E-Invoicing under GST

E-Invoicing under GST

What is E-Invoicing under GST?

E-invoicing, or electronic invoicing, is a system used by Indian businesses under GST to create invoices online. This system makes invoicing easier and helps prevent tax evasion. It also ensures accurate data for GST filing. It helps make invoicing easier, prevent tax evasion, and ensure accurate data for GST filing.

Who is required to use E-Invoicing?

The applicability of e-invoicing is based on a business's annual turnover:

Businesses with over Rs. 100 crore turnover starting from 2017-18 must use e-invoicing. It is mandatory for them. (Notification No. 88/2020 – Central Tax)

·      Exempted: Certain entities are exempt from e-invoicing, including: 

o  Insurance companies

o  Banking companies

o  Financial institutions

o  NBFCs (Non-Banking Financial Companies)

o  Goods Transport Agencies (GTAs)

o  Airlines

o  Multiplexes providing cinematograph film screening services

o  Units operating within Special Economic Zones (SEZs)

Process of E-Invoicing

Here's a breakdown of the e-invoicing process:

1Businesses use their current software to create invoices, making sure to include all required fields from the e-invoice schema.

The invoice is sent to the Invoice Registration Portal (IRP) to receive a unique Invoice Reference Number (IRN). This number is generated for authorization purposes.

To create a standard invoice, include recipient information, GST number, itemized costs, tax rates, and total amount. Upload this information to the IRP using a JSON file or App.lication Service Provider (ASP), or a direct API. The invoice details should include all required fields.

The IRP checks the invoice data for duplicates and creates a unique hash for future reference. The IRN is created using the seller's GSTIN, invoice amount, financial year, and document type. The IRN is made using the seller's GSTIN, invoice amount, financial year, and document type.

6The IRP creates the IRN, signs the invoice digitally, and generates a QR code for the supplier. The supplier is notified via email when the e-invoice is successfully generated.

The IRP sends invoice data to the GST portal for filing returns. It may also send the data to the e-way bill portal for processing. This data auto-populates the supplier's GSTR-1 for the relevant tax period.

Benefits of E-Invoicing

·      Reduced Tax Evasion: E-invoicing makes it more difficult to manipulate invoices and evade taxes.

Data accuracy is improved by exchanging data in real-time between the IRP, GST portal, and e-way bill portal.l. This helps in maintaining consistent data across all platforms.

·      Simplified Return Filing: Auto-population of invoice data in GST returns reduces manual data entry and potential errors.

·      Enhanced Efficiency: E-invoicing streamlines the invoice generation and filing process.

Conclusion

E-invoicing is an important part of the tax system under GST. It will start with bigger businesses but may expand to smaller ones later on. It's important for GST-registered businesses to understand how e-invoicing works and what it means for them. This will help them follow the rules and take advantage of the benefits of e-invoicing.