E-invoice in India under GST : Complete Note

By | January 21, 2021
(Last Updated On: January 21, 2021)

E-invoice in India
(Updated as on 1.1.2021)

The GST Council, in its 35th meeting held on 21stJune 2019, has recommended the introduction of electronic invoices (‘e-invoice’) in GST in a phased manner on a voluntary basis for online generation of B2B e-invoices from January 2020. As a result, a technical sub-group was
constituted to look into the technical aspects of e-invoicing (Annexure-1 contains the extract of minutes of 35th GSTC meeting on introduction of electronic invoicing system). After that, GST Council in its 37th meeting held on 20 th September 2019 took note and approved the recommendations of the technical sub-group on e-invoicing (Annexure-2 contains the extract
of minutes of 37th GSTC on status and progress in generation of e-invoicing). The Government on 13th December 2019 issued Notifications 68/2019- Central Tax to 70/2019- Central Tax, setting out the legitimate guide for e-invoicing.

Initially, it was decided to introduce e-invoicing mandatorily for all taxpayers with annual aggregate turnover above ₹100 crores from April 1, 2020. However, the sudden onset of COVID-19 pandemic delayed the implementation, and the dates were extended to 1st October
2020 and the aggregate turnover of registered persons required preparing invoice in terms of Rule 48(4) enhanced to Rs. 500 crores. The aggregate turnover includes the turnover of all GSTINs under a single PAN, across India. For the taxpayers with annual aggregate turnover
above ₹100 crores, e-invoicing provisions got applicable from January 01, 2021.

Under e-invoicing system, taxpayers continue to create their GST invoices on their own Accounting/Billing/ERP Systems. These invoices are now reported to ‘Invoice Registration Portal (IRP)’ in a standard format (called ‘schema’ & notified as Form GST INV-1). On
reporting, IRP generates a unique ‘Invoice Reference Number (IRN)’ and digitally sign the invoice. IRP also generates a QR code containing the unique IRN along with certain other key particulars. While the 64-character IRN need not be printed on the invoice, the QR code
generated by IRP shall be printed on the invoice issued to the buyer. The QR code enables offline verification of the fact whether the e-invoice has been reported on the IRP or not and whether the digital signature is intact or tampered with (using Mobile App etc.)

At present, e-invoicing is required for invoices, credit notes and debit notes issued by a
registered person, other than
➢ SEZ units
➢ insurer or a banking company or a financial institution, including a non-banking
financial company
➢ goods transport agency supplying services in relation to transportation of goods by road
in a goods carriage

➢ suppliers of passenger transportation service
➢ suppliers of services by way of admission to exhibition of cinematograph films in
multiplex screens

whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs.
100 crores in respect of the supply of goods or services or both to registered persons (B2B),
SEZs (with/ without payment), or for the purpose of exports (with/ without payment) and
deemed Exports.

Advantages of E-invoicing System
As discussed in 35th GSTC meeting, e-invoicing has several benefits for both taxpayers as well
as the Government.
From taxpayer perspective, backward integration and automation of tax relevant processes
replace manual and periodic reporting of forms, separate GST declarations, separate tax
accounting etc. Thus, tax collection and refund can be processed seamlessly. Further businesses
are relieved from carrying hard copies of invoice during transit of goods and it also results in
early settlement of payable and receivables. The electronic invoice system also reduces the
need for post audit systems of invoice matching drastically, as it ensures in real-time that fiscal
documents are tax compliant. Electronic invoicing also helps to digitalize the supply chain
which in future may result in emergence of more innovative trade finance schemes.
From Government perspective, e-invoice leads to significant reduction of the tax evasion,
which paves the way to better management of taxes and freeing human resources for other
important works. Various types of fraud like carousel fraud, fraud of invoicing between
phantom partners who disappear before tax audit, no invoicing or invoicing with no goods
supplied, fraudulent export ITC refunds, suppression of turnover etc., can be addressed through
increasing use of e-invoices.

Important Terms used under E-Invoicing System
1. E-invoice Schema (INV-1)
E-invoice schema is notified as FORM GST INV-1. Schema simply means a structured
template or format. ‘Schema’ acts as uniform standard for ERP/ Billing/ Accounting software
providers to build utility in their solution/package to prepare e-invoice, for reporting to IRP.
Schema ensures e-invoice is ‘machine-readable’ and ‘inter-operable’, i.e. the invoice/format
can be readily ‘picked up’, ‘read’, ‘understood’ and further processed by different systems like
Tally, SAP etc.
Latest e-invoice schema is notified on 30th July 2020 vide Notification No. 60/2020 – Central
Tax. The e-invoice schema contains both mandatory and optional fields. The mandatory fields
are those that must be compulsorily there for an invoice to be valid under the e-invoice
standard. The optional fields are those that may be incorporated as per the business needs.

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Category: GST

About CA Satbir Singh

Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters and can be reached at Email : Taxheal@gmail.com

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