Based
  • API Based
  • Offline Tool
  • Mobile App-Based
  • Through SMS
  • Through GSP

Benefits of e-Invoicing

Some of the key benefits of e-invoicing are as follows:

  • Standardization

The generated e-Invoice can be used for GST Returns i.e. GSTR 1 or GST ANX – 1 and for generating e-way bill. 

  • Seamless Reconciliation

There would be seamless reconciliation and authentication of data between the suppliers and the recipient resulting in better control over Input Tax Credit (ITC) and claim.  

  • Lesser Compliance

It helps the taxpayers to reduce the overall burden of the compliance. There will be a massive reduction in the issues related to input credit verification as the same data will get recorded to the buyer as well to the tax department in the inward supply register (Purchase Register). 

  • Reduces Data Entry Work

The e-Invoices generated on one software are easily readable by another that helps in reducing the need for manual and multiple data entries.

  • Elimination of fake invoices

With e-Invoicing, the chances of errors and mistakes get decreased resulting in the reduction of tax evasion and eliminate the generation of fake invoices.

  • Easy to keep track of Invoices

It helps to keep a proper track of all the created invoices i.e. when an invoice has been sent, paid, viewed and received through e-invoicing system. 

The Road Ahead

e-Invoicing will help the businesses in the long run and will move forward in the digital age. The Introduction of e-Invoice system will streamline the GST process i.e. it will automate the tax return filing processes as all the required details related to the invoices will auto-populate the returns that will help the taxpayers to easily get the Input Tax Credit. 

 

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