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E-invoicing in GST: Definition, Applicability, Limit, and more

E-invoicing in GST

An invoice is a very important part of business accounting. It shows that the client has to pay you for the goods or services you’ve given them and acts as a payment agreement. If your business is registered for GST, you may need to send E-invoices for transactions between businesses. The GST law defines E-Invoicing as electronic invoicing. In the same way that a business that is registered for GST uses an e-way bill to move goods from one place to another. Similarly, some businesses that are registered for GST and have been notified must create an E-invoice for business-to-business (B2B) transactions.

Wondering if you need to use E-invoicing in GST? You should read this full guide that covers everything you need to know about E-invoicing in GST from meaning to applicability.

What is E-invoicing in GST?

Electronic invoicing, also known as E-invoicing in GST, refers to the system by which the Goods and Services Tax Network (GSTN) electronically authenticates B2B invoices for use on the common GST portal.

At its 35th meeting, the GST Council implemented an E-invoicing system to cover particular categories, including both small and large businesses. Under the GST E-invoice system, the GSTN-managed Invoice Registration Portal (IRP) assigns identifying numbers to each invoice. The IRP subsequently transfers all invoice-related information to both the GST site and the e-way bill. This eliminates the requirement for manual data entry during the submission of GSTR-1 returns and Part-A of e-way bills.

In India, E-invoicing under GST does not refer to the creation of invoices for the GST portal. Rather, it relates to the submission of standard invoices that have already been prepared on einvoice1.gst.gov.in. It automates reporting for several purposes by requiring only a single entry of invoice details. In addition, the CBIC has notified a set of common E-invoicing gateways under GST.

E-invoicing Limit

Here are the most latest updates about the E-invoicing limit under GST:

1. 1st August 2022

In accordance with notification number 17/2022, the E-Invoicing system for B2B transactions has been expanded to businesses with annual aggregate revenue of between Rs.10 crore to Rs.20 crore as of October 1, 2022.

2. February 24th, 2022

The E-Invoicing system will be expanded to companies with an annual turnover of more than 20 crore rupees up to 50 crore rupees beginning on 1 April 2022, per notice no. 1/2022.

E-invoicing in GST

Benefits of E-invoicing to Businesses

The primary objective of using an E-invoice system is to pre-populate the returns and decrease the difficulties associated with reconciliation. This is made possible by the design of the IRP system, which exchanges invoice information with the GST and e-way bill systems. Thus, continual uploading of invoices will ensure that the majority of information required for refunds and e-way bills is automatically completed. By utilising GSTN’s E-invoice, businesses will have the following benefits:

  • E-Invoice closes a significant data reconciliation gap under GST to decrease mismatching errors.
  • E-invoices generated by one application can be read by another, allowing interoperability and reducing data entry errors.
  • E-invoice enables the supplier’s invoices to be monitored in real-time.
  • Backward integration and automation of the GST return filing process — the required details of the invoices would be automatically entered in the various returns, particularly for the generation of part-A e-way bills.
  • Improved accessibility to legitimate input tax credits.
  • Access to official credit methods, such as invoice discounting or financing, should be expedited and simplified, especially for small enterprises.
  • Since the information they require is available at the transaction level, tax authorities undertake fewer audits and surveys.
  • Improved client connections and increased opportunities for small businesses to transact with large corporations.

Applicability of E-invoicing under GST

The table below outlines the applicability of E-invoicing in GST based on the total annual revenue of taxpayers:

Phase

For taxpayers with combined annual revenue of more than
Applicable date
I
INR 500 crore

01.10.2020

II

INR 100 crore
01.01.2021
III
INR 50 crore

01.04.2021

IV

INR 20 crore
01.04.2022
V
INR 10 crore

01.10.2022

Additionally, keep in mind that:

  • If their revenue reaches the specified threshold in any fiscal year beginning in 2017–18 through 2021–22, the taxpayers must abide by the GST E-invoicing system. In addition, the turnover of all GSTINs associated with a single PAN across India is referred to as the aggregate turnover.
  • E-invoicing will be used starting in the following fiscal year if a company’s turnover was below the threshold level in the previous fiscal year but has since risen beyond the limit in the current fiscal year.
  • According to CBIC notification No. 13/2020, E-invoicing in GST is not applicable to a number of registered persons regardless of revenue, including:
  1. Insurance providers, banks, or NBFC
  2. Agencies for moving goods
  3. Individuals that are authorised to provide passenger transportation
  4. An SEZ unit
  5. A branch of government or a municipal government
  6. Registered individuals that provide services through admittance to the screening of motion pictures in multiplexes.

Process of getting an E-invoice in GST

The procedures for E-invoicing under GST are listed below:

1. As a taxpayer, you must make sure that the ERP system is being used as intended and work with the software vendor to implement a set of standards for E-invoicing under GST.
Additionally, you have the following two alternatives for creating IRN:
– Whitelisting of your computer system’s IP address for integration through a GST Suvidha Provider (GSP) or direct API integration.
– Uploading invoices in masse using a programme for creating electronic invoices in bulk.
2. After choosing one of the two possibilities, you must use that programme to create a conventional invoice by entering all the required information, such as transaction value, item rate, billing name, and address, to name a few. In this case, the IRP serves as a central registrar for GST E-invoicing. You can opt to communicate with IRP through a mobile app or an SMS.
3. Using the four major criteria of the invoice number, seller GSTIN, financial year, and document type, IRP will then validate the B2B invoice details and generate an IRN for reference.
4. The invoice is digitally signed in this phase by the IRP, who subsequently generates a QR code for the supplier in Output JSON. Additionally, if available, the supply’s seller is informed through email about the creation of the electronic invoice.
5. The authenticated payload is subsequently sent by IRP to the GST site for return filing and, if necessary, the e-way bill portal.

Note: The GST E-invoice system simply requires that all taxpayers submit invoices electronically to IRP.

What are the Mandatory fields for E-invoicing in GST?

Supplier_Legal Name
Supplier_GSTIN
Supplier_Address
Supplier_Place
Supplier_State_Code
Supplier Pincode
Document Number
Document Date
Preceding_Invoice_Reference and Date
Recipient_Legal Name
Recipient’s GSTIN
Recipient’s State Code
Pincode
Recipient’s Address
Supply Type Code
Item Description
HSN Code
Item_Price
Assessable Value
GST Rate
Total Invoice Value
IGST Value, CGST Value, and SGST Value
Place_Of_Supply_State_Code
Recipient Place
IRN
ShippingTo_GSTIN
Shipping To_State, Pin Code, and State Code
Is_Service
Dispatch From_Name, Address, Pincode, and Place

Systems before & after E-invoicing in GST

Prior to the implementation of E-invoicing in the GST, businesses produced invoices using various software. These invoices’ information is then manually input for the GSTR-1 return. The details of the invoice are reflected in GSTR-2B once the respective suppliers have completed filing GSTR-1. In addition, the carriers or consignors must create e-way bills by reimporting the devices in Excel.

There is an electronic invoicing method to make the difficulties simpler. The procedure for creating or uploading invoice data is still the same. However, JSON, an excel tool, or an API integration can now be used. Here, the data is easily transferred for the creation of the GSTR-1 and the e-way bill.

E-invoicing in GST

How can E-invoicing curb Tax Evasion?

In the following ways, it will help prevent tax evasion:

  • Since the E-invoice must be compulsorily issued through the GST system, tax officials would have real-time access to transactions.
  • Because an invoice is generated prior to completing a transaction, there will be less opportunity for manipulation.
  • Since all invoices must be generated through the GST system, it will lessen the likelihood of fraudulent GST invoices, and only real input tax credits may be claimed. The ability to connect input credit information with output tax information facilitates the identification of fraudulent tax credit applications by the GSTN.

Conclusion

Since the GST council authorised the notion of electronic invoicing, E-invoicing has gained prominence in the business community. The rationale is that electronic invoicing has several advantages over the conventional way. In addition, E-invoicing promotes the development of the digital economy. As a result of the improved effectiveness of the GST system, fraudulent activities will be reduced and data entry errors will be eliminated. As the invoice is a crucial document and E-invoicing is a connected reform, it is crucial for businesses to fully comprehend it and prepare for it properly.

So, we hope this blog was helpful and that you now fully understand the E-invoicing in GST concept.

FAQs

1. Can an E-invoice be partially or completely cancelled?

Ans: E-invoices can only be cancelled in their entirety, partial cancellations are not possible. It must be sent within 24 hours of cancellation to the IRN. Any subsequent attempts to cancel must be made manually on the GST site before the returns are filed because such actions are not permitted on the IRN.

2. Does an E-invoice necessitate an E-way bill?

Ans: When establishing an E-invoice, taxpayers have the option to also create an e-way bill. However, customers also have the option to generate an e-way charge later. To guarantee the validity of the e-way charge, an E-invoice must be provided. Many believe that the arrival of E-invoicing has rendered the e-way bill obsolete, however, this is untrue. E-way bills are crucial documents that are necessary for the transportation of products.

3. Can we create an electronic invoice for someone who isn’t registered?

Ans: The client or unregistered individual won’t be claiming an ITC. As of right now, there is no rule requiring E-invoicing for B2C transactions. But for digital payments in B2C transactions, a dynamic QR code needs to be generated. For taxpayers with a cumulative revenue of over 500 crores since the first of December 2020, this is a requirement.

4. What is E-invoicing in GST?

Ans: The mechanism used by the Goods and Services Tax Network (GSTN) to electronically validate B2B invoices for use on the common GST portal is referred to as electronic invoicing, or E-invoicing in GST.

5. E-invoicing is applicable to whom?

Ans: The E-invoicing system is currently in place for GST-registered individuals whose total revenue in any prior fiscal year (2017–18 to 202–22) exceeded Rs. 20 crores. Now it is applicable to those with a revenue of more than Rs. 10 crore to up to Rs. 20 crore as of October 1, 2022. As mentioned in the section above, there are certain exceptions.

6. On the shared GST portal, would there be a feature for generating electronic invoices?

Ans: No, the individual ERP software now used by firms will continue to be used to create invoices. The invoice must adhere to the specified requirements and the standard E-invoicing format. Direct invoice production via a uniform gateway is not yet expected.

7. What kinds of documentation must be submitted to the Invoice Reporting Portal (IRP)?

Ans: All invoices issued by the supplier, credit notes, debit notes, and other documents specified in the GST law must be recorded as electronic invoices (E-invoices).

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