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GST E-Invoice/E-Invoicing – What Businesses Need to Know

What is a GST E-invoice?

Firstly, GST e-invoice or electronic invoices does not mean electronically generated invoices. It neither means generating invoices through a government portal nor any other website.

E-invoicing is a process to make the invoices more authentic and ease the tax filing process. As per Rule 48(4) of CGST Rules, eligible businesses have to prepare an invoice by uploading specified particulars of the invoice (in form GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN). 

After uploading the details, the IRP generates an invoice with a unique ‘Invoice Reference Number (IRN)’ along with a QR code. The IRN (along with the QR code) issued by the supplier to the buyer is called an e-invoice in GST

When was GST E-Invoicing Introduced 

In 2019, the GST Council has recommended the introduction of e-invoicing in a phased manner from the year 2020. Initially, e-invoicing has been made mandatory for businesses with an annual aggregate turnover above INR 500 Crore from 1st October 2020.

Later, businesses above INR 100 Crore turnover were also asked to generate e-invoices starting 1st January 2021.

Further notifications included firms with an annual turnover of above INR 50 crore and above INR 20 crore effective from 1st April 2021 and 1st April 2022. 

The annual turnover includes the turnover of all the GSTINs under a single PAN across India. 

Therefore any business whose annual aggregate turnover is above INR 20 crore in any financial year starting from 2017-18 in respect to the supply of goods or services to registered persons (B2B) should generate e-invoices. 

GST e-Invoicing Process

In the GST e-invoicing process, eligible businesses continue to generate GST invoices on their own billing and accounting softwares or ERP systems. The generated invoices are then reported to ‘Invoice Registration Portal (IRP) – einvoice1.gst.gov.in/ in a specified format. Once reported, the portal

  • Generates a unique 64-character ‘Invoice Reference Number (IRN)’
  • Signs the invoice digitally, and 
  • Generates a QR code that contains the IRN and other key information

Both the IRN and the QR code need to be printed on the invoice before issuing it to the buyer. This enables physical verification of the invoice as to whether or not it has been reported on the IRP. 

GST e-Invoicing Applicability

As mentioned above, GST e-invoicing is applicable for all the registered B2B businesses whose aggregate turnover in any preceding financial year from 2017-18 onwards is more than INR 20 crore. 

 For quick reference, here is the list with eligible businesses and effective dates: 

Business TurnoverE-invoicing effective from 
Above INR 20 crore to INR 50 crore1st April 2022
Above INR 50 crore to INR 100 crore1st April 2021
Above INR 100 crore to INR 500 crore1st January 2021
Above INR 500 crore1st October 2020

All the enterprises supplying goods or services or both to registered persons (B2B), SEZs, conducting exports and deemed exports are required to generate e-invoices.  

However, certain businesses are exempted from GST e-invoicing, including – 

  • Special economic zones (SEZ)
  • Financial and non-financial institutions, including insurance companies, banks
  • Transportation agencies supplying goods by road
  • Suppliers of passenger transportation services
  • Suppliers of services by way of admission to movies in multiplex theatres

The taxpayer can also check his eligibility through the GST e-Invoice system portal. From the home page, click on the Search tab, select ‘e-Invoice Status of Taxpayer‘, enter ‘GSTIN’ and click on ‘Go’.

Why is GST e-Invoicing Introduced?

E-Invoicing provides several benefits to both the Government as well as to taxpayers. 

Advantages of GST e-Invoicing to taxpayers

  • E-invoicing automates tax-related processes, thus eliminating manual reporting of forms, GST declarations, and separate tax accounting. This enables seamless processing of tax collection and refund. 
  • E-invoicing eliminates the need to carry hard copies of the invoices during the transit of goods thus enabling quick settlement of payables and receivables. 
  • E-invoicing reduces the need for post-audit systems of invoices as e-invoice ensures that the documents are tax-compliant in real-time. 
  • It also helps in digitalising the supply chain mechanism which might enable innovative trade finance schemes in future. 
  • Auto-generation of e-way bill.

Advantages of GST e-Invoicing to the Government

  • For the government, e-invoicing helps to significantly reduce tax evasion resulting in better management of taxes and allocation of resources to other important tasks. 
  • By bringing more and more businesses under e-invoicing,  the Government can keep a check on various frauds like carousel fraud, no invoicing fraud, invoicing with no goods supplied fraud, suppression of turnover fraud, fraud of invoicing between phantom partners who escape before tax audit, frauds related to ITC refunds, etc. 

GST e-Invoicing Workflow

The step-by-step process of how a GST e-invoice is generated is listed below.

  1. The seller generates an invoice in his own accounting and billing software or an excel or other existing systems. The seller should ensure that the generated invoice data is in JSON format, without which the IRP will not accept it. 
  2. Once the invoice in JSON format is ready, the same needs to be uploaded directly on Invoice Registration Portal (IRP).
  3. The IRP verifies the supplier’s GSTIN, document type & number, and financial year and also checks the Central Registry of GST System for any duplicates.

Once verified, it adds a signature on the invoice along with a QR code containing GSTINs of seller and buyer, invoice number, invoice date, number of line items, HSN of a major commodity, etc.

  1. The IRP then generates the Invoice Reference Number (IRN), which is a unique 64-character hash. The IRN provides a unique identity for each invoice for the entire financial year. An IRN number looks like 35054cc24d97033afc24f49ec4456dbab81f542c534f9d30359dc75794e08bbe

In case the IRP finds a similar document in the registry, it will reject it with an error code.

  1. Once everything is clear, the IRP returns the digitally signed invoice with the IRN and the QR code to the seller. 

In another half of the e-invoicing, where the seller or the buyer is not involved, the IRP portal shares the document’s data and the IRN to the GST system and e-way bill system. The GST system then updates the GSTR-1 of the seller and GSTR-2A of the buyer.

If the invoice also contains transportation details like transportation ID, vehicle number, etc., the e-way bill system captures the same and creates the e-way bill without requiring further data entry. 

The Key Elements of a GST e-Invoice

The GST e-Invoice contains two key elements that are not present in the invoice – 

  • Invoice Reference Number (IRN)
  • Quick Response Code (QR Code)

Invoice Reference Number (IRN)

IRN is a unique reference number also termed as the hash is generated by IRP on successful registration of e-invoice. IRN is a unique 64-character hash generated using the computer algorithm and is a combination of supplier GSTIN, financial year, document type (Invoice-INV, credit note-CRN, debit note-DBN), and document number.

A hash generation algorithm converts a message or a string consisting of characters (alphabets + numbers + certain special characters) into a series of numbers so that

the resulting numbers do not indicate the original message.

For instance, a taxpayer with GSTIN 05AAAAA8888A12N has issued the invoice with

the number ACD05464 on 10.02.2020, the string used for hashing is 05AAAAA8888A12N2019- 20INVA0CD5464 and the IRN hash will look like

6668A0CD05956B5CA5D1322F647DC4F892B383FCBD5F09C6CH69FFEB48683444

The IRN is unique for every e-invoice generated in a financial year in the entire GST system.

Quick Response Code (QR Code)

IRP also generates the quick response code (QR code), which contains the unique IRN (hash) along with some important information about the invoice and digital signature so that it can be verified using offline app.

The QR code consists of the following information

  •  Supplier GSTIN 
  •  Recipient GSTIN 
  •  Supplier invoice number 
  •  Invoice generation date
  •  Invoice value
  •  Number of items
  •  HSN Code of main item
  •  Invoice Reference Number (IRN)
  •  Date of IRN generation

A signed QR code looks like this 

Image Source: https://einvoice1-trial.nic.in/


Frequently Asked Questions

What happens if I generate only GST invoices?

If you’re a notified business, you need to generate an e-invoice. A GST invoice without IRN is not valid.

What should businesses do to be e-invoice ready?

Businesses can continue to issue invoices as usual. However, they need to update their billing and accounting software or ERP so that they can enable invoice reporting to IRP and obtain IRN.

I don’t use any billing software to generate invoices. How should I report invoices to IRP?

If you don’t use any software for invoice generation, you can use the free
offline utility (bulk generation tool), which can be downloaded from the e-invoice portal. Using this, invoice data can be easily reported to IRP to obtain IRN and signed e-invoice.

Is it possible to bulk upload invoices to IRP?

Yes, you can use the bulk generation tool to upload the invoices in bulk. Also, you can choose an accounting system that supports bulk upload on invoices to IRP.

Is the invoice number the same as the invoice reference number (IRN)?

No, both are not the same. An invoice number is generated by the supplier. It governs by relevant GST rules and differs from business to business. IRN, on other hand, is a unique reference number (hash) generated and returned by IRP, on successful registration of an e-invoice.

Can I print an e-invoice?

Yes, you can print the e-invoice, once the IRP returns the signed JSON. Your accounting software converts it into PDF and you can print the same if required

Do I need to print IRN on the invoice?

Printing IRN on the invoice is optional. As the QR code is already embedded with the IRN, you don’t have to print it separately.

Do I need to print the QR code on the invoice?

As per Rule 46 of CGST Rules, it is mandatory to print the QR code on the invoice. The QR code needs to be clear and in optimal size and should be readable by the QR code reader.

Can I cancel an e-invoice in GST portal?

Yes, you can submit a cancellation request within 24 hours of reporting the invoice to IRP using the ‘Cancel API’ option. However, if there is a connected e-way bill and if is verified by an officer during transit, cancellation of IRN will not be permitted.

Is there a dedicated website for e-invoicing related services?

Invoice Registration Portal (IRP) (https://einvoice1.gst.gov.in/) is a dedicated website for all e-invoicing related services.




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