What is e-invoicing under GST?
‘e-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices and a few other documents are authenticated electronically by GSTN for further use on the common GST portal.
In its 35th meeting, the GST Council decided to implement a system of e-Invoicing, covering specific categories of persons, mostly large enterprises. Later on, it has been expanded to cover mid-sized businesses and small businesses as well.
e-Invoicing does not imply the generation of invoices on the GST portal but it means submitting an already generated standard invoice on a common e invoice portal. Thus, it automates multi-purpose reporting with a one-time input of invoice details. The CBIC notified a set of common portals to prepare e invoice via Notification No.69/2019 – Central Tax.
Useful Links
Benefits of e-Invoicing to businesses
Who must generate e invoice and its Applicability?
The e invoice applicability can be explained as follows-
Turnover criteria or e Invoice limit
| Phase | Applicable to taxpayers having an aggregate turnover of more than | Applicable date | Notification number |
| I | Rs 500 crore | 01.10.2020 | 61/2020 – Central Tax and 70/2020 – Central Tax |
| II | Rs 100 crore | 01.01.2021 | 88/2020 – Central Tax |
| III | Rs 50 crore | 01.04.2021 | 5/2021 – Central Tax |
| IV | Rs 20 crore | 01.04.2022 | 1/2022 – Central Tax |
| V | Rs 10 crore | 01.10.2022 | 17/2022 – Central Tax |
Startup or an established business, you’ll find professional utilities services fast, affordable and hassle-free Startup or an established business, you’ll find professional utilities services fast, affordable and hassle-free
Who need not comply with e-Invoicing?
However, irrespective of the turnover, e-Invoicing shall not be applicable to the following categories of registered persons for now, as notified in CBIC Notification No.13/2020 – Central Tax, amended from time to time-
| Notified Businesses | Documents | Transactions |
| 1)An insurer or a banking company or a financial institution, including an NBFC 2) A Goods Transport Agency (GTA) 3) A registered person supplying passenger transportation services 4) A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services 5) An SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax) 6) A government department and Local authority (excluded via CBIC Notification No. 23/2021 – Central Tax) 7) Persons registered in terms of Rule 14 of CGST Rules (OIDAR) | Delivery challans, Bill of supply, financial or commercial credit note or debit note, bill of entry, and ISD invoices. | Any Business-to-Consumers (B2C) sales, Nil-rated or non-taxable or exempt B2B sale of goods or services, nil-rated or non-taxable or exempt B2G sale of goods or services, imports, high sea sales and bonded warehouse sales, Free Trade & Warehousing Zones (FTWZ), and supplies under reverse charge covered by Section 9(4) of the CGST Act. |
Process of getting an e invoice
The following are the stages involved in generating or raising an e-invoice.
- 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.
- 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 ClearTax.
- 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.
- 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.
- 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.
- 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).
- 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).
- 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.
How can e-invoicing curb tax evasion?
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.
FAQs on e-invoicing
Currently, the e-invoicing system is already implemented for the GST registered persons whose aggregate turnover in any previous financial years (2017-18 to 2021-22) exceeds Rs.20 crore. From 1st October 2022, it shall apply to those with a turnover of more than Rs.10 crore up to Rs.20 crore. There are some exceptions as listed in the above section
An e-invoice cannot be cancelled partially but can be cancelled wholly. On cancellation, it must be reported to the IRN within 24 hours. Any attempt to cancel thereafter cannot be done on the IRN and must be manually cancelled on the GST portal before the returns are filed
No, invoices must be uploaded one at a time into the IRP. The ERP of a business will need to be designed to place the request for the upload of individual invoices
No, invoices will continue to be generated on the individual ERP software currently in use by businesses. The invoice must adhere to the e-invoicing standard format and include the mandatory parameters. The direct generation of invoices on a common portal is not being planned at the moment
Invoices by the supplier, credit notes and debit notes as per the GST law or any other document as notified under GST law are to be reported as an e-invoice