e-Invoicing? Definition, Applicability, Process, Benefits, Silent Features & Resources

E-invoicing is important for every business no business can keep itself away from it, as it is a part of the transaction. Earlier businesses were doing invoicing through the traditional way which have certain drawbacks like, error, efforts, lack of transparency, manual work and record maintenance, But now the government has introduced e-invoicing which is a more advanced and robust way than traditional invoicing, as it has not only reduce the time, cost and efforts of business but also improved the efficiency and whole invoicing process.

Electronic invoicing is gaining prominence across the business due to its digitization and standardization. It is preferred by the business as it has streamlined the business invoicing process and made reporting and record management easy.

Notifications

What Is E-invoicing, Definition, Its Background and Implementation Under GST

E-invoicing doesn't mean generating an invoice through digital platforms like accounting software, ERPs and government portals. e-invoicing is the digital transformation and automation of the invoicing process from creating, to distributing, reporting and archiving. It is to speed up the transaction reporting between buyer and supplier and also to the government. 

e-invoicing or electronic invoicing process where reporting of Invoice data to the Invoice registration portal (IRP), and after authenticating IRP assign a Unique invoice reference number or IRN to invoices for further use like the creation of e waybill and for GST filing on the common GST Portal.

Electronic invoice or e-invoice was introduced by the GST Council, in its 37th meeting held on on 20th September 2019. GST Council introduced Einvoicing in a phased manner, which means It was not applied to all types of business in one go, but applied as per turnover.

e-invoices first need to be reported to IRP and to be validated as per e-invoicing guidelines before being passed on to the buyer. Once it is passed or verified by the E-invoice system. IRP will send the signed and authenticated e-invoice data along with IRN to the GST System will automatically start reflecting days into the buyer GSTIN side, in GSTIN 2A after the T+1 day, as well as to the E-way bill system to create the Eway bill.

What Are the Documents That Need to Be Reported Under E-invoicing?

The documents covered by the e-invoice system are: 

• Invoices 
• Credit Notes
• Debit Notes

What Is an E-invoice?

The electronic invoice is a document that is already reported to the government and verified by the government system with a unique invoice reference number, which can be fetched and verified easily from anywhere by anyone. It shows that it contains the data of genuine and authenticated transactions. In case of compliance Invoices can be exchanged electronically between the Accounts Receivables and Accounts Payables departments of the vendor and buyer, respectively for GST Filling and waybill purposes.

What Are Not Considered an Electronic Invoice?

• Paper or Printed invoices - handwritten invoices slips, and receipts are not the electronic invoice.
• PDF Invoice - Digital or computer-generated invoices through various modes are not considered as e-invoice invoices.
• Other types of Invoices: bills, receipts, challans etc.

The below table will show you the comparison of other types of Invoices with E-invoice

E-Invoice – Legal Provisions:

For viewing rules/notifications issued on e-invoice, please visit: https://einvoice1.gst.gov.in

Who Are the Taxpayers Required to Generate E-invoices and From When?

The below table will explain the phase-wise who needs to generate e invoice and its Applicability based on AATO or Aggregate annual Turnover and Date of Implementation from or applied on the business that is coming in the AATO criteres.

Who Need Not Comply With E-invoicing?

Following are the business, person, documents or transactions not they are not comply to generate e-invoices irrespective of their turnover.

E-Invoice – Workflow or Procedure

Let's understand how e-invoicing works or the Process of e-invoicing? The government document on e-invoicing Schema and Standards is very clear. It highlights the steps required to generate the e-invoice successfully. Therefore, we will only provide a brief summary here.

The supplier must generate an e-invoice that meets the schema requirement as published by GSTIN. Invoice data must be converted into JSON format through an ERP or accounting software and uploaded on the Invoice Registration Portal (IRP). The first IRP will be NIC. If any, the limit on JSON size is yet to be published by the government. The time limit for uploading or generating the e-invoice to IRP is within thirty days from the date given in the invoice and debit note or credit note.

Once the data has been uploaded, IRP shall create an IRN, based on Supplier GSTIN, supplier’s invoice number, and Financial year (YYYY-YY) (the algorithm used to generate the hash/IRN remains unknown currently). IRP will also digitally sign the invoice, and generate a QR Code and send it to the sender. It will also reflect the e-invoice to the recipient or buyer side based on GSTIN in their GST & Eway bill system.

What Are the Benefits of E-invoicing for Businesses and the Government?

There are uncountable benefits for Businesses, governments, and MSMEs can reap by moving from traditional invoicing to e-invoicing.

• Cost: Einvoicing has reduced several other costs like data entry mistakes, postage, storage, Printi & reprint costs, Review process of Invoices and lost of invoices. Businesses and countries that have adopted e-invoicing systems and report a reduction in cost of processing expenses between 60-80% compared to paper and PDF invoices. Corporates also see a reduction in tax compliance costs by 37-39%
• Reduction in Efforts: Due to the elimination of manual processing and automatic capture of invoice data in the ERP system, businesses can depend on smaller AR/AP departments to deliver. Since tasks generally associated with traditional invoicing are either eliminated.
• Invoice management & Reporting & tracking: The businesses now check transactions that are disposed of by e-invoice and separate them from the remaining agreement. So now tracking, reporting, management and sorting of invoices inside the ERPs or other in-house customer software or solutions are easy now.
• Increased visibility: Managers can benefit from Increased visibility because of the immediate receipt of invoices in the ERP. In contrast, paper invoices can take time to show up resulting in inaccurate forecasting and planning. Proper planning can help manage treasury and ensure the most efficient use of funds.
• Easy ITC Claim: Chances of failing to claim Input Tax Credit (ITC) on invoices that do not go through the Accounts Payable department are also reduced. An example of such invoices would be employee expenses such as airline tickets eligible for ITC claim, but for which no Purchase Order is issued and hence, do not go through the AP department In some cases, invoices might also get lost only to resurface later by the the which deadline to claim ITC has already passed. However, with the government acting as an intermediary in e-invoicing and transmitting tax documents from vendor to buyer, and in the Indian context, even planning to send it to the appropriate tax return will ensure that no available ITC remains unclaimed.
• Improve buyer and supplier relationship: Efficient Accounts payable and Accounts Receivable departments can help build trust among suppliers and buyers and prove to be a strategic advantage. Businesses can ensure on-time payments to avoid late fees and receive contractually negotiated discounts. Finance options such as Buyer-based early payment or bank-led discounts may be introduced to improve cash flow, ultimately resulting in more business for the entire supply chain. It will Improve overall business efficiency, and reduce disputes and delays in invoice payment.
• Fraud and duplicates: Vend fraud is significantly reduced since the government acts as the intermediary and ensures that no duplicates or fakes are shared intentionally or unintentionally.
• Save Environment: E-invoicing is altered Better for Earth as e-invoicing eliminates the exchange of billions of paper invoices. In India, 7.11 billion B2B invoices were reported to the GSTN system until 11th November 2019. It is indirectly benefiting in saving the environment as producing tons of paper requires a large amount of trees to cut.
• Tax Evasion: Proper Invoice transaction reporting to the government. Reduction in fake ITC claims as there is proper matching of Input credit and output credit tax
• Improved Business Performance: The major problem that MSMEs may face is to engage in real-time creation and IRN capture. Retailers coming under this turnover range make thousands of B2B invoices on a daily basis. Moreover, they may not keep the clients on hold for such a long time until the e-invoice is generated. Such MSMEs must use the GSP services for easy implementation.

What Are the Fields, Components and Formats of an E-invoice?

E invoice contains 12 Sections, & 6 annexures -

• 5 Sections and 2 annexures are mandatory and the remaining are optional buyers can get it filled as per their business needs.
• 138 Fields which include mandatory and optional out of which only 30 fields are mandatory and the rest are optional and can be filled as per requirements.

The below table will give the list of Mandatory fields in e-invoices. You will understand the fields with their name, Sample values and field Explanations.

Download the GST e-Invoice Schema from here form GST INV – 1.

Format of Sample e-invoice

JSON is JavaScript Object Notation: the government has availed the Einvocie payload in JSON format which is lightweight and easy readable for both the machine and human, it is widely acceptable and compatible with modern programming languages to generate a PDF of einvoice

The e-invoice format notified is as follows:

Silent Features of E invoices

1. Unique Invoice Reference Number (IRN): it is a unique number assigned to an invoice after submission. The length of IRN is 64 digits, its value alphanumeric means it contains both the alphabets as well as numbers. Under the new e-Invoicing system, IRN plays a very important role as it maintains the uniqueness of the invoice generated during a financial year by all the business. It also ensures the duplicity of the invoices.IRN is present in the QR Code provided by the IRP.
2. Digital Signing of e-Invoice by Invoice Registration Portal (IRP): As such there are no technical requirements to sign the e-invoice. IRP do the digital signing of the e-invoice once it assigns the IRN and hash to the e invoice JSON with the private key. Post-digital sign the seller can use the einvoice for his business transaction purpose.
3. QR Code with key particulars: The Quick Response (QR) code contains all the relevant details about the invoice.QR code contains eight fields, which are listed below.
   1. Invoice Number - 
   2. Invoice Date - date of invoice.
   3. IRN Number - it is a unique number given by the IRP to invoice after submission.
   4. HSN Code - of line items that have high taxable value
   5. Number of line items - 
   6. Invoice amount
   7. GSTIN of Supplier or Sender
   8. GSTIN OF Recipient or purchaser

      QR code is helpful during the road check to the officer, if the poor connectivity, they can scan the QR code through an available Government APP.

      This is helpful for businesses as well through which they can make the entry of goods at the gate

4. Easy Verification
   You can verify the authenticity of e-invoice there are multiple ways for it
   1. By uploading the JSON or signed QR code string to the Einvoice Portal.
   2. Government QR code app which may be downloaded from einvoice1.gst.gov.in or from play store.
   3. Masters India Einvocie QR code reader software & APP
5. Multiple Registrars/IRPs: NIC is the first registrar of the E invoice system and it has put several other IRPs 24*7 in service to smoothen the operations.
6. Standardization of e-Invoice:
   E-invoice has a standard format, no extra field of your choice can be added to it., because it contains fields that are predefined by the government, the e-invoice system will accept the JSON data of those fields as per the e-invoice Schema wise.
7. Several methods or Modes for reporting or generating e-invoices: 
   There are several modes available to the taxpayer based on his/her need or feasibility.
   1. Direct API Access: Taxpayers can directly integrate the API into his System. In this situation, the taxpayer can create a username and password to access the API via client secret and ID. They just have to whitelist their IP address to access the APIs. 
   2. For Enterprises Using ERPs: They can use the APIs directly in their ERP system - The business can make a password and username for Each GSTIN of their entity and have to whitelist the IP address and get the Client Secret and ID to get access
   3. Through E-way bill APIs: If the business has access already to the e-way API bills, they can utilize the same information like username, and password to access the e-invoice system. :
   4. Through GSP API: If the APIs are not available to the Taxpayer then they can take the help of GSP or ASP and Integrate into the system. Businesses can generate passwords and usernames using the GSPs and get in arrangements to use the API with GSP’s Customer Secret and Customer ID. 
   5. Free Offline Utility: The government has also provided the Bulk Generation Tool it can be downloadable from IRP and then data uploading could be done to the IRP Portal through this tool, this way is best suitable for business not using any ERP or accounting software, they can create the JSON though this Free offline tool and create the e invoices.
   6. Web-based: Some ASP or GSP have built the Web-based or SAAS solution that taxpayers can use to generate e-invoices.
      
      Mobile app - is currently not available but will also be provided in future - currently government has availed the APP to verify the QR code data.

8. Printing of e-Invoice: IRP do not return the PDF, it gives the signed JSON which contain the detail of the transaction and is encrypted, In order to Print it Seller or buyer have to decrypt the signed invoice data and then conver into an HTML version so PDF could be generated by hitting the PDF API or URL. Particulars as per Rule 46/53 & a Quick Response (QR) Code should be printed while issuing or printing e-invoice hardcopy. The QR code should be clear enough that it could be read by the QR code reader APP.

9. Cancellation of e-invoice: 
   E invoice can not be cancelled partially Supplier can cancel the e-invoice within 24 hrs of generation; otherwise, amendments will have to be made on the GST portal. The government has defined proper processes To cancel the already uploaded e-Invoice the taxpayer can either do it by uploading the Invoice Reference Number (IRN) to the system or by providing the following details: i. GST Number (GSTIN) ii. Document type iii. Document number iv. Document date It shall be noted that once the e-invoice is cancelled the same IRN cannot be used to generate another e-Invoice. The other way businesses can cancel is through API. by passing the IRN number, GSTIN, cancel reason and remark.
   IRN cancellation will as per accounting standards, and once cancelled its status changes to cancelled from active. Also same invoice cannot be used again to create the e-invoice, if tried then IRP will reject such an invoice, as it uses data like supplier information, Invoice number and financial year to create an IRN of an e-invoice.

10. Amendment of e-invoice already reported: 
    Yes, the supplier can make an Amendment in an e-invoice, but only on the GST portal, while filing GSTR-1. As the IRP reports the e-Invoice to the GST System the taxpayer can amend the e-Invoice on the GST Portal. NIC avail a time limit of 24 hours to make the necessary changes on the Einvoice.

11. Auto-population of GSTR-1/2A and generation of e-way bill:
    Yes, IRP will process the e-Invoice data (payload) in the GST and eway bill system. Let's understand how e-invoicing affects the e-way bill and the GST returns. The GST System auto-populates the data in GSTR 1 of a supplier and GSTR 2A of a buyer. Further, the E invoice is also reflecting in the EWB system if it's a goods invoice having a value of more than Rs. 50000, then the supplier have to create an e-way bill of that- invoice in order to ship the goods from his place to buyer place, for which he required and waybill copy. So, the supplier can use the E-Invoice JSON to create an E-way bill.

12. IRN Data Access or Availability to Buyer: The buyer can fetch or obtain the IRN data into his system through API after T+1 days. Because the government allow 1 days window to the supplier to made the cancellation of the invoice.

Key Takeaways of E-Invoicing

1. E-invoicing is beneficial not only to the government but also to all types of businesses around the world.
2. E invoice has a standard Schema.
3. E invoice gets generated based on 4 parameters, supplier GSTIN, Financial year, Invoice number and document type.
4. It is bringing the digital revolution in invoice processing as and reducing the traditional way of Invoicing. 
5. Governments all around the world are accepting e-invoicing.

e-invoice – Sandbox/API Testing:

There are two ways you can try e-invoice APIs

1. Masters India einvoice APIs
2. Government source - Please visit: https://einv-apisandbox.nic.in

e-invoice – Resources, Help & Feedback

FAQs: Get all EInvoice queries answered by visiting the below FAQs sections.

• e-invoice - FAQs on Law/Procedure 
• e-invoice - FAQs on IRP (Login, Registration, User Management etc.) / Offline Utility 
• e-invoice - FAQs on APIs / Sandbox

Video

Visit: E-Invoicing Implementation - Challenges & Solutions. A LIVE discussion with Team Givaudan

Help Desk: For any technical issue with APIs/Sandbox/e-invoice portal/Offline Utility etc., please raise a ticket with the GST Self-Service Portal 

Feedback/Suggestions: Any other feedback & suggestions on e-invoice are welcome at e-invoice@gstn.org.in

Conclusion

E-invoicing is the future-proof solution. Because it is making transaction reporting easy for businesses as well as the government, it reduces the fake and tax evasion part. Governments across the globe are considering it to implement. E-invoicing will fundamentally change how a business’s AR/AP department operates and will mandate reporting of transactions to the government, even before it go to the counterparty. It will force the Business to move from archaic invoicing practices to all-new electronic invoicing for real-time exchange of invoicing data. To automate and speed up the whole invoicing process, and improve business performance exchange of Business transactions e-invoices is a must.

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