e-Invoice under GST?


Ever since the concept of e-invoicing was approved by the GST council, the buzz around e-invoicing has gained importance among the business community. The introduction of e-invoice was approved by GST council at its 37th  meeting held in the month of September,2019 with the key objective to ensure inter-operability of e-invoices across the GST eco-system.

Invoice being a key document and e-invoicing being a reform related to it, it is super important for businesses to understand it fully and accordingly prepare towards to it.

In this article, let’s discuss and understand everything about e-invoicing under GST.

What is e-invoice in GST?

e-Invoice known as ‘Electronic invoicing’ is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.

Post successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by IRP. Along with IRN, each invoice is digitally signed and added with a QR code. This process is collectively called as e-invoicing under GST


Why e-Invoicing is introduced?

In spite of invoices generated by each software looks more or less the same, the computer system can’t understand it, though the business users can understand them fully. For example, an invoice generated by accounting Software “A” cannot be read by a machine which is using “B” accounting software.

Today, there are hundreds of accounting/billing software which generates invoices and all of them have their own formats to store the information. Owing to this, the GST system can’t read and understand these invoices, although the information in the invoice remains the same.

To cut the long story short, today the same information is presented in different invoice format and there is no way a system can understand it.

Hence, a need was felt to standardize the format in which electronic data of an invoice will be shared with others to ensure there is interoperability of the data.

What are the benefits of e-Invoice?

The basic aim behind the adoption of the e-invoice system is to pre-populate the returns and reduce the reconciliation challenges. This is achieved by the design of the IRP system which shares the invoice data to the GST system and e-way bill system. Thus, continuous uploading of invoice will ensure that most of the details required in returns as well in the e-way bill get auto-populated.

The following are some of the key benefits of e-invoicing:

  • Reduces reporting of same invoice details multiple time in different forms. It’s just one-time upload and everything, as required, will get pre-populated.
  • Part-A of e-Way bill will be auto-captured and only transporter details are required to be updated.
  • On uploading of invoices, the B2B details will be auto-captured in GSTR-1 return.
  • Substantial reduction in input credit verification challenges as the same data will get reported to the tax department as well to the buyer in his inward supply (purchase) register (GSTR-2A).
  • On receipt of info through GST System, a buyer can do a reconciliation with his Purchase register and accept/reject it on time under New Return.
  • Complete trail of B2B invoices and system-level matching of input credit and output tax helps to reduce tax evasion
  • Increase efficiency in tax administration by eliminating fake invoice.

When will e-invoicing be introduced?

To ensure that businesses get enough time to adapt to the new system of electronic invoicing, the GST Council has approved the introduction of e-invoicing in a phased manner.

  • Taxpayers with a turnover of  ₹500 crores and more, e-invoice is already introduced from 1st October 2020.
  • Businesses with a turnover of ₹100 crores  and more, it is applicable from 1st January, 2021.
  • For businesses with a turnover of ₹50 crores  and more, e-invicing is applicable from 1st April,2021

Type of business to whom e-invoice will be applicable?

Electronic Invoicing will be applicable to all the business who are registered under GST and issuing B2B invoices in phased manner as discussed above.

Who should upload the e-invoice?

Under the concept of e-invoice, the seller has to electronically upload the invoice to the IRP system and capture the QR code and IRN (Invoice Reference Number) in the physical copy of the invoice issued to the recipient.

What type of documents are to be reported to GST system?

Following documents are covered under the concept of e-invoice. Meaning the creator of these document needs to upload it to the IRP system.

  • Invoice by Supplier
  • Credit Note by Supplier
  • Debit Note by Supplier
  • Any other document as required by law to be reported by the creator of the document

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

E-invoice is a system in which the invoice needs to be electronically uploaded and authenticated with a unique invoice reference number (IRN) and digitally singed QR code. The change is that the seller needs to print the QR code and IRN number on the invoice before issuing it to the buyer.

Businesses using ERP/ business management software that seamlessly connects with IRP system and automatically prints the QR code and IRN on the invoice will find it easy to manage e-invoice requirements without much changes to the business process.

What are the modes of generating e-Invoice?

Multiple modes will be made available so that the taxpayer can use the best mode based on his/her need. The following are different mode of generating e-Invoice?

    • Web-Based,
    • API Based,
    • SMS Based,
  • Mobile App
  • offline tool based and
  • GSP based