E-Invoicing Under GST: Definitive Guide

What is e-Invoicing ?

e-Invoice is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. Under the electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).

All invoice information is transferred from einvoice1.gst.gov.in portal to both the GST portal and e-way bill portal in real-time. Therefore, it eliminates the need for manual data entry while filing GSTR-1 return as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to GST portal.

Businesses have the following benefits by using e-invoice initiated by GSTN

  • E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
  • E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
  • Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
  • Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
  • Faster availability of genuine input tax credit.
  • Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.

Process of e-invoicing System

Supplier Invoice Registration Portal GST System Buyer
Seller will prepare Tax Invoice with its accounting software Validates Invoice data Rules out the existence of same IRN in GST System Buyer can view the Invoice details in GSTR-2A
Upload JSON file on the IRP system Generates IRN Auto Populate Invoice details in GSTR-1/2A Auto populate With QR Code on Invoice Copy he can check the authenticity of e-invoice by uploading the json sent by supplier
  Sends Invoice pay loads to GST System    
  Sends details to e-way bill system    

Who Must Generate E-Invoices?

Phase Applicable to taxpayers having an aggregate turnover of more than Applicable date Notification number
I Rs 500 crore 01.10.2020 61/2020 – Central Tax and 70/2020 – Central Tax
II Rs 100 crore 01.01.2021 88/2020 – Central Tax
III Rs 50 crore 01.04.2021
5/2021 – Central Tax
IV Rs 20 crore 01.04.2022 1/2022 – Central Tax
V Rs 10 crore 01.10.2022 17/2022 – Central Tax

How Can e-invoicing Curb Tax Evasion?

It will help in curbing tax evasion in the following ways-

  1. Tax authorities will have access to transactions as they take place in real-time since the e-invoice will have to be compulsorily generated through the GST portal.
  2. There will be less scope for manipulating invoices since the invoice gets generated before carrying out a transaction.
  3. It will reduce the chances of fake GST invoices, and the only genuine input tax credit can be claimed as all invoices need to be generated through the GST portal. Since the input credit can be matched with output tax details, it becomes easier for GSTN to track fake tax credit claims.