New E-INVOICE System Under GST – Complete Guide

E-invoicing under GST w.e.f 1st October 2020 Registered Taxpayers ‘s Aggregate Turnover > Rs 500 crore

What is E-Invoicing?

E-Invoice to be issued in respect of the supply to a registered person only (B2B) in form GST INV 01. The format has been notified vide Notification No. 60/2020 dated 30/07/2020
The Purpose of implementing E-Invoicing is to curb the GST Evasion through the issue of fake invoices.

It would make the return filing easier and simpler for businesses as invoice data would already be captured by centralized portal.

E-invoices can not be generated directly from the common portal.

E-invoicing or authentication is required to ensure that invoices generated by your accounting software are valid for use in processes such as e-way billing and GST return filing.

The process involves the submission of business invoices created by different accounting software to the GST Portal in order to get them verified in a common manner.

gst e invoice

Since the invoices generated by various GST return filing software may have various formats, they cannot be all fetch directly to the GST system by the software. So the Government has also agreed to implement a Standard format (Schema), with all the accounting specifications Software to adopt a common format that can then be submitted for authentication and validation to GST portal.

To sum up, the E-invoice is a standard mechanism or scheme for data Exchange between different GST billing software Manufacturers.

Misconception About E-Invoice Under GST
  • It would need to issue through GST portal
  • The generation of IRS might take several minutes and that would affect my business hours
  • E-invoicing will need to be issued for all the transactions
  • Not using of ERP / ACCOUNTING SOFTWARE I cannot issue E-Invoice
  • E-invoicing will add on one more GST compliance
  • IRN generated by the IRP would be the invoice number
  • Requires major changes in Billing, Software, ERP, or accounting, to become compliant.
  • Separate invoice format for different business
exemption in e invoice
Exemption in E-Invoice in the following Cases:
  • Small Companies having Aggregate Turnover < 500 Crore
  • operating in the unit in SEZ’s (Special Economic Zones)
  • Goods Transport Agency (GTA)
  • Service by way of Passenger Transportation Service
  • Insurer/Banking Company/Financial Institution including an NBFC
  • Service by way of Admission to Exhibition of Cinematographic films in multiplex screen

Steps of Generation of E-Invoice under GST

STEP 1 – Creation of Invoice and JSON
  • Generation of the invoice by the seller through his or her own accounting or billing System (maybe any software utility / ERP that generates invoice)
  • The invoice must be e-invoiced (as per the PEPPOL scheme). The seller should have an ERP feature that outputs invoice data in JSON format.
  • Anyone who does not use any accounting software or IT tool to produce the invoice will be provided with an offline tool for key invoice data and submit the same
  • Suppliers (seller) software should be able to generate a JSON of the final invoice that is ready to be uploaded to the IRP. The IRP will only take JSON
  • The next step would be to create a unique Invoice Reference Number
  • (IRN) Use a regular hash generation algorithm from the seller.
STEP 3 – Uploading of JSON
  • Seller to upload the JSON of the e-invoice to the IRP.
  • The JSON may be uploaded directly to the IRP or through GSPs or through third party Apps
STEP 4 – Validation of data by IRP
  • If IRN is not generated, then IRP will generate IRN, based on JSON uploaded.
  • If IRN is created, then IRP must validate the IRN (uploaded based on JSON) from Central Registry of GST System  to ensure that the same supplier invoice for the same financial year will not be uploaded again.
  • Upon receipt of confirmation from the Central Registry, the IRP will add its signature on the Invoice Data as well as the QR code to the JSON.
new gst e-invoice

STEP 5 – Sharing of E-invoice
  • Sharing signed E-invoice data with IRN to seller
  • It will also update the seller’s ANX-1 and buyer’s ANX-2 by sharing signed E-invoice data along with IRN to the GST system as well as to the E-Way Bill System.
  • The IRP will sign the e-invoice, and the IRP signed e-invoice will be a legal e-invoice and will be used by the GST / E-Way bill system.

STEP 6 – E-invoice Downloading
  • Return the digitally signed JSON with IRN to the seller, along with a QR. The recorded invoice will also be sent to the seller and buyer as given in the invoice.

QR Code

The QR code allows to view, verify and access the invoices quickly 
Of the GST method. After uploading JSON of invoices IRP will generate QR code for a quick views . 

The QR code shall consist of the following parameters for e-invoices

  1. GSTIN of supplier
  2. GSTIN of Recipient
  3. Invoice number as given by Supplier
  4. Date of generation of invoice
  5. Invoice value (taxable value and gross tax)
  6. Number of line items.
  7. HSN Main item code (line item with the highest taxable value)
  8. Unique Invoice Reference Number.
Modes in e invoice
Modes of Generation of E-Invoice under GST

Various modes should be made available so that taxpayers can use the best possible means. The following modes are envisaged This stage of the proposed e-invoice method, via the IRP

  1. Web based
  2. API based
  3. SMS based
  4. mobile app based
  5. offline tool based and
  6. GSP based
Mandatory fields to be declared in an E-Invoice
  • Document Type Code: Enumerated List such as INV/CRN/DBN.
  • Supplier Legal Name
  • Supplier GSTIN
  • Supplier Address
  • Supplier Place
  • Supplier State Code
  • Supplier Pin code
  • Document Number
  • PrecedingInvoice Reference and date
  • Document Date
  • Recipient Legal Name
  • Recipient’s GSTIN
  • Recipient’s Address
  • Recipient’s State Code
  • Place of Supply State Code
  • Pincode
  • Recipient Place
  • IRN-Invoice Reference Number: GSTN will create a unique number after the e-invoice is submitted to the GSTN portal. An acknowledgment will be sent back to the manufacturer after the e-invoice has been successfully approved by the system. Before use, IRN should be shown on the e-invoice.
  • Shipping To- GSTIN
  • Shipping To -State, Pincode and State code
  • Dispatch From- Name, Address, Place and Pincode
  • Is Service: Whether or not supply of service must be mentioned
  • Supply Type Code
  • Item Description
  • HSN Code
  • Item Price
  • Assessable Value
  • GST Rate
  • IGST Value, CGST Value and SGST Value Separately
  • Total Invoice Value.

Other Important points of E-Invoices under GST

Signature on E-invoice – E – the invoice produced is not needed e-Authorized again The e-invoice will be digitally signed by the IRP after it has been confirmed. After registering it on IRP/GST system it will not be required to be signed by someone else.

E-invoice Currency —Primary E-Invoice currency will be INR. Seller can display the currency in E-invoice.  

The line item of E-Invoices – The maximum number of line items per einvoice is 100.

Printing — E-invoice can be printed. It is valid only if it has IRN.

Cancellation of E-Invoice – The mechanism of the e-invoice enables the invoices to be canceled. It will have to be reported within 24 hours.  Any cancellation after 24hrs could not be possible, however, one may Cancel the same manually on the GST portal before filing the returns.

E Way Bill — E-Invoice is not going to replace the E-way bill. For the transport of 
Goods, the e-way bill will remain mandatory

Bulk-uploading of invoices for the generation of IRN will not be

Invoices must be uploaded to the IRP one at a time. The ERP of the 
Company will need to be designed in such a way that it should be able to place the request for Uploading of individual invoices