Last Updated on July 26, 2023
E-Invoice under GST
The government of India implemented E-invoice under the GST system back in 2020, and most organizations supported the administration’s decision. Initially, the companies with an annual turnover of Rs 500+ crores were liable to generate e-invoices. However, with each notification, the turnover limit for e-invoice kept reducing. And the current turnover limit required for e-invoice generation is Rs. 50+ crores. The chances are no less that it becomes compulsory for every business to file digital invoices.
There are different terminologies, exemptions, & applications to e-invoicing in GST & this article would help us understand it.
Table of Contents
- What is E-invoicing in GST?
- Invoice Reference Number
- Applicability of E-invoice under GST
- Example of E-invoice Applicability
- E-Invoice Portal Exemption
- How to Generate E-Invoice GST?
- Last Words
- Frequently Asked Questions
What is E-invoicing in GST?
E-invoicing under GST is exchanging the invoice bill between supplier & buyer in an authenticated & integrated “electronic format.” The introduction of the concept was to replace the conventional paper-based manual process and reduce tax evasions. Under the system, all the registered businesses in India have to generate their unique invoice reference number (IRN) on Invoice Registration Portal (IRP).
Invoice Reference Number
Invoice reference number (IRN) is a unique 64 characters hash based on four parameters. It includes document number & type, supplier GSTIN, and financial year. Some notable features of IRN are:
- Firstly, The GST system’s Invoice Registry saves the Invoice Reference Number generated by the IRP portal;
- It is different from Invoice Number;
- Generation of e-invoice should be before the movement of goods or issuance of the invoice;
- And, the generated IRN remains on the portal for two days.
Applicability of E-invoice under GST
The amendment for making E-invoicing mandatory has been introduced in different phases, based majorly on the aggregate turnover value of the business. The first phase went live in October 2020, when the government made digital invoicing mandatory for all companies with an annual turnover of more than Rs. 500 crore.
The second phase went live on 1st January 2021, when the government mandated the invoice filling for businesses having an AATO of INR 100+ crores.
Similarly, the third phase went live on 01st April 2021. Now, the organizations with an AATO of more than Rs. 50 crores are required to make digital invoices.
Note 1: The only seller can generate e-invoice and not the receivers, transporters, or customers. However, eCommerce platforms need to create invoices on behalf of their suppliers.
Note 2: E-invoice under GST to be calculated from FY 2017-18, and respective aggregate annual turnover businesses need to comply.
Note 3: E-invoice under GST needs to be generated only for B2B & Export bills and not for B2C bills.
Example of E-invoice Applicability
Illustration for Annual Aggregate Turnover (AATO) of more than 50 Crore.
|Particulars||Example 1||Example 2|
|Taxable Turnover||25 Crore||25 Crore|
|Exempted Turnover||7.5 Crore||10 Crore|
|Nil Rated Supply||5 Crore||5.5 Crore|
|Export Turnover||10 Crore||10 Crore|
|Sub Total:||47.5 Crore||50.5 Crore|
|CGST, SGST, IGST, CESS||3 Crore||5 Crore|
|Grand Total:||51.5 Crore||55.5 Crore|
|Applicability Of E-Invoicing||NOT APPLICABLE*||APPLICABLE**|
E-Invoice Portal Exemption
The Government of India has also exempted certain business entities from making e-invoices, and it includes:
- Passenger transportation services Suppliers;
- Banking company;
- Financial Institution;
- Insurance Company;
- Admission to the exhibition of cinematograph films in PVR & other multiplex screens service suppliers;
- All the SEZ units (excluding SEZ developers)
Benefits of E-invoice Portal
Tracking: E-invoice under GST facilitates real-time tracking for administration. It allows easy & quick availability for ITC (Input Tax Credit).
Automatic Processing: E-invoicing in GST reduces the need for the manual reporting process. The taxpayer is required to record it & get it authorized on IRP (Invoice Registration Portal). After authentication, the GST portal would update all the invoice details.
Transparency & Fewer Errors: Every e-invoice has a digitally signed QR code that contains all the details and can be read by anyone, allowing transparency, interoperability, and fewer error chances.
Easy & Faster: The unified e-invoice system would speed up the auditing method and availability of genuine ITC (input tax credits).
Challenges in Generating E-invoice under GST
Some of the most common challenges which businesses might encounter due to the amendment are:
- The administration is working over a plan to stop generating digital bills if the invoice reference number (IRN) is not available.
- Customers might not be able to claim ITC benefits if the e-invoice is not available. As a result, customers could start denying the goods.
- Non-authorized E-invoices by IRP (Invoice Registration Portal) would not be valid. The businesses would attract an Rs. 10,000 penalty for non-compliance;
- GST authorities might levy fines might on the transportation of goods that are without a valid tax e-invoice.
How to Generate E-Invoice GST?
Here are steps by step guide to generate E-invoice under GST :
Step 1: All the businesses need to create E-invoices on their accounting portals. However, they need to ensure that all the required fields are mentioned and in the proper format. If the case fails, then the invoice would be held invalid.
Step 2: Getting approved through the government E-invoice portal – IRP (Invoice Registration Portal), is a government portal, where every registrar registers and gets an IRN (Invoice Registering Number). IRN is a unique identification number for each invoice, generated by registered firms once an invoice is authorized.
Step 3: Once a business registers for E-invoice under GST, the IRP portal would generate a digitally signed QR code with specific details from the invoice. The digitally signed QR code shall be printed on the invoice too.
After this process, e-invoice would be authenticated, and all the related information gets mentioned on the government’s EWB portal.
So, this was all about e-invoicing in GST. The government and administration introduced the system at the 37th GST council meeting in September 2019. The primary objective was to build a fast, reliable, error-free, and interoperable billing ecosystem in India.
Frequently Asked Questions
Q1. What E-invoicing in GST?
E-Invoicing is a digitally authenticated method to generate electronic bills. It requires all the B2B & export firms to register with the government-facilitated invoice registration portal (IRP). The system would generate IRN (Invoice Reference Number) and a QR code with all the details for every invoice.
Q2. Who needs to generate an E-Invoice GST?
As per the latest notification, all the organizations having an AATO (Annual Aggregate Turnover) of Rs. 50 crore need to generate an E-invoice under GST. Earlier, the specified AATO limit was Rs. 100 crores.
Q3. What are required & not required documents, during reporting on IRP?
The supplier needs to report the following document to IRP:
- Supplier Credit Note
- Debit Note
- Tax Invoice – B2B & b2G
- Exports Invoice
- SEZ Developer Invoice
Similarly, the supplier does not need to report below mentioned documents:
- Delivery Challan
- Bill of Supply
- Job Work Challan
- Receipt/Refund Voucher
Q4. Does the E-invoice portal support digital invoice generation?
No, the IRP portal doesn’t have the option to generate an e-invoice GST directly. Companies need to hire professionals or use tools. However, all the invoices need to be in the proper, exact format. They must mention the fields as per administration suggestions. The GST portal has also suggested a list of eight accounting tools & billing software.
Q5. What is a QR code?
After successfully authorizing the invoice on IRP, the system facilitates a digitally signed QR code that contains important details about the invoice, which are:
- Recipient GSTIN
- Supplier GSTIN
- IRN (Invoice Reference Number)
- Number of Items
- Item HSN Code
- Value of Invoice
- Invoice number
Note that any person who scans the code can read the details.
Q6. Can IRN be deleted or cancelled after generation?
If the invoice gets approved and the system generates IRN, it can not be deleted from the portal (IRP). But one can cancel it within 24 hours. However, the invoice must be fully cancelled.