E-invoicing under GST: A Broad Overview of Electronic Invoicing

The transportation of goods from one point to another is facilitated by the filing of ‘E-Way Bills.’ It is done on the common GST portal. Likewise, the GST Council, in its 35th meeting, has chosen to implement a system of e-Invoicing. It will be applicable to particularized categories of persons. The CBIC formally announced the system of e-Invoicing under GST vides Notification No. 68/2019 – Central Tax. This also covers sub-rules (4), (5), and (6) below rule 48 of the CGST Rules, 2017. E-Invoicing does not imply the formation of invoices on the GST portal. That would be a myth. Instead, e-Invoicing includes the submission of an already created standard invoice on a common e-invoice portal. Thus it automates multi-purpose recording with a one-time input of invoice details. The CBIC announced a set of common portals for the preparation of e-invoices via Notification No.69/2019 – Central Tax.

Introduction

‘E-Invoicing’ is a method in which B2B invoices are authorized electronically with GSTN. It is an additional trade on the regular GST portal. Below the automated invoicing scheme, an identification number will be allotted against each invoice by the Invoice Registration Portal (IRP). It will be ruled by the GST Network(GSTN). The first IRP was started by the National Informatics Centre at invoice.gst.gov.in. All invoice information will be moved from this portal to the GST billing portal in real-time. Hence, it will eliminate the requirement for manual data entry while filing GSTR-1 returns. This also goes while the generation of part-A of the e-way bills.

To whom is e-Invoicing applicable?

E-Invoicing has been made applicable from 1st Oct’ 20 to every business whose turnover has passed Rs.500 crore. This applies in any of the leading financial years from 2017-18 to 2019-20 – Central Tax invoice under GST. Moreover, from 1st Jan’ 21, e-Invoicing will be relevant to businesses passing the Rs.100 crore turnover limit. This applies in any of the financial years between 2017-18 to 2019-20. However, irrespective of the turnover, e-Invoicing shall not be relevant to the following categories of registered persons for now. It has been reported in CBIC Notification No.13/2020 – Central Tax:
  • An insurer or a banking corporation or a financial institution, including an NBFC
  • A Goods Transport Agency (GTA)
  • A registered person providing passenger transportation gst services
  • A registered person providing services by way of admission to the display of cinematographic films in multiplex services
  • An SEZ unit

The current system in place for issuing invoices

Currently, businesses make invoices through various software, and the features of these invoices are manually uploaded in the GSTR-1 return. Once the GSTR-1 is listed, the invoice information is revealed in form GSTR-2A for the recipients. On the other hand, the merchant or transporters must generate a GST invoice bill. It can be done by again sending the invoices in excel or JSON manually. The e-Invoicing system has to be implemented from 1st October 2020. This method of generating and uploading invoice details will continue to be the same. It will be performed by conveying using the excel tool/JSON or through API integration. The data will seamlessly move to GSTR-1 preparation and for the e-way bill generation too. The e-Invoicing system will be an essential tool to enable this.

When will e-Invoicing get implemented?

The first phase of e-Invoicing was implemented from 1st October 2020 for taxpayers with a total turnover exceeding Rs.500 crore. These taxpayers can use gst bill formats. From 1st January 2021, e-Invoicing will be extended to companies with an aggregated turnover passing Rs.100 crore. The government plans to conduct all businesses under the range of e-Invoicing from 1st April 2021. The aggregate turnover will involve the turnover of all GSTINs below a single PAN, across India.

Benefits of Electronic invoicing to businesses

Businesses will have the following benefits by utilizing e-invoice initiated by GSTN:
  • E-invoice fixes and plugs a major gap in data conciliation under goods and services tax to decrease mismatch errors.
  • E-invoices built on one software can be read by another, enabling interoperability and help reduce data entry faults.
  • Real-time tracking of invoices provided by the supplier is enabled by e-invoice.
  • Backward integration and industrialization of the tax return filing process
  • Faster availability of actual input tax credit.
  • Lesser probability of audits/surveys by the tax authorities since the information they need is available at a transaction level.

Major Challenges of E-invoicing GST

  • If the invoice is discovered not listed on the IRP, such invoice will not be regarded as a valid tax invoice. Hence, a fine of Rs 10,000 will be incurred for every instance of non-compliance
  • Transportation of goods without a substantial tax invoice can be a reason for the delay of goods and vehicles. Fines will be also imposed for the same.
  • Customers may refuse to accept and/or pay goods if a legitimate tax invoice is not available. It would influence the receiver’s eligibility to receive ITC benefits
  • In addition, the government plans to fix a check. It will prohibit the generation of an e-way bill if the IRN is missing

Update for E-invoicing Under GST System

For the improvement of the GST invoice structure, the council has made a change in  a current GST E-invoice. The plan will be in practice from 1 January 2020 on a voluntary basis. As every new provision calls for getting a particular standard to effectively achieve the goal. The basic criterion for e-invoicing is finalized after consultations with trade/industry bodies. Members of ICAI assures the absolute applicability of the new e-invoicing below the GST system. Till now there was no regulation fixed for e-invoicing. It was in the 37th GST Council meeting chaired by Union FM Nirmala Sitharaman. The standard of the new e-invoice mechanism was explained and approved are published on the GST portal.

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