E-invoicing in GST: Definition, Applicability, Limit, and More
What is e-invoicing in GST?
Electronic invoicing, also known as e-invoicing in GST, refers to the system that authenticates B2B invoices electronically by the Goods and Services Tax Network (GSTN) for use on the common GST portal.
The GST Council, in its 35th meeting, implemented an e-invoicing system to cover specific categories, including both mid-sized businesses and large enterprises. Under the GST e-invoice system, the Invoice Registration Portal (IRP) which is managed by the GSTN, issues identification numbers for every invoice. All the invoice-related information is then transferred to the IRP to both the GST portal and e-way bill. This eliminates the need for entering the data manually during GSTR-1 return filing or for Part-A of the e-way bills.
You should also know that e-invoicing under GST in India does not refer to the generation of invoices for the GST portal. Rather, it refers to the submission of already generated standard invoices on einvoice1.gst.gov.in. It automates multi-purpose reporting by entering the invoice details one time. Also, the CBIC has notified a set of common portals for e-invoicing under GST.
Applicability of e-invoicing under GST
The following table covers the applicability of e-invoicing in GST as per the aggregate turnover of taxpayers:
|For taxpayers having an aggregate turnover of more than
|INR 500 crore
|INR 100 crore
|INR 50 crore
|INR 20 crore
|INR 10 crore
- The taxpayers must comply with the GST e-invoicing system if their turnover exceeds the given limit in any financial year starting from 2017-18 to 2021-22. Besides this, the aggregate turnover means the turnover of all the GSTINs under one PAN across India.
- If the turnover of a business was below the threshold limit in the last financial year but has now increased beyond the limit in the current financial year, then e-invoicing will be applicable from the next financial year.
- Irrespective of the turnover, e-invoicing in GST is not applicable to various categories of registered persons as detailed in CBIC notification No. 13/2020, including:
- Insurer, banking company, or an NBFC
- Goods transport agency
- Registered individuals supplying passenger transportation
- An SEZ unit
- A government department or local authority
- Registered individuals supplying services via admission to the exhibition of cinematographic films in multiplexes
How is the GST e-invoice system better than the current system?
Before the introduction of e-invoicing in GST, businesses generated invoices through different software. The details of these invoices are then manually entered for GSTR-1 return. Once the respective suppliers proceed with GSTR-1 filing, the invoice details are reflected in GSTR-2B. Besides this, the transporters or consignors then need to generate e-way bills by importing the devices again in excel or JSON.
To simplify the complications, there is an e-invoicing system. While the process of generating or uploading invoice information remains the same, it can now be done using JSON, excel tool, or via API integration. Here, the data flows seamlessly for GSTR-1 preparation and e-way bill generation
Process of getting an e-invoice under GST
Given below are the steps involved with e-invoicing in GST:
- As a taxpayer, you need to ensure using the reconfigured ERP system and coordinate with the software provider to incorporate a standard set for e-invoicing under GST.
- You also get the following two options to generate IRN:
– Whitelisting of the IP address of your computer system on the e-invoicing portal for integration via a GST Suvidha Provider (GSP) or direct API integration
– Use of bulk e-invoice generation tool to upload invoices in bulk.
- After selecting any of the two options, you need to raise a regular invoice using that software by providing all the necessary details, such as transaction value, item rate, and billing name and address, to name a few. Here, the IRP acts as a central registrar for e-invoicing in GST. You can also choose to interact with IRP via SMS or a mobile app.
- IRP will then validate the B2B invoice details and generate an IRN for reference based on the four main parameters, which are – invoice number, seller GSTIN, financial year, and document type.
- In this step, the IRP digitally signs the invoice and then creates a QR code for the supplier in Output JSON. Also, the supply’s seller is intimated about the e-invoice generation via an email if provided.
- IRP then sends the authenticated payload to the GST portal for return filing and e-way bill portal, if applicable.
Note – The GST e-invoice system only mandates all the taxpayers to report invoices on IRP electronically.
Benefits of e-invoicing in GST for businesses
Given below are the benefits of e-invoicing under GST in India:
- It bridges the gap in data reconciliation to reduce mismatch errors under GST.
- GST e-invoicing system allows interoperability, which means the e-invoices created by one software can be read by others. This helps reduce data entry errors.
- It also enables real-time tracking of invoices prepared by the supplier.
- It ensures quick availability of input tax credit.
- The relevant details of invoices get auto-populated in returns and e-way bills.
- It ultimately reduces the possibility of surveys or audits by tax authorities.
Curbing tax evasion made simpler with e-invoicing in GST
e-invoicing in GST helps curb tax evasion in several ways, including:
- The e-invoices have to be generated compulsorily through the GST portal, it gives tax authorities access to transactions as they occur in real-time.
- There is less scope for invoice manipulation.
- E-invoicing in GST also reduces the chances of fake GST invoices. Since the output tax details are matched with the input tax credit, tracking fake tax credit claims becomes easier for GSTN.