Introduction
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. After that,
GST Council in its 37th meeting held on 20th September 2019 took note and approved the
recommendations of the technical sub-group on 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.).
Applicability
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.
Businesses have the following benefits by using e-invoice initiated by GSTN
E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
Faster availability of genuine input tax credit.
Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.
Process of E invoice Generation
Following is the step by step process to issue E invoice.
Step 1) Creation of Invoice with the help of existing infrastructure but one thing should kept in mind that the invoice should contain every mandatory fields which is required by E invoice schema.
If all the mandatory fields are not synchronised is existing infrastructure then tax payer is advice to go for IT enable infrastructure.
Step 2) Invoice Authorisation and generation of Unique IRN (Invoice Registration Number). The invoice which has been prepared has to be uploaded to E invoicing portal for generation of IRN. For this taxpayer can use abovementioned websites notified by the government.
Step 3) Generation Of QR Code.
Mandatory Points Required To Mentioned For E Invoicing
On the basis my analysis of E invoicing template total number of fields in e-invoice schema is around 140, of which approximately 50 are mandatory or mandatory subject to certain conditions for the normal general small taxpayer. The mandatory data includes details like buyer and supplier details, invoice value, tax rate, description and HSN of goods or service, taxable value and tax amounts. Optional data fields are payment related such as bank account no, mode of payment, pre-tax values, reference document number etc.
In case no value to be given in mandatory field taxpayer can us “nil” value for successful generation of IRN.
Tax payer has to report following documents under E Invoicing system.
1) Invoice By Supplier of Goods or Services
2) Credit Note and Debit Note
Bill of Supply And Delivery challan and Transfer documents need not be uploaded to E invoicing Portal.
Non Applicability of E Invoicing
The following Taxable persons are excluded from issuing e-invoice vide GST notification No. 13/2020-Central Tax dated 21st Mar’ 2020 :
Insurance company
Banking company
Financial Institution
NBFCs
GTA
Supplier of passenger transportation services
Supplier of services by way of admission to the exhibition of cinematograph films in multiplex screens
Special Economic Zones (SEZs) Units (Notified vide Notification No. 13/2020 and 61/2020- Central Tax )
As per the notifications, exclusion is for SEZ Unit and not for SEZ Developers.
How will 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 the 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.
Synchronization Of GSTR 1, GSTR 3B And E Way Bill with E Invoicing
With an Introduction of E invoicing government has planning to achieve an seamless flow of Input Tax Credit. With E invoicing real-time posting of ITC in receivers GSTR 2A and posting of forward invoice in GSTR 1 of supplier will be automated. And it is another positive move towards generation of automated GST returns.
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TAXAJPosted by Ramesh Kumar Gupta