E-INVOICING UNDER GST
The Government of India has made E-invoicing compulsory for taxpayers having turnover greater than 500 Cr w.e.f. 1st October 2020 vide N/No. 61/2020 – CT dated 30th July, 2020. Further, another notification namely, N/No. 88/2020 – CT dated 10th November 2020, has made E-Invoicing compulsory for taxpayers having turnover greater than `100 Cr w.e.f. 1st January 2020.
What is E-invoicing?
Electronic Invoicing is an electronic authentication mechanism under GST. Under the mechanism, all the B2B invoices generated by a business will have to be authenticated on the GSTN portal, electronically. Furthermore, to manage these invoices, the Invoice Registration Portal (IRP) will issue a unique identification number for every invoice called as Invoice Reference Number (IRN).
What are the benefits of E-Invoicing?
Who all are exempted from the provisions of E-invoicing?
The following are exempted from the provisions of E-invoicing:
What is the time limit of generating an E-Invoice?
There has been no time-limit prescribed for authentication of E-Invoice. However, Rule 48(5) states that any invoice issued by a person, on whom provisions of e-invoicing is applicable, other than an e-invoice shall be invalid. Therefore, if the recipient wants to claim the input tax credit then, he shall have a valid invoice [as per Sec 16(2)(a)], i.e., e-invoice. Further, if the supply involves the movement of goods and the EWB is not accompanied by a valid invoice then the goods are liable for confiscation. Thus, the specified person shall generate the e-invoice before making it available to the recipients.
How can an e-invoice be modified/cancelled?
Correction or modification of any e-invoice is not allowed. However, if any taxpayer wishes to modify the data/figures already mentioned in the e-invoice, then he/she shall cancel the same and generate a new e-invoice.
GST E-invoice Generating Procedure
The taxpayer or business is responsible to generate the invoice/s and then submit them to Invoice Registration Portal (IRP) for approval. After successful verification, the portal will return the invoice to the supplier along with a unique reference number, digital signature, and a QR code. The e-invoice will also be shared with the corresponding buyer on the email id provided.
Step 1: Invoice Creation
The seller/supplier will create an invoice in the prescribed format (e-invoice schema) using his/her accounting or billing software. It must have the 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.
Step 2: IRN Generation
The next step would be to generate a unique Invoice Reference Number (IRN) by the seller using a standard hash-generation algorithm.
Step 3: Invoice Uploading
Now, the seller will upload JSON for each of the invoices, along with IRN, to the Invoice Registration Portal, either directly or through third-party software.
Step 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.
Upon 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.
Step 5: Sharing of Data
The uploaded data will be shared with the E-way bill and GST system.
Step 6: E-invoice Downloading
The portal will send 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.
1. What documents are presently covered under e-invoicing?
ii. Credit Notes
iii. Debit Notes,
when issued by a notified class of taxpayers (to registered persons (B2B) or for the purpose of Exports) are currently covered under e-invoice.
Though different documents are covered, for ease of reference and understanding, the system is referred to as ‘e-invoicing’.
2. What supplies are presently covered under e-invoice?
Ans: Supplies to registered persons (B2B), Supplies to SEZs (with/without payment), Exports (with/without payment), Deemed Exports, by notified class of taxpayers are currently covered under e-invoicing.
3. B2C (Business to Consumer) supplies can also be reported by notified persons?
Ans: No. Reporting B2C invoices by notified persons is not applicable/allowed currently. However, they will be brought under e-invoice in the next phase.
4. Is e-invoicing applicable for NIL-rated or wholly-exempt supplies?
Ans: No. In those cases, a bill of supply is issued and not a tax invoice.
5. Whether the financial/commercial credit notes also need to be reported to IRP?
Ans: No, only the credit and debit notes issued under Section 34 of CGST/SGST Act have to be reported.
6. Whether e-invoicing is applicable for supplies by notified persons to Government Departments?
Ans: E-invoicing by notified persons is mandated for the supply of goods or services or both to a registered person. Thus, where the Government Department doesn’t have any registration under GST (i.e. not a ‘registered person’), e-invoicing doesn’t arise. However, where the Govt. department is having a GSTIN (as entity supplying goods/services/ deducting TDS), the same has to be mentioned as recipient GSTIN in the e-invoice.
7. Whether e-invoicing is applicable for invoices between two different GSTINs under the same PAN?
Ans: Yes. e-invoicing by notified persons is mandated for the supply of goods or services or both to a registered person.
As per Section 25(4) of CGST/SGST Act, “A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.”
8. For high sea sales and bonded warehouse sales, whether e-invoicing is applicable?
Ans: No. These activities/transactions are neither supply of goods nor a supply of services, as per Schedule III of CGST/SGST Act.
9. What is the applicability of e-invoice for import transactions?
Ans: E-invoicing is not applicable for import Bills of Entry.
10. Do SEZ Developers need to issue e-invoices?
Ans: Yes, if they have the specified turnover and fulfilling other conditions of the notification.
In terms of Notification (Central Tax) 61/2020 dt. 30-7-2020, only SEZ Units are exempted from issuing e-invoices.
11. Whether e-invoicing is applicable for supplies involving Reverse Charge?
Ans: If the invoice issued by a notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.
For example, a taxpayer (say, a Firm of Advocates having aggregate turnover in an FY is more than Rs. 500 Cr.) is supplying services to a company (who will be discharging tax liability as a recipient under RCM), such invoices have to be reported by the notified person to IRP. On the other hand, where supplies are received by a notified person from (i) an unregistered person (attracting reverse charge under Section 9(4)) or (ii) through the import of services, e-invoicing doesn’t arise / not applicable.
12. Do I need to print QR Code on the invoice? If so, what shall be its size and location on the invoice copy?
Ans: Yes. The QR code (containing, inter alia, the IRN) which comes as part of signed JSON from IRP, shall be extracted and printed on the invoice. This is one of the mandatory particulars of invoice under Rule 46 of CGST Rules. While the printed QR code shall be clear enough to be readable by a QR Code reader, the size and its placing on the invoice is up to the preference of the businesses.
13. While returning IRN, the IRP is also adding its digital signature, “Acknowledgement No.” and “Date”. Whether these also need to be printed while issuing invoice?
Ans: No. There is no mandate to print these particulars on invoice copy. Note that the “Acknowledgement No.” and “Date” given by IRP are only for reference. Being a 15-digit number, the acknowledgment number will also come in handy for printing e-invoice or for generating e-way bill (instead of keying in the 64-character long IRN).
14. If an e-invoice is applicable and issued, am I supposed to issue copies of the invoice in triplicate/duplicate?
Ans: Where e-invoicing is applicable, there is no need of issuing invoice copies in triplicate/duplicate. This is clearly specified in Rule 48(6).
15. Where e-invoicing is applicable, is carrying e-invoice print during transportation of goods mandatory?
Ans: No. As per Rule 138A(2) of CGST Rules, where e-invoicing is applicable, “the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, maybe produced electronically, for verification by the proper officer, in lieu of the physical copy of such tax invoice.”
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