E-Invoicing or Electronic-Invoicing is a mechanism of electronic verification of all B2B invoices of businesses having a return of more than Rs. 500 crores. All such invoices would be verified on the GSTN portal in an electronic manner. The GST E-Invoice generation system is based on the concept of minimizing tax evasion.
Invoice Verification
According to the GST officers, all businesses that come under a specific threshold would be provided a unique number at every instance of an E-Invoice generation. This would allow businesses to match the unique numbers with the invoices printed in the sales return copy and paid taxes for the purpose of verification.
Government Validity to the Invoice
As per the new mandate, starting from October 2020, every business having a turnover of more than Rs. 500 crores must upload all the invoice details for the last financial year on a notified Invoice Registration Portal (IRP) to enable the validation of its important particulars. Upon invoice updating, a unique number, IRN (Invoice Reference Number) with a digitally signed QR code (Quick Response Code) would be issued by the portal. Through the issuance of the IRN and QR code, the government provides validity to the uploaded invoice. Upon authentication of the invoice, the details would be available in real-time on the EWB portal and the GST portal.
Fine in Case of Non-Compliance
In case, a business fails to register the invoice on the IRP, then the particular invoice would be deemed an invalid tax invoice for all matters related to GST and the business would be penalized an amount of Rs. 10,000 for every instance of non-compliance.
The government has tried to assist the taxpayers to ease into E-Invoicing by providing the option to generate and report E-Invoice in a voluntary manner from January 2020. The trial for e-invoice was also enabled in August 2020 on the e-invoice portal.
Process for GST E-Invoice Generation
- The process of GST E-Invoice generation is similar to e-way bill which is generated on the portal docs.ewaybillgst.gov.in and the GST payments made on the GSTN portal.
- A business could generate IRN with the help of a regular hash-generation algorithm. This IRN generation is optional and, in its absence, the same will be generated by the IRP system of government.
- JSON file for every invoice would be uploaded on the IRP along with IRN (if generated).
- The generated hash or attached IRN would be validated by the IRP through JSON. This IRN would act as a unique identity for the E-invoice for the whole of the fiscal year.
- Once, the validation is successful, the invoice would be updated on the invoice data through the digital signature of IRP, and a QR code would be appended to the JSON file.
- The updated invoice would be shared with the GST system and the E-way bill, and subsequently auto-populated for GST return.
- The digitally signed JSON, IRN, and QR code would be sent back to the business, while a copy would be sent to the purchaser on his/her registered email.
Advantages of GST E-Invoicing
- The government would be able to deal with tax leakages and frauds that occur due to fake invoices.
- The GST E-Invoice would substitute e-way bill for the movement of merchandizes as it is regulated by a centralized government portal. Currently, the e-way bill is needed for movable merchandizes in the price range of Rs.50,000 and above.
- GST E-Invoice would remove the need for filing GST returns in the return form, as the data would be auto-filled in the portal.
- GST E-Invoicing is time-saving for the businesses as they have to report the invoice details just a single time for entire GST filings.
- There would be minimal mismatches in reconciliation.
- It would give rise to interoperability between multiple software.
- Suppliers’ invoices would be tracked in real-time.
- There would be automated return filing as essential data would be auto-populated for diverse returns and even EWB (Part A).
- Businesses would be able to place ITC claim in a precise and easy manner.
Consequences of Not Updating the E-Invoice
- A penalty of Rs. 10,000 for every occurrence of non-compliance of E-Invoicing mandate, wherein the business fails to register an invoice on the IRP portal, making the invoice invalid for tax purposes
- Transportation of merchandizes devoid of a valid E-Invoice could result in the detention of both vehicle and the merchandize along with the imposition of a penalty.
- Refusal of consumers to accept merchandize and/ or pay for it without a valid tax invoice, thereby impacting the eligibility of a business to benefit from ITC.
- A check by the government for restriction of e-way bill generation without the presence of IRN.
