E-invoice under GST (E-invoicing)

During the 35^th GST Council meeting, it was recommended to implement an e-invoicing system under GST. E-invoicing is shortly known as an e-invoice. E-invoice is a system thru which typically (normally) generated invoices are electronically authenticated by GSTN.

It is a general perception that e-invoice means generation of invoice through GST portal. But, in fact, e-invoicing is just a system, wherein, the normally generated invoice is to be uploaded to Invoice Registration Portal (i.e., IRP) for electronic authentication of the same. The present article briefs the basic of e-invoicing under GST.

Stage-wise application of e-invoice under GST

Being one of the biggest reform under GST, e-invoicing is introduced in a stage-wise manner. Various stages of application of e-invoice are tabulated hereunder-

What documents are presently covered under e -invoicing?

i. Invoices

ii. Credit Notes

iii. Debit Notes

Categories of persons exempt from e-invoice

Notification no. 13/2020- Central Tax dated 21^st March 2020, exempted following categories of the person from issuing e-invoice-

• A banking company,
• A financial institution,
• A non-banking financial company (NBFC),
• A person engaged in providing passenger transportation service,
• An insurer,
• A goods transport agency (i.e., GTA) supplying service,
• A person engaged in providing services in terms of admission of the exhibition of the cinematograph films in the multiplex screen,

Additionally, vide notification no. 61/2020-Central Tax dated 30^th July 2020, the special economic zone unit (SEZ) is also exempted from e-invoice.

Further, as per notification no. 23/2021-Central Tax dated 1^st June 2021, a government department and a local authority are also exempted from following e-invoice procedure under GST.

E-invoice vis-à-vis IRN

IRN will be generated for each and every invoice uploaded to the e-invoice portal. IRN is an abbreviation of Invoice Reference Number. Structurally, IRN is a 64 characters long number fixed to each invoice being uploaded to the e-invoice portal. IRN is uniquely generated using the hash generation algorithm.

The formation of 64 characters long number (i.e., IRN) is explained hereunder-

Steps for generating e-invoice

STEP 1 – Generation of normal invoice-

The taxpayer is firstly required to generate a normal invoice using respective ERP/ accounting software. However, the taxpayer has to ensure that the normal invoice should contain the following set parameters (i.e., e-invoice schema)-

• Document Type Code,
• Supplier’s details like-
  • Legal Name,
  • GSTIN,
  • Address,
  • Place,
  • State Code, and
  • PIN Code.
• Document Number,
• Preceding Invoice Reference and date,
• Document Date,
• Recipient’s details like-
  • Legal Name,
  • GSTIN,
  • Place,
  • Address, and
  • State Code.
• Place of Supply State Code,
• PIN Code,
• Invoice Reference Number (i.e., IRN),
• Shipping To – GSTIN,
• Shipping To – State; PIN Code and State Code,
• Dispatch From – Name; Place; Address; and PIN Code,
• Service (Y/N),
• Supply Type Code,
• Item Description,
• HSN Code,
• Item Price,
• Assessable Value,
• GST Rate,
• Value of IGST; CGST and SGST,
• Total Invoice Value. 

STEP 2 – Generation of (JavaScript Object Notation) JSON file-

ERP/ accounting software used for the preparation of the normal invoice should have the feature of generating JSON file. The normal invoice so prepared at STEP 1 should be converted into a JSON file.

STEP 3 – Uploading the JSON file-

Now, the JSON file, generated at STEP 2, needs to be uploaded on IRP (i.e., Invoice Registration Portal). The JSON file can be uploaded using any of the following ways-

• Direct upload on IRP;
• Uploading through GST Suvidha Provider (i.e., GSP); or
• Via third party apps (which also includes API).

STEP 4 – Generation of IRN-

On uploading of JSON file, IRP will carry out a duplication check. Thereafter, IRP will generate a unique IRN.

Highlighting benefits of e-invoicing

Some of the benefits of e-invoicing are highlighted hereunder-

• The biggest advantage of e-invoice is that it surely results in the reduction of frauds as well as reduction in generation of fake invoice under GST.
• Real-time tracking of invoice under e-invoicing will allow faster availability of ITC to the buyers.
• Auto-population of e-invoice details in GST returns, will enable faster filing of returns under GST.
• It will reduce the chances of data entry errors since invoice generation by one software will be read by another software which allows interoperability.

Drawbacks spinning around e-invoicing under GST

Some of the drawbacks of e-invoicing systems are-

• The taxpayer will have to carry out crucial changes in the ERP/ accounting software.
• The compliance cost is likely to increase more due to e-invoicing.
• Since only B2B transactions are to be reported under e-invoicing, the taxpayer will have to segregate B2B and B2C transactions. This will also increase fraudulent generation of B2C transaction invoices.

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