E-invoicing under GST
- Posted on Nov 29, 2019
- By Guest
In 35th GST Council meeting, the council have decided to implement a system of e-invoicing to stop one of the major challenge fake invoices for claiming fictitious Input Tax Credit (ITC)
So step by step lets understand what is E-invoicing
First lets burst the myth
Myth: “Generation of invoice on GST portal.”
Fact: “E-invoicing is the submission of an already generated standard invoice on a common portal. This automates multi-purpose reporting with a one-time input of invoice details.”
What is E-invoicing?
‘E-invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. Its similar to “E-Way Bills” on the common GST Portal
Under the proposed electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network. All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time.
Therefore, it will eliminate the need for manual data entry while filing GST returns as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to GST portal.
What is the current system in place for issuing invoices?
Currently, businesses generate invoices through various softwares, and the details of these invoices are manually uploaded in the GSTR1 Return. The invoice information is thereafter reflected in GSTR-2A for the recipients for viewing only. On the other hand, the consignor or transporters must generate e-way bill by again importing the invoices in excel or JSON manually.
Under the new return system, an annexure in form GST ANX-1 will mostly take the place of the GSTR-1 return. However, the process of generating and uploading invoice details will remain the same. It will be done by importing using the excel tool/JSON or by the online entry of data. A seamless flow of data is expected for e-way bill generation. e-invoicing will be the key tool to enable this.
What are the mandatory fields of an e-invoice?
The following fields of an invoice must be compulsorily declared in an e-invoice:
|Sl. no.||Name of the field||List of Choices/ Specifications/Sample Inputs||Remarks|
|1||Invoice Type||Max length: 10Can be one of the following:
|Denotation for regular, SEZ supplies with payment, SEZ supplies without payment, deemed exports, sale from the bonded warehouse, export without payment of tax, export with payment of tax|
|2||InvoiceType Code||Max length: 50Will be auto-generated by GSTIN based on the invoice type specified by the user||A subcode may also be automatically added by the GSTN|
|3||Supplier_GSTIN||Max length: 15Must be alphanumeric||GSTIN of the supplier raising the e-invoice|
|4||Invoice Number||Max length: 16Sample input is
|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|
|5||Preceeding_Invoice_Reference||Max length:16Sample input is
|Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes and other documents required under GST|
|6||Invoice 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|
|7||Reverse Charge||‘Y’ or ‘N’ as a single character||Mention whether or not the particular supply is subject to reverse charge mechanism|
|8||GSTIN||Max length: 15||The GSTIN of the buyer to be declared here|
|9||State Code||Max length: 2||The place of supply state code to be declared here|
|10||Place||Max length: 50||The place (locality/district/state) of the buyer on whom the invoice is raised/ billed to must be declared here if any|
|11||Pincode||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|
|12||Unique Identification Number||Abbreviated as ‘UUID’Max length: 50
Sample input is ‘649b01ft’
|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|
|13||ShippingTo_GSTIN||Max length: 15||GSTIN of the buyer himself or the person to whom the particular item is being delivered to|
|14||Shipping To_State||Max length: 100||State pertaining to the place to which the goods and services invoiced were or are delivered|
|15||Supply Type||Max length: 2Sample values can be either of Supply/export/Job work||It can be either interstate or intrastate supply. Further, it can be outward or inward supply
Moreover, the supply can further be classified as import, export, job work, for own use, return, sales return, others, SKD/CKD/Lots, line sales, recipients not known, exhibition or fairs
|16||Transaction Mode||Max length: 2The schema specifies that the field can have either of regular/bill to/ship to||A combination of a ‘Bill To Ship To’ and ‘Bill From Dispatch From’ is also allowed|
|17||Item Description||Max length: 300The sample value is ‘Mobile’
The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’
|Simply put, the relevant description generally used for the item in the trade. However, more clarity is needed on how it needs to be described for every two or more items belonging to the same HSN code|
|18||Quantity||Decimal (13,2)Sample value is ‘10’||The number of items (goods or services) that is charged on the invoice as a line item.|
|19||Rate||Decimal (10,2)Sample value is ‘50’||The unit price, exclusive of GST, before subtracting item price discount, can not be negative|
|20||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|
|21||GST Rate||Decimal (3,2)Sample value is ‘5’||The GST rate represented as a percentage that is applicable to the item being invoiced|
|22||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|
|23||Total Invoice Value||Decimal (11,2)||The total amount of the Invoice with GST. Must be rounded to a maximum of 2 decimals|
What is the process of getting an e-invoice?
1: Taxpayer must ensure to use the reconfigured ERP system as per PEPPOL standard. He must coordinate with the software service provider to incorporate the standard set for e-invoicing, i.e. e-invoice schema (standards)
and must have the mandatory parameters, at least. It should be capable of generating the JSON file for multiple invoices together. Those taxpayers not having any software will be provided offline utility. Also, small taxpayers having annual turnover below Rs 1.5 crore have the option to choose from 8 different accounting and billing softwares all tied up with the GSTN. It is available free of cost. It is available both as online (cloud-based) as well as offline (installed on the computer system of the user).
2: The taxpayer must thereafter raise a normal invoice on that software. He must give all the necessary details like, billing name and address, GSTN of the supplier, transaction value, Item rate, GST rate applicable, tax amount, etc.
3: Upload the details of invoice especially mandatory fields onto the IRP using the JSON file only. It can be done directly or GSPs or through APIs(apps or software providers). The IRP will act as the central registrar for e-invoicing and its authentication. There are several modes of interacting with IRP such as web-based, API-based, SMS based, mobile app-based, an offline tool-based, and GSP based.
4: IRP will validate the key details of the B2B invoice, checks for any duplications and generates an invoice reference number (hash) for reference. The hash could have been generated by the taxpayer beforehand itself (Format of IRN or hash: Seller GSTIN, Invoice number, and FY in YYYY-YY). But then, it becomes valid and effective only once registered on IRP.
5: IRP generates the invoice reference number (IRN), digitally signs the invoice and creates a QR code in Output JSON for the supplier. On the other hand, the recipient of the supply will also get intimated of the e-invoice generation through email (if provided in the invoice).
6: IRP will send the authenticated payload to GST portal for GST returns. Additionally, details will be forwarded to the e-way bill portal, if applicable. ANX-1 of seller and ANX-2 of the buyer gets auto-filled for the relevant tax period. In turn, it determines the tax liability.
A taxpayer can continue to print his invoice as being done presently with logo. e-invoicing system only mandates all taxpayers to report invoices on IRP in electronic format.
When will E-invoicing get implemented?
While no exact date has been provided yet, electronic invoicing is proposed to be implemented from 1st January 2020. It will be implemented in a phased manner by GSTN. Similar to the new GST return filing system, the electronic invoicing system will first be available on a trial basis or voluntary compliance.
- Posted on Nov 29, 2019
- By Guest
- 0 Comments