What is e-invoicing?
- ‘E-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal.
- An identification number will be issued against every invoice by the Invoice Registration Portal.
- All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time.
- Therefore, it will eliminate the need for manual data entry while filing GSTR-1 returns.
- As per the Notification. No. 10/2023-Central Tax Dated 10th May,2023 Effective from 1st August 2023 Every GST Registered person whose Aggregate Annual Turnover exceeds Rs 5 Crore in any preceding Financial Year from 2017-18 onwards needs to be considered to ascertain the applicability of E-Invoicing.
- “Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
- As per the Notification. No. 10/2023 amended Notification.No.13/2020 vide Notification. No. 70/2020 and Notification. No. 88/2020, AATO in any preceding Financial Year from 2017-18 onwards needs to be considered to ascertain the applicability of E-Invoicing mandate. The AATO is as per GST Returns.
Who needs to generate an E-Invoice
GST E-invoice can be generated only by suppliers. The recipients and transporters cannot generate it. E-commerce operators can generate e-invoices under GST on behalf of the sellers on their platforms.
Type of documents to be reported
The taxpayers need to report the following documents to the e-invoice system.
- Invoice by Supplier
- Credit Note by Supplier
- Debit Note by Supplier
Supplies covered under E-invoicing
E-Invoicing currently applies to:
- Supplies to registered persons (i.e., B2B supplies)
- Supplies to SEZs (with/without payment of tax)
- Exports (with/without payment of tax)
- Deemed exports
E-Invoicing currently not applies to:
- nil-rated Supplies
- wholly-exempt Supplies
Non Applicability under E-invoicing
- An insurer or a banking company or a financial institution, including NBFC
- A Goods Transport Agency (GTA)
- A registered person supplying passenger transportation services
- A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services
- SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)
- A government department and Local authority (excluded via CBIC Notification No. 23/2021 – Central Tax)
Steps to generate e-invoice
- Invoice Creation
Invoice is created using an accounting or billing software as per the prescribed format for E-invoicing
- Invoice Registration Number (IRN) Generation
Supplier can generate a unique Invoice Reference Number (IRN)
- Upload on Invoice Registration Portal (IRP)
JSON file for each B2B invoice, along with the IRN to be uploaded.
- IRP Validation of Invoice Information
The IRP will authenticate the file against the central registry of GST for any duplication.
- Digital Signature and QR Code Generation
Upon successful verification, the invoice will be updated with IRP’s digital signature on the invoice data and a QR code will be added to the JSON file.
- E-Invoice data transmission to E-Way Bill Portal and GST System
The uploaded data will be shared with the E-way bill and GST system, which will be used for auto-population of GST Annexures
- E-Invoice Receipt back to Supplier’s ERP
The portal will send the digitally signed JSON along with IRN and QR code back to the seller.
E-invoicing applicability for RCM transactions
- SEZ units are exempted from E-invoicing however the SEZ developer needs to generate IRN as they fall under E-invoice mandate.
- E-invoicing is not required for B2C – Business to Consumer transactions. However, for taxpayers with AATO above Rs 500 Cr, the invoices need to have self-generated QR Code.
Generating E-Way Bill along with E-Invoice
Generation of E-way Bill is now inter-twined with E-Invoicing. IRP can be used to generate not only IRN but also E-way bills, for the documents that qualify.
- Penalty for non-issuance of invoice: 100% of the tax due or Rs.10,000 (whichever is higher) will be imposed for each instance of non-compliance.
- Penalty for incorrect invoice: Rs.25,000 will be imposed as penalty in case the goods are transported without a valid invoice, the department may detain the goods and the vehicle.Penalty may be imposed here.