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Co-authored by Aashna Chopra

What is e-invoicing under GST?

All B2B invoices are electronically uploaded and authorized by the designated site under the "Electronic invoicing" or "e-Invoice" system. 

After successful authentication, IRP generates a distinct Invoice Reference Number (IRN) for each invoice. Each invoice has an IRN, a QR code, and a digital signature. Under GST, this procedure is referred to as e-invoicing.

Why is e-invoicing introduced?

Although the invoices produced by each software appear to be somewhat similar, the computer system is unable to comprehend them, whereas business users are completely able to do so. For instance, a machine running accounting software "B" cannot read an invoice created by accounting programme "A".

There are hundreds of accounting and billing programmes available today that produce invoices, and each of them has a unique format for storing the data. These invoices still include the same information, but the GST system is unable to read and comprehend them.

To make a long tale short, the same information is currently supplied in many invoicing formats, making it impossible for a system to comprehend it.

As a result, it was deemed necessary to define the format in which electronic data from an invoice will be exchanged with others in order to guarantee data compatibility.

What are the benefits of e-invoice?

Pre-populating the returns and reducing the obstacles of reconciliation are the main goals underlying the deployment of the e-invoice system. This is made possible by the way the IRP system is set up to share invoice data with the e-way bill and GST systems. Therefore, ongoing invoice uploading will guarantee that the majority of information needed in returns and the e-way bill is automatically filled in. 

Some of the main advantages of e-invoicing include the following:

1. Reduces the need for multiple reports on the same invoice information. It only requires a single upload, and everything will be pre-populated as needed.

2. Only the transporter details need to be updated since Part-A of the e-Way bill will be automatically captured.

3. The B2B information will automatically be collected in the GSTR-1 return upon invoice upload.

4. Significantly less difficult to verify input credits because the buyer will report the same information to the tax agency in his inward supply (purchase) register (GSTR-2A).

5. After receiving information from the GST System, a buyer can promptly accept or reject it under a new return by performing a reconciliation with his purchase register.

6. Reduced tax evasion is made possible by a complete trail of B2B invoices and system-level input credit and output tax matching.

7. Eliminating phoney invoices will improve tax administration efficiency.

Types of business to whom e-invoicing is applicable?

All businesses that are GST-registered and issue B2B invoices will be subject to electronic invoicing in a progressive way.

Who should upload the e-invoice?

The seller must electronically upload the invoice to the IRP system in accordance with the e-invoice concept, and must also scan the QR code and IRN (Invoice Reference Number) on the recipient's physical copy of the invoice.

Type of documents that are to be uploaded to the GST system

1. Invoice by supplier

2. Credit note by supplier

3. Debit note by supplier

4. Any other document required by the law to be reported by the creator of the document.

How is e-invoice different from current practice of invoicing?

A unique invoice reference number (IRN) and a digitally signed QR code are required for authentication in the e-invoice system, which requires the invoice to be uploaded electronically. The modification is that before issuing the invoice to the customer, the seller must print the IRN number and QR code on it.

Businesses that use ERP or business management software that smoothly integrates with the IRP system and automatically prints the QR code and IRN on the invoice will find it simple to manage the requirements for e-invoices without making many modifications to the operational procedures.

References

1. https://cleartax.in/s/e-invoicing-gst/

2. https://taxguru.in/goods-and-service-tax/e-invoicing-gst-w-e-f-01-04-2022.html

3. https://taxguru.in/goods-and-service-tax/e-invoicing-gst-brief-overview.html

4. https://taxguru.in/goods-and-service-tax/e-invoice-applicability-gst.html

5. https://taxadda.com/e-invoicing-under-gst/