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E- Invoicing Under GST Regime

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The government of India has launched Digital India Program due to rapid growth and access of technology. One of the key vision areas “Governance & services on Demand” includes access to digitally transformed services for improving ease of doing business. Recently announced E- invoicing or Electronic invoicing can be said as one of the efforts to curb tax evasion through digitization.

Government of India is all set to launch GST e-invoicing in a phased manner. In a first phase, B2B transactions can be reported through e-invoicing system on a voluntary basis. Till date GST council has notified following classes of registered persons to generate e-invoice  :

Date of Applicability Annual Turnover limit
1St January 2020 (Voluntary basis for B2B segment) > INR 500 crore
1st February 2020(Voluntary basis for B2B segment) >INR 100 crore
1stApril 2020 (Mandatory basis) > INR 100 crore
1stApril 2020 (Quick Response Code (QR Code) is mandatory for B2C segment) > INR 500 crore


Currently, there are no standards existing in India about e-invoicing. So, GST council has finalized standards after consultation with trade &industrial bodies as well as ICAI. GST council has approved the standard of e- invoice in its 37th meeting held on 20th Sept, 2019 and the same along with schema has been published on GST portal. In August 2019, GSTN has released a draft template of e-invoice for industry feedback known as e-invoice schema. As on 10th October 2019, GST Council has approved the e-invoicing template and the mechanism. GSTN has released the finalized version of e-invoicing template as an announcement on the portal.They have released draft GST Annex-1 & Annex-2 for awareness among GST practitioners and traders.

There are misconceptions about GST E-invoicing which made necessary to GST council to issue a statement. Council made it clear that tax invoices will not be generated from GST portal directly.The invoice shall be prepared by registered persons in terms of sub-rule (4) of rule 48 as may be notified by the Government, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner as may be specified in the notification. So basically E-invoice system consists of two important parts namely:

  • Generation of invoice in a standard format so that invoices generated on one system can be read by other system.
  • Reporting of invoice to a central system.

In a layman’s language, following can be said as process in E-invoicing ecosystem:

  • Generation of an E-invoice though regular accounting software (Responsibility of taxpayer)
  • Report the same to Invoice Registration Portal (IRP) of GST
  • It will generate a unique Invoice Reference number (IRN)
  • Sign the invoice digitally and QR code will get generated
  • The same will be returned the same to the taxpayer and also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.

Invoice, credit note and debit note created by suppliers are to be reported in the e-invoice GST system. Invoice can be registered on IRP by web, API, SMS, Mobile app, offline Tool and GST based mode. GST council has notified 10 Invoice Registration portal which has been effective from 1st January, 2020.

Benefits :

  • Simplify Input Tax Credit verification process :

E-invoice system is not only a tax reform but also a business reform as it will change the way of recording and reporting of transactions at business organizations. It is also targeted towards solving reconciliation problems by providing auto populated data which was the real problem faced by GST practitioners & traders recently while filling GSTR-9 (Annual return). New system will reduce input credit verification issues as same data will get reported to tax department as well as buyer in his inward supply register.

  • Reduce tax evasion :

During G-20 summit, Finance Minister Nirmala Sitharaman emphasized ministry’s focus on reducing tax evasion. By keeping trail of B2B GST invoices, it would be possible for government to curb tax evasion which will also lead to elimination of fake invoices. It’s a measure to deliver transparency.

  • One time reporting :

Just by reporting once on B2B invoice data, it will reduce reporting in multiple formats (one for GSTR1 and the other for e-way bill) i.e. E-way bill can also be generated using e-invoice data.Also, it will lead to reduce data entry errors as data generated by one system can be read by another.

Implementation of e-invoicing is expanding around globe. Nearly 60 countries are using e-invoicing system. There are also countries who made it mandatory compliance trough e-invoicing. Tax system around the world want to collect and analyze more data from taxpayers through technology. Reason behind regulation of e-invoicing is that the system is useful for business as well as government.

After failure of the portal during due dates, GST council have assured of building good capacity servers for GST e-invoicing system. It can be concluded that GST e-invoicing system is a dynamic step taken by government but implementation of the system will be the real crux.

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