Tuesday, September 29, 2020

Detailed Guide on E-Invoicing under GST (w.e.f. 01-Oct-2020)

The E-invoicing System under the provisions of the GST law relate to generation of a digital invoice on a portal as provided for such purpose by the GST Department.

Such invoices reported on the portal will automatically reflect for approval on GSTR-1 as well as E-Way Bill portals.

Applicability Threshold

Turnover Threshold: Generation of e-invoices and application of QR codes is mandatory for all businesses with annual  aggregate turnover (based on single PAN) of Rs. 500 crore or more (in any preceding FY from 2017-18 and onwards), with effect from 01-Oct-2020.

B2B & Exports: Such e-invoicing is required for B2B invoices and not for B2C invoices where the recipient is an unregistered person. Further, such e-invoices are also mandatory for exports, zero rated supplies, deemed exports, debit and credit notes for registered recipients.

Exempt Suppliers: Further, SEZ units, insurers, banks, NBFCs, GTAs, suppliers of passenger transport service, and suppliers of services by way of admission to exhibition of cinematograph films in multiplex screens have also been exempted from generating e-invoice.

Voluntary or Customer Mandated: For a few other businesses that do not meet this turnover criteria, customers may still mandate or stress on providing of e-invoices from their vendors to ensure that they do not lose out on input tax credit (ITC) in case the vendor makes any error in filing its GSTR-1. It is possible that currently, to manage traffic, the e-invoicing portal may have certain restrictions around voluntary generation of e-invoices.

Process for E-Invoicing

Step 1: Generate an invoice in your accounting or billing software (Tally, FACT, Busy, Quickbooks, SAP, Oracle, Navision, etc) as you would normally do. The invoice must conform to the e-invoice schema and have the mandatory parameters. The optional parameters can be according to the business need of the supplier. 

Step 2: Ensure that your billing software is capable of generating a JSON of each invoice. Generate the JSON file. Entities not having their own ERP or software solutions can use the free offline utility "bulk generation tool" downloadable from the e-invoice portal. These can be accessed here.

Step 3: Upload the JSON on the Invoice Registration Portal (IRP). A few software may also provide the option of uploading them on the IRP directly from within the software. Subsequently, a unique IRN will be generated for such invoice based on Supplier’s GSTIN, Document Type, Document Number and Financial Year. IRN is a unique 64 character code which may look like gibberish.
For example, 35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06bbe

Step 4: The IRP will add a validating QR code to the JSON and attach a signature validation at the end of the Department. This becomes the e-invoice. This exported JSON can be converted to readable format and populated into a PDF file with the QR code using the accounting software. DSC of the supplier is not mandatory for e-invoicing and is not required currently. Also, the QR code cannot be printed on another sheet of paper and has to be on the invoice itself.

Step 5: Thereafter, the e-invoice will be sent to both the supplier and the recipient by the IRP on their registered email IDs.

Step 6: The details will then automatically also be sent to the GST portal for updation of GSTR-1 and to the EWB portal for further action. In case Part-B details are not provided at the time of reporting invoice to IRP, the same will have to be provided by the user through "e-way bill" tab in IRP login or e-Way Bill Portal, so as to generate e-way bill.

In case of breakdown of internet activity in certain areas, a localized mechanism to provide relaxation in such contingent situations will be notified.

E-Invoice Portal

The portal can be access here. The URL is https://einvoice1.gst.gov.in/

You may visit "e-invoice enablement" under the Registration tab to register.

Details in the QR Code

The QR code may be read by any such code reader on the mobile phone, and it would show the following information.

1) GSTIN of Supplier
2) GSTIN of Recipient
3) Invoice No. given by Supplier
4) Invoice Date
5) Taxable Value, GST and Invoice Value
6) No. of Line Items
7) HSN code of line item having highest taxable value
8) IRN generated by the IRP

Further, one may also verify whether a JSON is signed and IRN generated by uploading it here.

Amendment and Cancellation

In case of any change, the e-invoice has to be cancelled completely within 24 hours of its generation on the IRP.

In case the change or error is observed beyond the 24 hour limit, the supplier will have to revise the invoice and generate a new invoice with a new IRN on the portal with a revised invoice number.

Amendment of e-invoice can be done only on the GST portal as amendment while filing of GSTR-1 and not on the IRP.

Applicability Under Reverse Charge

If the invoice is issued by notified person in respect of supplies made by him, but attracting reverse charge under Section 9(3), e-invoicing is applicable. This means that say, a taxpayer being a Goods Transport Agency (GTA) or a firm of advocates having aggregate turnover in a FY more than Rs. 500 crore, supplies services to a company which will be discharging tax liability as recipient under RCM - in such a case, invoice will have to be reported by the notified person (in this example, GTA or firm of advocates) to the IRP.

On the other hand, where supplies are received by notified person from an unregistered person thereby attracting reverse charge under Section 9(4), or through import of services - in such case, e-invoicing is not applicable.

E-Commerce Portals

E-Commerce Operators (ECO) may be allowed to generate such e-invoices on behalf of sellers on their platform. A detailed guide for ECOs is given here.  

Legal References & Reading

Edit (30-Oct-2020)
The CBIC released a Press Release by which it has been decided that invoices issued during October 2020 without following the manner prescribed for e-invoice shall be deemed to be valid, if IRN for such invoices is obtained from the IRP within 30 days of the invoice date. This relaxation holds only for the first month of October.