E-Invoicing – Definition, Implementation & Impact
The 35th GST Council meeting decided to implement a E-Invoicing System for specific people or category. E-invoicing is submission of invoices in standard format decided by GST Council and to be uploaded on common portal. It automates multi-purpose reporting with a one-time input of all invoice details. Having a standard is a must to ensure complete interoperability of e-invoices across the entire GST eco-system so that e-invoices generated by one software can be read by any other software, thereby eliminating the need of fresh data entry – which is a norm and standard expectation today.
What does E-Invoice consist of ?
E-Invoice around the globe consists of :
- Standard Format E-Invoicing.
- Reporting E-Invoicing to Central System.
The main goal was to pre-populate the return and reduce the reconciliation problems. GST Council has given the responsibility of designing the standard format to GSTN .
Benefits :
- Better taxpayers service
- Reduction of Tax Evasion
- Efficiency in Tax Administration
- No fake Invoices
- Shorten payment cycles
- Improve account reconciliation
- Enhance compliance
- Prevent errors, losses and frauds
- Improve supplier/customer relationship
- Reduce the carbon footprint
and many more
Generation of E-Invoice will be the responsibility of the taxpayer who will be required to report the same to Invoice Registration Portal (IRP) of GST, which in turn will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The QR Code will contain vital parameters of the e-invoice and return the same to the taxpayer who generated the document in first place. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.
Documents that are to be reported to GST System :
- Invoice by Supplier
- Credit Note by Supplier
- Debit Note by Supplier
- Any other document as required by law to be reported by the creator of the document (as notified by the Government from time to time).
E-Invoice Implementation
The taxpayers whose:
a) turnover of over Rs 500 Crore can voluntarily generate e-invoices starting from 7 January 2020 through APIs
b) turnover over Rs 100 but less than Rs 500 Crore can join them from 1 February 2020.
c) turnover over Rs 100 Crore will mandatorily implemented from 1st April 2020
*Note: The aggregate turnover will include the turnover of all GSTINs under a single PAN, across India.
Process of generating an E-Invoice
- The first thing a tax payers should do is to reconfigure already using Accounting Software or get a new one with E-Invoicing Facilities. The software should have mandatory parameters and should be capable of generating the JSON file for multiple invoices at once.
- Taxpayers will have to raise a normal invoice generated through the accounting software . All the parameters must be present in that invoices. The fields or parameter specified by GST System should be there on that invoice.
- Upload the details of invoice especially mandatory fields onto the IRP using the JSON file only. It can be done directly or through GSPs or 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.
- The IRP will validate invoices and check for duplicate or fake invoice and generate IRN (Invoice Reference Number) . There are most important 4 parameters provided by GST System :
- Seller GSTIN
- Invoice number
- Financial Year in (YYYY-YY)
- Document type (INV/DN/CN).
- IRP generates IRN (Reference Number) and digitally signs the invoices and generates a QR Code in output JSON format for the supplier. The seller of the supply will get intimated of the E-invoice generation through email.
- IRP will send the authenticated payload for GST returns.then, details will be forwarded to the E-Way bill portal.
Effects on Tax Department
- Tax Authorities will have direct access transaction as it happens in real time . Since it is to be generated on GST Portal.
- Less scope of manipulation or infringement of invoices.
- Reduction in fake invoices. IRN number can be used to verify invoices.
Mandatory Fields of E-Invoice
| Sl. no. | Name of the field | List of Choices/ Specifications/Sample Inputs | Remarks |
|---|---|---|---|
| 1 | Invoice Type | Max length: 10 Can 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: 50
Will 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: 15
Must be alphanumeric |
GSTIN of the supplier raising the e-invoice |
| 4 | Invoice Number | Max length: 16
Sample 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:16
Sample 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 | Max length: 2 | Column 3 Value 9 | 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 |
