An overview of e-invoicing

The 'e-invoicing' system has been introduced from January 1, 2020 for generating business-to-business (B2B) invoices on a voluntary basis. It will become mandatory w.e.f 01 April 2020 for Registered person whose aggregate turnover in a financial year exceeds Rs 100 Crore.

E-Invoice is a standard format of the invoice recommended by the GSTN for the GST registered suppliers. There is a myth or misconception that e invoicing means generation of invoices from a central portal of tax department (GSTN Portal).

E invoice does not mean the generation of invoices from a central portal of the tax department. It's a standard format of the invoice. The taxpayer would continue to use their existing accounting system / ERP or excel based tool for generating the invoice. Existing software would adopt the new e-invoice standard wherein they would re-align their data access and retrieval in the standard format.

The GST council approved the standard of e-invoice in its 37th meeting held on 20th sep 2019 and the same along with schema has been published on GST portal. The same e-invoice schema will be used by all kinds of businesses and no separate format is required for different kind of users i.e. Traders, Medical Shops, Professionals and Contractors etc. The schema has mandatory and non-mandatory fields. Mandatory field has to be filled by all the taxpayers. Non-mandatory field is optional for the business to choose. Specific sectors of business may choose to use those non-mandatory field which are needed by them or their eco-system.

The central government vide Notification No. 69/2019- Central Tax, dated 12th Dec 2019, has notified ten sites as CGST Electronic Portal which shall act as IRP. Ten sites serially numbered are from 1 to 10, starting from www.einvoice1.gst.gov.in to www.einvoice10.gst.gov.in, is operational from 1st day of January, 2020.The GST portal or Invoice Registration Portal (IRP) will NOT provide facility to generate invoices. IRP is only to report the invoice data.

Capacity of the system at IRP: The capacity of the system at IRP has been built so as to handle the envisaged loads of data. Last two years of data uploaded reported in GSTR1 has been taken as the basis for envisaging load on IRP.

Steps in generation of E Invoice

Supplier will upload the JSON of the invoice into the IRP (Invoice Reference Portal).

What is JSON: JSON (Java Script Object Notation) format is a standard data interchange format. It is primarily used for transmitting data between a web application and a server. A JSON file is a file that stores simple data structures and objects in JSON Format.

The JSON may be uploaded directly on the IRP or through GSPs or through third party provided Apps.

The IRP will generate the hash.

What is Hash: The hash function is a type of mathematical function, which, when applied to a digital file (record), assigns it a specific value called a hash.

The hash generated by IRP will become the IRN ( Invoice Reference Number ) of the e invoice. This shall be unique to each invoice and hence be the unique identity for each invoice for the entire financial year in the entire GST system for a tax payer.

The IRP will check the IRN from the central registry of GST system to ensure its uniqueness. On receipt of conformation from Central Registry , IRP will authenticate and add its signature on the Invoice data as well as a QR code to the JSON. After that Invoice Reference Number IRN will be generated by the IRP.

IRP will return the digitally signed JSON with IRN back to the seller along with a QR code. The registered invoice will also be sent to the seller and buyer on their e mail ids as provided in the invoice.

IRP will share the signed e-invoice data along within IRN ( same as that has been returned to the supplier) to the GST system as well as to E-Way Bill System.

The GST system will update the ANX-1 of the supplier and ANX-2 of the buyer, which in turn will determined liability and ITC.

E Waybill system will create Part A of e way bill using this data to which only vehicle number will have to be attached in Part–B of the e way bill. However, for transportation of goods, carrying an e-way will during transit of goods, will continue to be mandatory,

Salient feature of e-invoicing :-

The supplier will generate e-invoice in his own accounting or billing system ie SAP/ Tally etc

The invoice generated by the supplier in his own system must be in standard format ( schema) that is published on GST portal and have the mandatory parameters.

The optional parameters can be according to the business need of the supplier.

The supplier's software should be capable to generate a JSON of the invoice that is ready to be uploaded to the IRP.

Company LOGO Software company has to provide place holder for company LOGO in the billing/accounting software so that it can be printed on supplier's invoice using his printer. Company's LOGO will not be part of JSON file to be uploaded on the IRP. Place holder is not provided in the e-invoice schema for the company logo.

Bulk uploading of invoices: Bulk uploading of invoices on portal is not possible Invoices have to be uploaded on IRP one at a time.. Essentially bulk upload will be required by large taxpayers who generate large number of invoices. Their ERP or accounting system will have to be designed in such a way that it makes request one by one. For the user, it will not make any difference

Supplier can issue his own system's invoice, It is possible for the supplier to issue his own system's invoice in the standard e-invoice schema. IRN (Hash) can be provided after the e-invoice has been successfully reported to the IRP. E-Invoice will be valid only after Invoice reference Number ( IRN ) be provided by the IRP system.

Capturing discount: The e-invoice has a provision for capturing discount at line item level. The discounting at line item level is to be mentioned only when it is applicable in the particular transaction. There is a mechanism and placeholders to provide discounting on item level as well as total discounts on  the invoice value.

Linking of multiple invoices: There be an option for linking multiple invoices in case of debit note/ credit note.

Export invoices: The e-invoice schema also caters to the export invoices as well. The e-invoice schema is based on most common standard, this will help buyer's system to read the e-invoice. It allows the declaration of export invoices / zero rated supplies.

Reverse Charge Mechanism reporting: E-invoice system has a reverse charge mechanism reporting as well

Recipient's Address, PAN No, & Bill to Ship to details: It will be possible to provide the address and bill-to party and PAN details in the placeholders provided in the schema

Downloading the e invoice: possible to allow invoices that are registered on invoice registration system/portal to be downloaded and/or saved on handheld devices.

Printing of invoice

The taxpayer can continue to print his paper invoice as he is doing today including logo and other information.

Signature on e invoice: The e-invoice will be digitally signed by the IRP after it has been validated. The signed e-invoice along with QR code will be shared with creator of document as well as the recipient. Once it is registered, it will not be required to be signed by anyone else.

Thus requirement for such invoices to be authenticated by the supplier using a digital signature/signature will be done away.

Cancellation of e invoice: The e-invoice mechanism enables invoices to be cancelled. This will have to be reported to IRN within 24 hours. Data on IRP will be kept there only for 24 hours

Any cancellation after 24hrs could not be possible on IRN, however one can manually cancel the same on GST portal before filing the returns.

Amendments to the e invoice: Amendments to the e-invoice are allowed on GST portal as per provisions of GST law. All amendments to the e-invoice will be done on GST portal only.

The author can also be reached at caanitabhadra@gmail.com

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