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GST e Invoice: A Complete Guide for Businesses

GST e Invoice

GST e Invoice: A Complete Guide for Businesses

GST e Invoice refers to electronic invoicing as defined by GST legislation. Much like how a GST-registered business employs an e-way bill when transporting goods between locations, certain notified GST-registered businesses are likewise mandated to create GST eInvoice for Business-to-Business (B2B) transactions.

As of the latest updates, starting from August 1, 2023, e-invoicing becomes mandatory for all registered individuals whose aggregate turnover (as per their PAN) in any preceding fiscal year from 2017-18 onwards exceeds five crores. Simplify your business financial operations using IndiaFilings Accountant & Invoicing Software for effortless billing and GST e invoicing. Take the first step today!

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What is GST eInvoice?

e-Invoice, also called electronic invoicing, is a system that involves the electronic submission and verification of all Business-to-Business (B2B) invoices through a designated portal.

Upon successful verification, the system generates a unique Invoice Reference Number (IRN) for each invoice through the Invoice Registration Portal (IRP). Additionally, each invoice receives digital signatures and is equipped with a QR code. This entire procedure is collectively termed as e-invoicing under the GST framework.

Businesses Eligible for GST eInvoice

GST E-invoice will apply to all businesses registered under the Goods and Services Tax (GST) system and issue Business-to-Business (B2B) invoices.

Advantages of the eInvoice System

The primary objective behind implementing the e-invoice system is to streamline GST return filing and alleviate reconciliation challenges. Here are some key benefits of the e-invoicing system:

  • Simplified Reporting: E-invoicing enables one-time reporting of B2B invoices during generation, reducing the need for reporting in multiple formats.
  • Efficient Record-Keeping: Sales and Purchase Registers can be easily generated from e-invoice data, facilitating the preparation of GST returns, especially under the new return system.
  •  E-way Bill Generation: E-way bills can be generated seamlessly using e-invoice data, simplifying the logistics and transportation process.
  • Reduced Reconciliation Efforts: E-invoicing minimizes the need for data reconciliation between financial records and GST returns, saving time and reducing errors.
  • Real-Time Tracking: Suppliers can track invoices in real time, expediting the availability of input tax credits and reducing verification issues.
  • Automation of Tax Filing: The tax filing process can streamline compliance and reduce manual efforts.
  • Fraud Prevention: Tax authorities gain access to real-time data, reducing the likelihood of fraudulent activities in the tax system.
  • Elimination of Fake Invoices: E-invoicing helps eliminate the generation of fake GST invoices, ensuring the tax system’s integrity.

GST invoice format Format: A Standardized Schema

The e-invoice format, as specified in GST rules, is designated as Form GST INV-1. In simpler terms, the structure or schema for e-invoicing is outlined through Form GSTR INV-1. This form serves as a standardized template for electronically recording invoice details. To report these details to the Invoice Registration Portal (IRP), they must be presented in JSON format.

The e-invoice format encompasses eight main categories, under which various details will be provided. These categories are as follows:

  • Basic Details
  • Invoice Period
  • Preceding Document / Contract Reference
  • Receipt / Contract References
  • Supplier Information
  • Buyer Information
  • Payee Information
  • Delivery Information

Specific information, such as invoice item details, document totals, and additional data like port codes and batch details, must be included within these broad categories.

It’s important to note that per the e-invoice format, specific details are mandatory when submitting invoice information to the IRP. However, including some details may be optional depending on the nature of the business and specific transactions. This structured approach ensures consistency and accuracy in the electronic reporting of invoices.

Mandatory Information for eInvoices

When preparing e-invoices, specific details are mandatory to ensure compliance and accurate reporting. These essential details include:

  • Code for Supply Type: Indicating the supply type, such as B2B for business to business, EXPWP for export with payment, or SEZWP for SEZ with payment.
  • Code for Document Type: Identifying the document type, such as INV for Invoice, CRN for Credit Note, or DBN for Debit Note.
  • Document Number: The invoice number follows GST rules and regulations.
  • Document Date: The date on which the invoice was issued.
  • Supplier Legal Name: The legal name of the supplier, consistent with their GST registration.
  • GSTIN of Supplier: The GST Identification Number of the supplier.
  • Supplier Address: The complete address of the supplier, including specific details like flat number and building number.
  • Supplier Place, State Code, and Pin Code: The location details of the supplier, including the place, state code, and six-digit PIN code.
  • Buyer’s Name and GSTIN: The buyer’s legal name, along with their GST Identification Number.
  • Place of Supply (State Code): Indicating the state code for the place of supply.
  • List of Items: Providing comprehensive information about the goods and services invoiced, including item descriptions, HSN codes, prices, and more.
  • Document Total Details: Provide details of the document total, including taxes, discounts, and other relevant calculations.
  • Ship-To Details (if applicable): Furnishing details regarding the shipping location if different from the buyer’s address.

These mandatory details ensure e -invoices conform to regulatory requirements and facilitate accurate and efficient record-keeping and reporting.

Phased Implementation of GST e Invoice System

To provide businesses with ample time to transition to the new electronic invoicing system, the GST Council introduced e-invoicing in a phased manner, with different deadlines based on annual turnover:

  • Exceeding 500 crores: Implemented from October 1, 2020
  • Exceeding 100 crores: Implemented from January 1, 2021
  • Exceeding 50 crores: Implemented from April 1, 2021
  • Exceeding 20 crores: Implemented from April 1, 2022
  • Exceeding ten crores: Implemented from October 1, 2022
  • Exceeding five crores: Implemented from August 1, 2023

Note: In the latest update, it is emphasized that starting from August 1, 2023, e-invoicing will become mandatory for all registered individuals whose aggregate turnover (as per their PAN) in any previous fiscal year from 2017-18 onwards exceeds five crores. This phased approach facilitates a smooth transition to electronic invoicing while considering businesses’ varying sizes and complexities.

Types of Documents Reported to the IRP

The e-invoicing system encompasses the following types of documents:

  • Invoices by the Supplier
  • Credit Notes by the Supplier
  • Debit Notes by the Recipient

Any other document required by law to be reported by the document creator.

Workflow of GST e Invoice Generation

The GST eInvoice system follows a standardized format for generating and transmitting invoices. Here is a step-by-step process of how it works:

  • Invoice Generation: Businesses generate invoices using their accounting or billing software, following the prescribed format specified by the GST authorities.
  • Invoice Validation: The generated invoice is validated against the GST rules and regulations to ensure compliance. Any errors or discrepancies are flagged for correction.
  • Invoice Registration: Once the invoice is validated, it is registered on the GST portal, and a unique Invoice Reference Number (IRN) is generated.
  • Invoice Transmission: The registered invoice and the IRN are transmitted to the recipient of the goods or services.
  • Invoice Reporting: The invoice data is automatically reported to the GST portal, eliminating the need for manual data entry.Integration of e-Invoicing with GST Returns.

Integration of e-invoicing with GST Returns

The integration of e-invoicing with GST Returns involves a systematic process:

  • Validation and Registration: An GST e Invoice is eligible for inclusion in the corresponding GST return only after it has undergone validation and registration by the invoice registration system. This ensures compliance with established requirements.
  • Recipient Access: After successful validation, the e invoice becomes visible to the recipient within the new return system, allowing for viewing and necessary actions.

The primary objective of this integration is to facilitate the pre-population of GST returns, effectively addressing reconciliation challenges. With e-Invoicing, invoice data can seamlessly populate the relevant sections of tax returns, eliminating the need for manual data entry.

Integrating e-invoicing with GST Returns aims to enhance efficiency, accuracy, and compliance in the tax reporting process while reducing reconciliation-related issues.

Amendment and Cancellation of e-Invoices

When it comes to amending or canceling e-invoices, there are specific rules and limitations:

  • Partial vs. Full Cancellation: An e-invoice cannot be partially canceled; it must be canceled in its entirety.
  • Reporting Within 24 Hours: If you decide to cancel an e-invoice, it must be reported to the Invoice Reference Number (IRN) within 24 hours of uploading.
  • No Post-24-Hour Cancellation on IRN: It’s important to note that no cancellations are allowed after the initial 24-hour window has passed. In such cases, Cancellation must be done manually on the GST portal before filing returns.

How can an e-invoice be amended?

Any amendments to an e-invoice can only be performed through the GST Portal. If changes or corrections are required for an e-invoice, taxpayers must access the GST Portal and follow the designated procedure for making amendments.

Amending e-invoices through the GST Portal ensures accuracy and compliance with the GST system’s regulations, allowing businesses to maintain accurate records and fulfill their tax obligations effectively.

Exemption from E-Invoicing Compliance

According to the most recent mandate, starting from August 1, 2023, e-invoicing will be mandatory for all registered persons whose aggregate turnover, as determined by their PAN, exceeded five crores in any prior fiscal year from 2017-18 onwards.

Businesses with a turnover below the stipulated amount are not required to comply with the e-invoicing requirement. This exemption ensures that smaller businesses are only burdened with this additional compliance once their turnover reaches the specified threshold.

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