One of the biggest and positive changes that took place in 2020 is E-invoicing under GST. The main intention or reason behind introducing the concept of e-invoicing was to restrict and reduce fake invoicing that had been happening and was a great concern of the government.
The government has introduced e-invoicing in a proper phased manner. If you havent gone through all the changes in rules and regulations that had been made mandatory, you need not worry.
Profitbooks is here to give you a clear insight in a detailed manner about E-invoicing under GST.
E-Invoicing under GST
E-Invoicing, which stands for electronic invoicing is a system where B2B invoices are authenticated electronically by GST Network (GSTN). It is an electronic authentication mechanism under GST. Under this system, an identification number, Invoice Reference Number (IRN), is issued against every invoice by the Invoice Registration Portal (IRP).
What happens here is that all of your invoice information gets transferred from this portal to both other portals; GST portal, an e-way bill portal, simultaneously in real-time. This reduces the need for entering the data manually as the information is passed directly by the IRP to the GST portal.
Changes made in the current invoicing system
The fundamental change in the E-invoicing system from the old invoicing system is that the seller now needs to print the QR code and IRN number on the invoice before issuing it to the buyer.
For Businesses that use ERP / business management software, it will be very easy to manage e-invoice requirements without many changes to the business process.
Who is applicable for E-Invoicing under GST?
E-Invoicing has been made applicable from 1st October 2020 to all the businesses who had aggregate turnover more than Rs.500 crore limit in any of the preceding financial years from 2017-18 to 2019-20.
Moreover, from 1st January 2021, e-Invoicing has been made applicable to businesses exceeding the Rs.100crore turnover limit in any of the financial years between 2017-18 to 2019-20. This has been intimated in Notification No.88/2020 – Central Tax.
Another thing that has been notified in CBIC Notification No.13/2020 Central Tax is that irrespective of the turnover, e-invoicing wont apply to the following categories of registered persons for now.
- A Goods Transport Agency (GTA)
- An insurer or a banking company or a financial institution, including an NBFC
- A registered person supplying passenger transportation services
- A registered person supplying services by way of admission to the exhibition of cinematographic films in multiplex services
- A SEZ unit (excluded via CBIC Notification No. 61/2020 – Central Tax)
Benefits for businesses
E-invoice initiated by GSTN will have the following benefits on businesses:
- E-invoices that are created on one software can be read by another. This allows interoperability and helps to reduce data entry errors.
- There is real-time tracking of invoices prepared by the supplier.
- It helps in backward integration and automation of the tax return filing process.
- There is a faster availability of genuine input tax credit.
- There exists a lesser possibility of audits/surveys by the tax authorities as the information they require is available at a transaction level.
Implementation dates
The GST Council has approved the introduction of e-invoicing in a phased manner to safeguard that businesses get enough time to familiarize themselves and adapt to the new system of e-invoicing.
For Taxpayers with a turnover of ?500 crores and more, e-invoice is already introduced from 1st October 2020.
For businesses with a turnover of ?100 crores and more, it has been made applicable from 1st January 2021.
It is expected that e-invoice will be valid for all businesses from 1st April 2021.
How does an E-invoice look like?
Transactions needed under E-Invoicing
E-Invoicing applies only to B2B Business to Business transactions. These B2B Supplies include domestic supplies as well as Exports. Moreover, Supplies to SEZ B2B Reverse Charge Invoices and Supplies through E-commerce Operators are also covered under E-Invoicing.
These transactions are also covered under GST E-invoicing if transaction through E-commerce comes under RCM. Moreover, an e-commerce operator can also generate IRN for the same thing.
E-invoicing is not required if there are B2C Business to Consumer transactions. But for taxpayers with AATO above Rs 500 Cr, the invoices must contain a self-generated QR Code. Import transactions do not get covered under E-Invoicing.
Mandatory fields of an e-invoice
An E-invoice must mainly obey the GST invoicing rules. Moreover, it should follow the invoicing system or policies followed by each industry or sector in India.
Below is a detailed list of the contents of the latest e-invoice format as notified on 30th July 2020 via Notification No.60/2020 Central Tax. It includes 12 Sections (mandatory + optional) and 6 annexures consisting of a total of 138 fields.
Out of the 12 Sections, 5 are Mandatory and 7 are Optional and 2 annexures are mandatory.
The following fields must be compulsorily declared in an e-invoice:
Sl. no. |
Name of the field |
List of Choices/ Specifications/Sample Inputs |
Remarks |
| 1 |
Document Type Code |
Enumerated List such as INV/CRN/DBN | Type of document must be specified |
| 2 |
Supplier Legal Name |
String Max length: 100 | Legal name of the supplier must be as per the PAN card |
| 3 |
Supplier GSTIN |
Max length: 15 Must be alphanumeric | GSTIN of the supplier raising the e-invoice |
| 4 |
Supplier Address |
Max length: 100 | Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice |
| 5 |
Supplier Place |
Max length: 50 | Suppliers location such as city/town/village must be mentioned |
| 6 |
Supplier State Code |
Enumerated list of states | The state must be selected from the latest list given by GSTN |
| 7 |
Supplier Pin code |
Six digit code | The place (locality/district/state) of the suppliers locality |
| 8 |
Document Number |
Max length: 16 Sample can be Sa/1/2019 | For unique identification of the invoice, a sequential number is required within the business context, time-frame, operating systems and records of the supplier. No identification scheme is to be used |
| 9 |
Preceeding_Invoice_Reference and date |
Max length:16 Sample input is Sa/1/2019 and 16/11/2020 | Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is needed to keep future expansion of e-versions of credit notes, debit notes and other documents required under GST |
| 10 |
Document Date |
String (DD/MM/YYYY) as per the technical field specification | The date when the invoice was issued. However, the format under explanatory notes refers to YYYY-MM-DD. Further clarity will be required. Document period start and end date must also be specified if selected. |
| 11 |
Recipient Legal Name |
Max length: 100 | The name of the buyer as per the PAN |
| 12 |
Recipients GSTIN |
Max length: 15 | The GSTIN of the buyer to be declared here |
| 13 |
Recipients Address |
Max length: 100 | Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice |
| 14 |
Recipients State Code |
Enumerated list | The place of supply state code to be selected here |
| 15 |
Place Of Supply State Code |
Enumerated list of states | The state must be selected from the latest list given by GSTN |
| 16 |
Pin code |
Six digit code | The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any |
| 17 |
Recipient Place |
Max length: 100 | Recipients location (City/Town/Village) |
| 18 |
IRN- Invoice Reference Number |
Max length: 64 Sample is a5c12dca8 0e7433217 ba4013 750f2046f229 | At the time of registration request, this field is left empty by the supplier. Later on, a unique number will be generated by GSTN after uploading of the e-invoice on the GSTN portal. An acknowledgement will be sent back to the supplier after the successful acceptance of the e-invoice by the portal. IRN should then be displayed on e-invoice before use. |
| 19 |
Shipping To GSTIN |
Max length: 15 | GSTIN of the buyer himself or the Recipient of the item |
| 20 |
Shipping To State, Pincode and State code |
Max length: 100 for state, 6 digit pincode and enumerated list for code | State pertaining to the place to which the goods and services invoiced were or are delivered |
| 21 |
Dispatch From Name, Address, Place and Pincode |
Max length: 100 each and 6 digit for pincode | Entitys details (name, and city/town/village) from where goods are dispatched |
| 22 |
Is Service |
String (Length: 1) by selecting Y/N | Whether or not supply of service must be mentioned |
| 23 |
Supply Type Code |
Enumerated list of codes Sample values can be either of B2B/B2C/ SEZWP/S EZWOP/E XP WP/EXP WOP/DE XP | Code will be used to figure out type of supply such as business to business, business to consumer, supply to SEZ/Exports with or without payment, and deemed export. |
| 24 |
Item Description |
Max length: 300 The sample value is Mobile The schema document refers to this as the identification scheme identifier of the Item classification identifier | This simply means the relevant description generally used for the item in the trade. Though, more clarity is required on how it needs to be described for every two or more items belonging to the same HSN code |
| 25 |
HSN Code |
Max length: 8 | The applicable HSN code for particular goods/service must be entered |
| 26 |
Item Price |
Decimal (12,3) Sample value is 50 | The unit price, exclusive of GST, before subtracting item price discount, cannot be negative |
| 27 |
Assessable Value |
Decimal (13,2) Sample value is 5000 | The price of an item, exclusive of GST, after subtracting item price discount. Hence, Gross price (-) Discount = Net price item, if any cash discount is provided at the time of sale |
| 28 |
GST Rate |
Decimal (3,2) Sample value is 5 | The GST rate represented as a percentage that is applicable to the item being invoiced |
| 29 |
IGST Value, CGST Value and SGST Value Separately |
Decimal (11,2) Sample value is 650.00 | For each individual item, IGST, CGST and SGST amounts have to be specified |
| 30 |
Total Invoice Value |
Decimal (11,2) | The total amount of the Invoice with GST. Must be rounded to a maximum of 2 decimals |
Generation for an e-invoice under GST
To generate an e-invoice, taxpayers will have to follow the e-invoice schema and submit mandatory details accordingly. Following is the list of mandatory and optional parameters:
Transaction details: tax scheme, supplier type
Document details: type, number, and date
Supplier information: legal name, GSTN address, location, PIN code, and state code.
Buyer Information: legal name, GSTN number, address, location, state code, and PIN code
Dispatch from address details
Shipping details
Item-related details: service/ goods, HSN code, total amount, GST rate, Assessable amount, total item value.
Batch number (if items are being moved in batches)
Invoice details: assessable values and total invoice value
The Aftermaths
An invoice is created from the taxpayers system itself. Then it is sent to Invoice Registration Portal (IRP) for authorization. After being authorized, the invoice data is updated with IRPs digital signature and a QR Code along with Invoice Registration Number (IRN).
Choosing a reliable QR code and digital signature provider ensures that the authentication process remains secure, seamless, and fully compliant with e-invoicing regulations.
There are multiple modes of generating e-invoice that is made available for the taxpayers to use. Following are some of them:
- Web-Based
- API Based
- SMS Based
- Mobile App
- Offline tool based
- GSP based
Possible to generate E-Way Bill along with E-Invoice?
Yes, you can! Because the generation of E-way Bill has now been inter-twined with E-Invoicing. IRP can help us to generate not only IRN but also E-way bills, for the documents that qualify.
As per the data sent, the IRP system returns IRN or E-way Bill Number or both. If the taxpayer sends transportation details along with invoice details, IRP communicates with the E-Way Bill portal. Thus, it generates an E-Way bill.
Software used for GSTNs e-invoicing
E-invoice can be created with the help of any software/tool that supports the given e-Invoicing format. It is important to prepare the system to send and receive invoice data. It is suggested to choose a solution that can solve all your requirements around e-invoicing and GST compliance.
IRIS Onyx is one complete e-invoicing software solution that helps you to make your e-invoicing effortlessly and without much hassle. It is a cloud-based advanced e-invoicing solution that integrates with your billing systems. It also helps you generate IRN effortlessly without disturbing your current business processes.
Exemptions from E-invoicing:
Following are the entities which are exempted from e-invoices:
- Special Economic Zone
- The insurer or a banking company
- Goods transport agency supplying services
- Passenger transportation service suppliers
- Admission to the exhibition of Cinematograph Films in Multiplex Screens
One thing that is very important to note is that Exemption is QUA BUSINESS and NOT QUA TAXPAYER. In laymans terms, a taxpayer who is engaged in multiple lines of business within the same GSTIN has to determine the activities; which are not covered within the aforementioned exemptions.
Conclusion
By now you must have got a clear idea of all the changes made in the e-invoicing system and the rules and regulations. To curb the fake invoicing happening all over the nation, the government had implemented the concept of e-invoicing under GST. And thus, it is necessary to be aware of all the implemented rules.
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