An Insight into E-Invoice System. (Updated up to 23.05.2023)
A) Background:-
1)
The GST Council, at its 37th meeting held at Goa on 20th September, 2019
approved the introduction of E Invoicing System. Accordingly the government has
issued Notification No 68/2019 – CT to 72/2019 – CT to make applicable all the
provisions relating to E Invoicing w.e.f. 1st April, 2020. (Now it extended
till 1st Oct, 2020 in 39th Meeting held on 14th March, 2020)
2)
E-invoicing in India will be a big move, due to the volume of business
transactions undertaken every day, as well as non-standardized formats used in
invoice generation. The main objective is to enable an E-invoice generated by
one software should be capable of being read by any other software. Basically,
through machine readability, an invoice can be uniformly-interpreted.
3) In addition to the above, this new system
of e-invoicing aims to make invoice reporting an integral part of a business
process and remove the tedious task of invoice-compilation at the end of a
return period. Claiming fictitious Input Tax Credit (ITC) by raising fake
invoices is also one of the biggest challenges currently faced by tax
authorities.
4)
The e-invoice system will help to reduce the number of fraud cases as the tax
authorities will have access to data in real-time. The basic aim behind
adoption of e-invoice system by tax departments is ability to pre-populate the
return and to reduce the reconciliation problems.
B) What is E Invoicing:-
1)
E Invoicing means generation of documents such as a Tax Invoice, Credit Note,
Debit Note, etc through a government portal, by transferring each data relating
to such document in JSON file on the portal.
2)
Most of People believe that E Invoicing means invoice will be prepared through
government portal, but it is not true. Invoices will continue to be generated
through regular accounting or invoicing software. But the difference is that, a
JSON file containing all details of the invoice will be generated after
preparing invoice and uploaded on the government portal. The portal will verify
the correctness of the data entered therein and generate a unique Reference
Number known as Invoice Reference Number (IRN).
3)
Taxpayer can enter the invoice details in bulk generation tool available on
e-invoice portal which in turn will create JSON file for uploading on the
e-invoice system.
C) Applicability of E-Invoicing:-
1)
The provisions relating to E Invoicing has been made applicable to,
(a) Registered person:-
Whose
aggregate turnover in any preceding financial year from 2017-18 onwards exceeds
Rs. 500 Crores:- From 01.10.2020. AND (Notification
No. 13/2020 Dt. 21.03.2020)
Whose aggregate turnover in any preceding
financial year from 2017-18 onwards exceeds Rs. 100 Crores:- From
01.01.2021. AND (Notification No. 88/2020 Dt. 10.11.2020)
Whose
aggregate turnover in any preceding financial year from 2017-18 onwards exceeds
Rs. 50 Crores:- From 01.04.2021. AND (Notification
No. 05/2021 Dt. 08.03.2021)
Whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 20 Crores:- From 01.04.2022. AND (Notification No. 01/2022 Dt. 24.02.2022)
Whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 10 Crores:- From 01.10.2022. AND (Notification No. 17/2022 Dt. 01.08.2022)
Whose
aggregate turnover in any preceding financial year from 2017-18 onwards exceeds
Rs. 5 Crores:- From 01.08.2023. AND (Notification No. 10/2023 Dt. 10.05.2023)
(b) In respect of all supplies of goods or
Services or both made to Registered Person (B2B Supplies) only and export. (In
case of Export E-Invoice is applicable but QR code is not applicable).
However E-Invoicing Provision shall not apply
to the following Persons as notified by Notification No. 13/2020 Central Tax
Dt. 21st March, 2020 & Notification No. 61/2020 Central Tax Dt. 30th July,
2020.
(a)
Special Economic Zone unit.
(b)
Insurance Company.
(c)
Banking Company.
(d)
Financial Institution.
(e)
NBFC.
(f)
Goods Transport Agency.
(g)
Person Supplying Passenger transport Service.
(h)
Person providing service of admission to exhibition of cinematograph films in
multiplex screens.
(i)
Persons registered in terms of Rule 14 of CGST Rules (OIDAR) (As per FAQs of
GSTN Site)
2)
As per Notification No. 14/2020 Central Tax Dt. 21st March, 2020, Invoice
issued by a registered person, whose aggregate turnover in a financial year
exceeds five hundred crore rupees, to an unregistered person (hereinafter
referred to as B2C invoice), shall have Quick Response (QR) code.
Parameters to be captured in the Quick
Response (QR) Code:-
a) Supplier GST No.
b)
Supplier UPI ID. (In
cases where the payment is collected by some person i.e. ECO, authorized by the
supplier on his/ her behalf, the UPI ID of such person may be provided in the
Dynamic QR Code, instead of UPI ID of the supplier).
c)
Payee’s Bank A/c
No. and IFSC Code. (If UPI ID mentioned in QR Code then Bank A/c and IFSC code
may not be provided).
d)
Invoice No. &
Invoice Date.
e)
Total Invoice
Value.
f)
GST Amount along
with breakup i.e. CGST, SGST, IGST, CESS, etc.
Further, Dynamic QR Code should be such that it can be scanned to
make a digital payment.
D) Invoice Reference Number (IRN):-
1)
The Invoice Reference Number (IRN) is a 64 character unique number generated by
the e-invoice system for every document such as an invoice or debit or credit
note to be submitted on the e-invoice system.
2)
This shall be unique to each invoice and hence be the unique identity for each
invoice for the entire financial year in the entire GST System for a taxpayer.
E) QR Code:-
1)
E-invoice system will generate a unique 64 character length Invoice Reference
Number (IRN) and digitally sign the e-invoice and the QR code (Quick response
Code). The QR code will enable quick view, validation and access of the
invoices from the GST system from hand held devices.
2)
The QR code will consist of the following e-invoice parameters:-
(a)
GSTIN of supplier.
(b)
GSTIN of Recipient.
(c)
Invoice number as given by Supplier.
(d)
Date of generation of invoice.
(e)
Invoice value (taxable value and gross tax).
(f)
Number of line items.
(g)
HSN Code of main item (the line item having highest taxable value).
(h)
Unique Invoice Reference Number.
3)
The digitally sign QR code will have a unique IRN which can be verified on the
central portal as well as by an Offline App by officer. This will be helpful
for tax officers checking the invoice on the roadside where Internet may not be
available all the time.
F) Benefits of E-invoice System:-
(a)
One time reporting on B2B, B2G and export invoice data in the form it is
generated to reduce reporting in multiple formats.
(b)
Reconciliation and data verification between suppliers and recipient will be
seamless and thus provide better control over input tax credit computation and
claim.
(c)
Reduction in overall compliance burden. Substantial reduction in input credit
verification issues as same data will get reported to tax department as well to
buyer in his inward supply (purchase) register.
(d)
Auto-generation of Sales and Purchase Registers (ANX-1 and ANX-2). To generate
Sales and purchase register (ANX-1 and ANX-2) from this data to keep the Return
(RET-1 etc.) ready for filing under New Return.
(e)
Reduction of tax evasion, System level matching of input credit and output tax.
(f)
Near real-time availability of information to all the relevant participants in
the supply chain.
(g)
On receipt of info thru GST System as buyer can do reconciliation with his
Purchase Order and accept/reject in time under New Return
(h)
Environment friendly – The need of the paper form of the multiple copies of way
bill is eliminated. Hence, the tons of paper are saved per day.
G) How E-invoice will be beneficial to
taxpayers:-
(a)
Save time:- With e-invoicing,
many unnecessary steps are cut out of the invoicing process. Both you and your
customer will be saving time using e-invoicing system.
(b)
Reduce costs:- With paperless
invoicing, you do not have to pay for paper or for postal fees. Further, by
saving time with e-invoicing instead of using templates and emailing PDFs, you
save working time. Concentrate on other value-adding tasks instead. We all know
time is money!
(c)
Reduce mistakes:- By
minimizing manual input and increasing automation, mistakes and typos are
reduced.
(d)
Offer better customer service:-
It is more convenient for customer to get an e-invoice to their desired
platform receiving an e-invoice instead of a paper invoice saves up to 90% on
processing costs.
(e)
Easier to keep track of invoices:-
Know when an invoice has been sent, viewed, and paid when using E-invoicing
system. You will know for sure that the invoice is sent and received.
(f)
A higher degree of control and
insight into the invoicing process:- If you use online invoicing
software, everything is saved on one platform which is accessible from anywhere
on any device.
H) How to generate E Invoice:-
1) Step 1 : Invoice & JSON File
Generation.
(a) Registered dealer is required to generate
invoice as per its routine practice in its own accounting software.
(b)
The invoice must confirm to the e-invoice standard. The seller’s software
should support creation of json file containing all details.
(c)
If the supplier’s software does not have feature of json file creation, they
can do so by downloading offline utility for JSON file creation and then submit
the same.
(d)
Taxpayer must thereafter raise a normal Tax Invoice on that software. It must
provide all the mandatory fields such as vendor name and address, GSTN of the
supplier, transaction value, Item rate, GST rate applicable, and Tax amount.
(e)
Final JSON file will be uploaded on the IRP (Invoice Registration Portal). IRP
will only take JSON.
2) Step 2 : Uploading of JSON.
(a)
The supplier first needs to register on any one of the 10 IRPs identified by
the government. Registration process would be simple with basic details
required. The government has identified following IRPs.
i) www.einvoice1.gst.gov.in
ii) www.einvoice2.gst.gov.in
iii)
www.einvoice3.gst.gov.in
iv) www.einvoice4.gst.gov.in
v) www.einvoice5.gst.gov.in
vi) www.einvoice6.gst.gov.in
vii) www.einvoice7.gst.gov.in
viii)
www.einvoice8.gst.gov.in
ix) www.einvoice9.gst.gov.in
x)
www.einvoice10.gst.gov.in
3) Step 3 : Data Validation by IRP.
(a)
Once the data is successfully validated by the IRP, it will register the
invoice on the portal and generate a Unique Invoice Number which is known as
the Invoice Registration Number (IRN).
(b)
The IRP will validate the IRN from Central Registry to ensure that same invoice
of that supplier is not repeated.
(c)
Once the data is confirmed by the Central Registry, IRP will add its signature
on the Invoice Data as well as a QR Code to the JSON.
(d)
Invoice with a valid digital signature of IRP will be a valid invoice.
4)
Step 4 : Invoice Sharing
(a)
The IRP will have the facility to directly e-mail the signed invoice to the
buyer’s e-mail address.
(b)
The IRP will also transmit the invoice data from its portal to E Way Bill
Portal and also the ANX 1 of the Supplier and ANX 2 of the buyer.
I) Features of the E-invoice system:-
(a) User friendly System:- The
system is user friendly with lots of easy to use operations by the users.
(b) Easy and quick generation of
methods:- There are a number of methods are provided using which the
users can easily and quickly generate the e-invoices.
(c) Multiple modes for e-invoice
generation:- This system support different modes of e-invoice
generation. The user can register the mode of e-invoice generation and use them
for invoice generation.
(d) Creating own masters:- The
user has a provision to create his own masters like customers, suppliers,
products and transporters. The system facilitates to use them while generating
the e-invoice.
(e) Managing sub-users:- The
taxpayer or registered person can create, modify and freeze the sub-users for
generation of the e-invoice and assign them to his employees or branches as per
need. This system also facilitates him to assign the roles/activities to be
played by the sub-user on the system.
(f) Monitoring the IRN generated:-
The system facilitates the registered person to know the number of INR,
generated by them on a specific date
(g) Generating the GSTR-1 from the
e-invoices:- Based on the e-invoice generated, the system pulls the
GSTR-1 related information and pushes it to the taxpayers GSTR-1 returns. This
avoids the taxpayers in uploading these transaction details.
(h) QR bar code on the e-invoice:-
The QR code on the e-invoice helps for easier and faster verification of the
e-invoices.
CLARIFICATION
(Circular no. 146/02/2021-GST Dt. 23.02.2021)
To which invoice is
Notification No 14/2020- Central Tax dated 21st March, 2020
applicable? Would this requirement be applicable on invoices issued for
supplies made for Exports?
As regards the supplies made for exports, though such supplies are made by a registered person to an unregistered person, however, as e-invoices are required to be issued in respect of supplies for exports, in terms of Notification no. 13/2020-Central Tax, dated 21st March, 2020 treating them as Business to Business (B2B) supplies, Notification no. 14/2020-Central Tax, dated 21st March, 2020 will not be applicable to them.
What parameters/
details are required to be captured in the Quick Response (QR) Code?
Dynamic QR Code, in terms of Notification No. 14/2020-Central Tax, dated
21st March, 2020 is required, inter-alia, to contain the following information:
-
i. Supplier GSTIN number
ii. Supplier UPI ID
iii. Payee’s Bank A/C number and IFSC
iv. Invoice number & invoice date,
v. Total Invoice Value and
vi. GST amount along with breakup i.e.
CGST, SGST, IGST, CESS, etc.
Further,
Dynamic QR Code should be such that it can be scanned to make a digital payment.
If a supplier
provides/ displays Dynamic QR Code, but the customer opts to make payment without
using Dynamic QR Code, then will the cross reference of such payment, made
without use of Dynamic QR Code, on the invoice, be considered as compliance of
Dynamic QR Code on the invoice?
If
the supplier has issued invoice having Dynamic QR Code for payment, the said
invoice shall be deemed to have complied with Dynamic QR Code requirements. In
cases where the supplier, has digitally displayed the Dynamic QR Code and the
customer pays for the invoice: -
i.
Using any mode like
UPI, credit/ debit card or online banking or cash or combination of various
modes of payment, with or without using Dynamic QR Code, and the supplier
provides a cross reference of the payment (transaction id along with date, time
and amount of payment, mode of payment like UPI, Credit card, Debit card,
online banking etc.) on the invoice.
OR
ii.
In cash, without using
Dynamic QR Code and the supplier provides a cross reference of the amount paid
in cash , along with date of such payment on the invoice.
The said invoice shall be deemed to have
complied with the requirement of having Dynamic QR Code.
In such cases, if the cross reference of the payment made using such electronic modes of payment is made on the invoice, the invoice shall be deemed to comply with the requirement of Dynamic QR Code. However, if payment is made after generation / issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
Is generation/
printing of Dynamic QR Code on B2C invoices mandatory for pre-paid invoices
i.e. where payment has been made before issuance of the invoice?
If cross reference of the payment received either
through electronic mode or through cash or combination thereof is made on the
invoice, then the invoice would be deemed to have complied with the requirement
of Dynamic QR Code. In cases other than pre-paid supply i.e. where payment is
made after generation / issuance of invoice, the supplier shall provide Dynamic
QR Code on the invoice.
Once the E-commerce operator (ECO) or the online application has complied with the Dynamic QR Code requirements, will the suppliers using such e-commerce portal or application for supplies still be required to comply with the requirement of Dynamic QR Code?
The provisions of the notification shall apply to each
supplier/registered person separately, if such person is liable to issue
invoices with Dynamic QR Code for B2C supplies as per the said notification. In
case, the supplier is making supply through the Ecommerce portal or
application, and the said supplier gives cross references of the payment
received in respect of the said supply on the invoice, then such invoices would
be deemed to have complied with the requirements of Dynamic QR Code. In cases
other than pre-paid supply i.e. where payment is made after generation /
issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.
Any
person, who has obtained a Unique Identity Number (UIN) as per the provisions
of Sub-Section 9 of Section 25 of CGST Act 2017, is not a “registered person”
as per the definition of registered person provided in section 2(94) of the CGST
Act 2017. Therefore, any invoice, issued to such person having a UIN, shall be
considered as invoice issued for a B2C supply and shall be required to comply with
the requirement of Dynamic QR Code.
UPI ID is linked to
the bank account of the payee/ person collecting money. Whether bank account
and IFSC details also need to be provided separately in the Dynamic QR Code along
with UPI ID?
Given
that UPI ID is linked to a specific bank account of the payee/ person collecting
money, separate details of bank account and IFSC may not be provided in the
Dynamic QR Code.
In cases where the
payment is collected by some person other than the supplier (ECO or any other
person authorized by the supplier on his/ her behalf), whether in such cases,
in place of UPI ID of the supplier, the UPI ID of such person, who is
authorized to collect the payment on behalf of the supplier, may be provided?
Yes. In such cases where the payment is collected by some person, authorized by the supplier on his/ her behalf, the UPI ID of such person may be provided in the Dynamic QR Code, instead of UPI ID of the supplier.
In cases, where receiver of services is located outside India, and
payment is being received by the supplier of services ,through RBI approved
modes of payment, but as per provisions of the IGST Act 2017, the place of
supply of such services is in India, then such supply of services is not
considered as export of services as per the IGST Act 2017; whether in such
cases, the Dynamic QR Code is required on the invoice issued, for such supply
of services, to such recipient located outside India? (Substitute by Circular
No. 165/21/2021-GST Dt. 17.11.2021)
No. Wherever an invoice is issued to a recipient located outside India, for supply of services, for which the place of supply is in India, as per the provisions of IGST Act 2017, and the payment is received by the supplier, in convertible foreign exchange or in Indian Rupees wherever permitted by the RBI, such invoice may be issued without having a Dynamic QR Code, as such dynamic QR code cannot be used by the recipient located outside India for making payment to the supplier."
In some instances of
retail sales over the counter, the payment from the customer in received on the
payment counter by displaying dynamic QR code on digital display, whereas the
invoice, along with invoice number, is generated on the processing system being
used by supplier/ merchant after receiving the payment. In such cases, it may
not be possible for the merchant/supplier to provide details of invoice number
in the dynamic QR code displayed to the customer on payment counter. However, each
transaction i.e. receipt of payment from a customer is having a unique Order
ID/ sales reference number, which is linked with the invoice for the said
transaction. Whether in such cases, the order ID/reference number of such
transaction can be provided in the dynamic QR code displayed digitally, instead
of invoice number.
In such cases, where the invoice number is not available at the time of digital display of dynamic QR code in case of over the counter sales and the invoice number and invoices are generated after receipt of payment, the unique order ID/unique sales reference number, which is uniquely linked to the invoice issued for the said transaction, may be provided in the Dynamic QR Code for digital display, as long as the details of such unique order ID/ sales reference number linkage with the invoice are available on the processing system of the merchant/ supplier and the cross reference of such payment along with unique order ID/ sales reference number are also provided on the invoice.
When part-payment has
already been received by the merchant/ supplier, either in advance or by
adjustment (e.g. using a voucher, discount coupon etc), before the dynamic QR
Code is generated, what amount should be provided in the Dynamic QR Code for
“invoice value”?
The purpose of dynamic QR Code is to enable the recipient/ customer to scan and pay the amount to be paid to the merchant/supplier in respect of the said supply. When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/discount coupon etc., then the dynamic QR code may provide only the remaining amount payable by the customer/recipient against “invoice value”. The details of total invoice value, along with details/ cross reference of the part payment/advance/ adjustment done, and the remaining amount to be paid, should be provided on the invoice.
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