The process of generating or raising an e-Invoice involves several stages:
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- ERP System Configuration: Process of getting an e invoice The taxpayer ensures that their ERP system is reconfigured according to PEPPOL (Pan-European Public Procurement Online) standards. They may coordinate with their software service provider to incorporate the standard e-Invoicing schema and include mandatory parameters notified by the CBIC.
- Options for IRN Generation: The taxpayer has two primary options for generating Invoice Reference Numbers (IRNs):
- Process of getting an e invoice Whitelisting the IP address of the computer system on the e-Invoice portal for direct API integration or integration via a GST Suvidha Provider (GSP) such as Clear Tax.
- Downloading the bulk generation tool to create a JSON file for bulk uploading of invoices to the e-Invoice portal.
- Invoice Creation: Process of getting an e invoice The taxpayer raises a regular invoice on their software, ensuring to include all necessary details such as billing name and address, supplier’s GSTN, transaction value, item rate, applicable GST rate, tax amount, etc.
- Uploading Invoice Details: Process of getting an e invoice After selecting one of the options for IRN generation, the taxpayer uploads invoice details, especially mandatory fields, to the Invoice Registration Portal (IRP) using the JSON file or through an application service provider (app or GSP) or direct API. The IRP acts as the central registrar for e-Invoicing and its authentication.
- IRP Validation and IRN Generation: Process of getting an e invoice The IRP validates key details of the B2B invoice, checks for duplications, and generates an Invoice Reference Number (IRN) based on parameters such as Seller GSTIN, invoice number, financial year, and document type (INV/DN/CN).
- Authentication and QR Code Generation: Process of getting an e invoice The IRP digitally signs the invoice, generates a QR code in the Output JSON for the supplier, and intimates the seller about the e-Invoice generation through email (if provided).
- Forwarding to GST Portal and E-Way Bill Portal: Process of getting an e invoice The IRP sends the authenticated payload to the GST portal for GST returns. Details are also forwarded to the e-way bill portal if applicable. The seller’s GSTR-1 is auto-filled for the relevant tax period, determining the tax liability.
- Invoice Printing: Process of getting an e invoice Despite e-Invoicing, taxpayers can continue printing their invoices with logos. The e-Invoicing system mandates reporting invoices on the IRP in electronic format.
Benefits of e-Invoicing to businesses: Process of getting an e invoice
Data Reconciliation: e-Invoicing addresses a significant gap in data reconciliation under GST, reducing mismatch errors and ensuring accuracy in reporting.
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- Interoperability: Invoices created on one software can be read by another, promoting interoperability and minimising data entry errors during transactions.
- Real-time Tracking: Process of getting an e invoice e-Invoicing enables real-time tracking of invoices prepared by the supplier, enhancing transparency and efficiency in the supply chain.
- Automation of GST Returns: Process of getting an e invoice e-Invoicing facilitates backward integration and automation of the GST return filing process. Relevant invoice details are automatically populated in various returns, streamlining compliance efforts, especially for generating part-A of e-way bills.
- Genuine Input Tax Credit (ITC): Process of getting an e invoice Faster availability of genuine input tax credit is ensured through e-Invoicing, enhancing liquidity and reducing working capital requirements for businesses.
- Reduced Possibility of Audits: With detailed transaction-level information readily available, there is a lesser possibility of audits or surveys by tax authorities, as the required data is accessible in real-time.
- Access to Credit Routes: Process of getting an e invoice e-Invoicing facilitates faster and easier access to formal credit routes such as invoice discounting or financing, particularly beneficial for small businesses seeking financial support.
- Improved Customer Relations: Process of getting an e invoice e-Invoicing enhances customer relations by ensuring prompt and accurate invoicing, leading to improved satisfaction and loyalty. Additionally, it opens up growth opportunities for small businesses to engage in transactions with large enterprises, fostering business expansion and development.
How can e-invoicing curb tax evasion?
Real-time Transaction Monitoring: Tax authorities gain access to transactions in real-time as e-Invoices are compulsorily generated through the GST portal. Process of getting an e invoice This enables proactive monitoring and identification of potential tax evasion activities as transactions occur.
- Pre-Transaction Invoice Generation: Process of getting an e invoice With e-Invoicing, invoices are generated before transactions are conducted, leaving less room for manipulation or alteration of invoice details. This preemptive measure helps prevent tax evasion schemes that rely on falsified or altered invoices.
- Reduction of Fake Invoices: The requirement for all invoices to be generated through the GST portal minimises the chances of fake GST invoices being used to claim fraudulent input tax credit. Process of getting an e invoice As a result, only genuine input tax credit can be claimed, as the authenticity of invoices can be verified against the GST portal’s records.
- Matching Input and Output Tax Details: Process of getting an e invoice By matching input tax credit claims with output tax details in real-time, GSTN can effectively track and identify discrepancies or inconsistencies, thus deterring attempts at fraudulent tax credit claims.
What are the mandatory fields of an e-invoice?
The latest e-Invoice format, as notified on 30th July 2020 via Notification No.60/2020 – Central Tax, encompasses the following key points:
- Structure: The e-Invoice format comprises 12 sections (mandatory + optional) and six annexures, totaling 138 fields.
- Mandatory and Optional Sections: Out of the 12 sections, five are mandatory, and seven are optional. Additionally, two annexures are mandatory.
- Required Fields: Certain fields are compulsory in an e-Invoice, including the document type code, supplier’s legal name and GSTIN, supplier’s address, document number, recipient’s legal name and GSTIN, document date, IRN (Invoice Reference Number), shipping details, supply type code, item description, HSN code, item price, assessable value, GST rate, IGST/CGST/SGST values, and total invoice value.
- Document Type Code: Specifies the type of document (e.g., invoice, credit note, debit note).
- Supplier and Recipient Details: Include legal names, GSTINs, addresses, state codes, and PIN codes.
- IRN (Invoice Reference Number): A unique identifier generated by GSTN after uploading the e-Invoice, confirming acceptance by the portal.
- Supply Type Code: Identifies the type of supply (e.g., B2B, B2C, SEZ, exports).
- Item Details: Descriptions, HSN codes, prices, assessable values, GST rates, and tax values for individual items.
- Total Invoice Value: The overall amount of the invoice with GST, rounded to a maximum of two decimals.
This standardised format ensures consistency and compliance across industries, while also accommodating sector-specific invoicing policies. By mandating key information and providing clear guidelines for data entry, the e-Invoice format facilitates accurate reporting and enhances transparency in transactions.
Format of sample e-invoice
The e-invoice format notified is as follows:
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