E-Invoicing shall be mandatory from 01.10.2020. We have tried to summarize the necessary information for the subject with easy understanding.
The GST Council, in its 37th meeting held on 20th September, 2019, has approved introduction of electronic invoice (‘e-invoice’), beginning from 1st January, 2020 on voluntary basis.
Further, the GST Council, in its 39th meeting, held on 14th March, 2020, has further recommended certain classes of registered persons to be exempt from issuing e-invoices and the date for implementation of e-invoicing to be extended to 01.10.2020 for certain category of taxpayers.
Not going into the theory that it will lead to standardization etc. etc. but the real benefits for the taxpayer will be as below:
- Directly reporting these invoices in GSTR 1
- E way bill can be generated directly with the e-invoice generation
- Elimination of duplication of invoice numbers
It is applicable for all registered persons who aggregate turnover (Kindly note that aggregate turnover would mean PAN based turnover and not GST based turnover) in a financial year exceeds Rs. 500 Crores. (Earlier the threshold limit was kept as Rs. 100 Crores but later on it has been enhanced to Rs. 500 Crores).
Following categories of the taxpayers are not required to comply with e-invoicing rules even though the turnover exceeds Rs. 500 Crores.
- Special Economic Zone (SEZ) units including Free Trade & Warehousing Zones (commonly referred to as FTWZ) (Kindly note that only SEZ Units are exempted, SEZ Developers are not)
- 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
- Supplier engaged in supplying passenger transportation service
- Supplier engaged in supplying services by way of admission to the exhibition of cinematograph films in multiplex screens
- Input Service Distributor (ISD)
So would it mean that now invoice will be generated from Government Portal?
No, it is not like that. E-Invoicing is not generation of invoice by a government portal.
Invoice will be generated from taxpayer’s accounting system only as it was done before.
The change is that, now these invoices will be reported to ‘Invoice Registration Portal’, commonly referred to as IRP (Like we are reporting all invoice details to E way bill portal).
After reporting IRP will generate the unique ‘Invoice Reference Number’, commonly referred to as IRN after digitally signing the e-invoice (Like we are getting E-way bill number) along with QR code.
Kindly note that now the invoice will be a valid GST invoice only if it has valid IRN and QR code.
How it will work?
First the invoice will be generated by the taxpayer with his own accounting software.
After that json file is to be created based on the invoice and it will be uploaded to the IRP portal.
The IRP will then generate IRN based on Supplier’s GSTIN, Document Type, Document Number and Financial Year and the IRP system will also check in its registry that there is no duplication of details.
If there is no error, then IRP will add its digital signature on it new json will be generated. It will have IRN and the QR code in it and both will be unique for each invoice. (Kindly note that the digital signature will of IRP and it is not required of the taxpayer)
This json is required to be downloaded in the taxpayer’s software and it is to be converted into pdf and then by attaching logo etc. if required by the taxpayer (from its own software only), it can be printed. Kindly note that IRP will remit back only json file. PDF conversion, logo insertion etc. is to be done by the taxpayer’s accounting software only.
The data will be shared with GSTR 1 and e way bill system.
However, for transferring data to e way bill system and generation of e way bill, transporter id / vehicle number etc. details is to be entered. In the absence of the same, e way bill will not be generated but there will be only e invoice.
Reporting of IRN and QR code on the invoice:
QR code is mandatory to be printed on the invoice.
Reporting of IRN is optional as it will be embedded in the QR code.
Kindly note that QR code is to be printed on invoice itself and not on separate paper and it should be clear enough to be readable by a QR code reader.
Under e-invoicing, following documents are covered:
- Credit notes
- Debit notes
So, wherever the word e-invoice appears, it is to be referred to as all of the three as mentioned above.
Further, only following supplies are covered under e-invoicing.
- Supplies to B2B
- Supplies to SEZ (with / without payment)
- Exports (with / without payment)
- Deemed Exports
It would mean that B2C transactions are not to be reported to IRP at present. In future, it may be required to be reported.
Applicable for Reverse Charge:
If the invoice issued by notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.
On the other hand, where supplies are received by notified person from (i) an unregistered person (attracting reverse charge under Section 9(4)) or (ii) through import of services, e-invoicing doesn’t arise / not applicable.
Empanelment on the portal:
The e-invoice category is not open for all. It is applicable only for the empaneled taxpayers whose turnover has crossed the threshold limit.
One can search the status of enablement of a GSTIN on e-invoice portal: https://einvoice1.gst.gov.in/ > Search > e-invoice status of taxpayer
In case any registered person, is required to prepare invoice in terms of Rule 48(4) but not enabled on the portal, he/she may request for enablement on portal: https://einvoice1.gst.gov.in/ > ‘Registration – > e-Invoice Enablement’.
In case any registered person, who doesn’t have the requirement to prepare invoice in terms of Rule 48(4) but still enabled on the e-invoice portal, the same may also be brought to the notice at email@example.com so that necessary action can be taken.
Kindly note that it is the responsibility of taxpayer that he is empaneled if his turnover has crossed the threshold limit. He can’t argue that as his name is not empaneled, he is not required to follow e-invoicing rues.
Modes of generation of e-invoice
- API based (integration with Taxpayer’s System directly)
- API based (integration with Taxpayer’s System through GSP/ASP)
- Free Offline Utility (‘Bulk Generation Tool’, downloadable from IRP)
Web-based / mobile app-based modes will also be provided in future.
Yes. It is possible. The offline utility (‘bulk generation tool’) serves this purpose.
Types of fields in e-invoicing schema:
– Data for fields marked as ‘Mandatory’ have to be provided compulsorily. A mandatory field not having any value can be reported as NIL.
– Fields marked as ‘Optional’ may or may not be filled up. Many of these are relevant for specific businesses (e.g. Batch No., Attributes etc.) and to cater to specific scenarios (e.g. export, e-way bill etc.).
– Some sections in the schema are marked as ‘Optional’. But, if this section is selected, some of the fields may be mandatory. For example, the section ‘e-way Bill Details’ is marked as optional. But, if this section is chosen, the field, ‘Mode of Transportation’ is mandatory.
|Starts with 0||Optional field|
|Starts with 1||Mandatory field|
|Ends with 1||Data for the field can be entered only once|
|Ends with n||Data for the field can be entered multiple times|
Reporting of Freight / Insurance / Packing charges etc. in e-invoice:
Such other charges (taxable), e.g. freight, insurance, packing & forwarding charges, amortization charges etc. may be added as one more line item in the invoice.
Reporting of TCS collected by suppliers under Income Tax Act, 1961 in e-invoice:
At present, there is no separate placeholder for this field in schema and including it in schema will be examined in next round of revision.
However, as a work around, the field of “Other Charges (Invoice Level)” can be used to mention TCS where it doesn’t form part of taxable value.
It may further be noted that e-invoice schema is only to report specified invoice particulars to IRP and once IRN is obtained from the portal, the business may add any other elements/ charges not relevant to e-invoice reporting, while issuing invoice finally to buyer.
Reporting of Credit / debit note and linking original invoice details:
It was announced probably a year back that in the GSTR 1, original invoice details with respect to debit / credit note details will be delinked.
However, it was made functional now and presently in GSTR 1, linking of credit / debit notes with original invoice details has been removed.
Thereby, as the linking option has been disabled in GST portal, it will also not required to be linked while generating e-invoice.
How IRN will look like:
IRN will not be the same as invoice number appearing on the invoice.
IRN is a unique 64-character hash, e.g. 35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06bbe
Amendment of E-Invoice:
Amendments are not possible for e-invoicing. Thereby, utmost care is to be taken while uploading details on the portal.
However, as a human being, there will be chances of mistakes. In that case any changes in the invoice details reported to IRP can be carried out while filing GSTR-1. But in no case, it can be amended in IRP portal.
However, these changes will be flagged to proper officer for information.
Cancellation of e-invoice:
The e-invoice can be cancelled through ‘Cancel API’ functionally at IRP within 24 hours.
However, if the connected e-way bill is active or verified by officer during transit, cancellation of IRN will not be permitted.
In case of cancellation of IRN, GSTR-1 also will be updated with such ‘cancelled’ status.
Further, once an IRN is cancelled, the concerned invoice number cannot be used again to generate another e-invoice/IRN.
Further, it has to be cancelled in toto. No partial cancellation of reported e-invoice allowed.
Various notifications have been issued on 30th September 2020, the summary details of which are as below:
- The threshold limit of turnover of Rs.500 Cr is to be seen qua any of the years starting from FY 2017-18. It means if in any of the F Y 17-18, 18-19 or 19-20, if threshold of Rs. 500 Cr is crossed then E-invoicing provisions are applicable from 01.10.2020
- For exports also, it is mandatory.
- Dynamic QR Code for B2C transactions deferred till 01.12.2020
- Partial relief for the month of October 2020 – Press Release has been issued by CBIC stating that as a last chance, in the initial phase of implementation of e-invoice, it has been decided that the invoices issued by such taxpayers during October 2020 without following the manner prescribed, shall be deemed to be valid and the penalty leviable for such non-adherence to provisions, shall stand waived if the Invoice Reference Number (IRN) for such invoices is obtained from the Invoice Reference Portal (IRP) within 30 days of the date of invoice. As an example in case a registered person has issued an invoice dated 3rd October, 2020 without obtaining IRN but reports the details of such invoice to IRP and obtains the IRN of the invoice on or before 2nd November, 2020 then it shall be deemed that the provisions are complied with and the penalty imposable shall also stand waived.
Hope you have found the above useful.