What Is e-Invoicing Under GST

The exchange of invoice documents between a supplier and a buyer in an integrated electronic format is e-invoicing. It is a mechanism where B2B invoices are authenticated electronically by GSTN for further use on the common portal. 

The system is for GST registered persons for uploading all B2B invoices to the Invoice Registration Portal IRP. The IRP generates and returns a unique invoice reference number (IRN), digitally signed e-invoice, and QR code to the user.

From 1st April 2022, e-invoice applies to all businesses whose aggregate turnover has exceeded the Rs. 20 crores limit in the previous financial year. E-invoice means submitting or uploading of ERP or accounting software-generated invoice into the Invoice generation portal for electronic authentication.

E-invoice is a process through which a normally generated invoice is authenticated by GSTN. Post authentication each invoice will be issued an IRN – Invoice reference number. The main aim of Electronic invoices is to reduce the evasion of the tax, and auto-population of various returns and also targets the reduction of reconciliations problem currently prevailing under GST.

With the generation of E-invoice, the government will get to know the full details of the invoice. Once the data reaches the government the process will be standardized so that E-way bills and GST returns will be easily prepared.

Supply Type Code Under e-Invoicing 

B2B: Business to Business
B2C: BUsiness to Customer
SEZWP: to SEZ With Payment
SEZWOP: to SEZ Without Payment
EXPWOP: Export Without Payment
DEXP: Deemed Export

B2B: Business to Business

e-Invoicing applied only to B2B – Business to Business invoices. Thus B2B invoices require both E-way bills and e-invoices, whereas B2C only require E-way bill to be generated. Electronic invoicing is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. All businesses whose aggregate annual turnover is more than Rs. 20 crore are eligible for e-invoice from 1st April 2022.

How To Create e-Invoice?

The taxpayer or business entity is responsible to generate the invoice/s and then submit them to the Invoice registration portal IRN for approval. After the successful verification, the portal will return the invoice to the supplier along with the unique reference number, digital signature, and QR code. The e-invoice will also be shared with the corresponding buyer on the email id provided.

Steps To Create e-Invoice

1. The seller/supplier will create an invoice in the prescribed format (e-invoice schema) using his/her accounting or billing software. It must have mandatory details. The accounting software of the supplier will generate a JSON for each B2B invoice. The JSON file will be uploaded to the IRP.

2. The next step would be to generate a unique invoice reference number IRN by the seller using a standard hash generation algorithm. 

3. Next, the seller will upload JSON for each of the invoices, along with IRN to the invoice registration portal either directly or via third-party software.

4. Authentication and signing: IRP will validate the hash/IRN attached with JSON or generate an IRN if not already uploaded by the supplier. 

Then it will authenticate the file against the central registry of GST. After the successful verification, it will add its signature on the invoice and a QR code to JSON. Hash generated earlier will become the new IRN of the E-invoice. It will be the unique identity of that e-invoice for the entire financial year.

5. Sharing of data: The data uploaded will be shared with the E-way bill and GST system

6. E-invoice downloading: The portal will be sent to the digitally signed JSON along with IRN and QR code back to the seller. The invoice will also be sent to the buyer on their registered email Id.

Benefits of Implementing e-Invoice

(a) With electronic invoices, the invoices issued by all are now fully interoperable. This eliminates transcription and other errors.

(b) The need for issuing invoices in multiple formats – one for the e-way bill and the other for GSTR 1 is eliminated

(c) As the mechanism provides a complete trail of B2B invoices, it helps in the reduction of tax evasion.

(d) Suppliers can track the invoices issued in real-time

(e) System-level matching of Input tax credit and output tax is enabled. This allows faster availability of input tax credits

(f) Eligible taxpayers have to report invoices just once. Once the taxpayer uploads the invoice on the invoice registration portal, the details are shared automatically with GST and the e-way bill portal. Details in GSTR 1 and Part A of Form EWB 01 are auto-populated. This reduces manual intervention to a large extent. Also, this will minimize the number of errors caused because of manual input of data.

(g) As Part A details in Form GST EWB 01 are auto-populated, the efforts to generate EWBs are minimized. After this, the registration person has to enter only the Part B details to complete the EWB generation process.

(h) The signed e-invoice is digitally shared with the buyer via email. Thus the buyer can compare his purchase order with the e-invoice and accept or reject it in real-time

(i) As the reporting is done on a real-time basis there is no scope for manipulation of the invoice. This further minimizes the scope for creating fake GST invoices

(j) Also, only those invoices with genuine ITC claims can be dealt with. Tax authorities can track phony input credits as the ITC and output tax details are readily available. 

(k) Suppliers are required to add the QR code received from IRP in the invoices shared with the recipient. This QR code can be scanned many times and the invoice can be generated again even if the original invoice is misplaced by the taxpayers.

(l) E-invoicing under GST will help secure instant loans without much documentation. It will majorly benefit MSMEs as banks can rate them based on these invoices and other GST data which will be readily available in the public domain.

(m) E-invoicing reduces the chance of human errors as the information will be directly populated in the billing system and all the data will be maintained safely thus minimizing errors. 

(n) IRP can be used not only to generate IRN but also E-way bills.

(p) As E-invoice is automated there is a minimum requirement of human intervention in checking, tallying, matching, etc. This saves time and money on both sides of the transaction, leading to faster payments and fewer errors between buyers and sellers.

To Whom is e-Invoicing Applicable?

Notification NumberApplicable FromAggregate Turnover Exceeding
61/2020 (30.07.2020)01.10.2020500 Core
88/2020 (10.11.2020)01.01.2021100 Core
05/2021 (08.03.2021)01.04.202150 Core
01.04.202201.04.202220 Core

From 1st April 2022, E-invoicing applies to the GST registered persons whose aggregate turnover in the financial year exceeds Rs. 20 crore. E-Invoice applies only to B2B transactions

How Can We Generate e-Invoice & IRN?

1. Directly from invoice registration portal (IRP): E-invoice can be created directly from the IRN portal with the following steps:

2. Create invoices using billing or accounting software as per the prescribed format for E-invoicing.

3. Invoice registration number IRN generation is generated using a standard hash generation algorithm

4. Upload on the invoice registration portal 

5. IRP validation of invoice information

6. Digital signature and QR code generation

7. The uploaded data will be shared with the E-way bill and GST system which will be used for the auto-population of GST Annexures

8. The portal will send digitally signed JSON along with IRN and QR code back to the seller. The invoice will also be sent to the buyer on their registered email id.

Offline Tool

The taxpayer needs to have the ENIV bulk converter installed in the system. This is an Excel-based offline utility that helps convert multiple invoices entered in the excel sheet into a single JSON file for bulk upload. This tool can be downloaded from the trial e-invoice portal. Here are the steps – Go to Help – Tools- Bulk Generation tools. Select the most appropriate tool.

(1) Using APIs: 

(a) Log in to the e-Invoice portal

(b) Go to API registration and then click on IP whitelisting

(c) IP whitelisting will be done after scrutinizing the test report

(d) The client ID and client secret will be sent to a registered mobile number of the taxpayer via SMS

(2) Through Accounting Software: Generating invoices and constantly switching to accounting software can be a consuming process. The cutting-edge accounting software offers a comprehensive solution to generate e-invoices in a hassle-free manner. With accounting software, GST-compliant invoices can be generated and managed online. Multiple invoices can be generated easily with user-friendly accounting software.

(3) Through Mobile app: Now creating an e-invoice is just a touch away. The cutting-edge mobile app brings you a carefully designed easy invoice manager app for generating hassle-free e-invoices. The app allows creating your e-invoice like adding items, combining multiple invoices into one, modifying the taxes, etc. It allows you to create professional and customized invoices specific to your industry with the logo of the company.       

(4) Through GSP: Using API through GSP integration, system integration can be done through the help of registered GSP – GST Suvidha providers. Before using this model the identified GSP will need to be tested in a sandbox environment. After the test, GSP will need to submit the test summary report on the sandbox portal. GSP needs to be registered on the e-Invoice portal if not registered.