An Insight into E-Invoice System.
A) Background:-
1) The GST Council, at
its 37th meeting held at Goa on 20th September, 2019 approved the introduction
of E Invoicing System. Accordingly the government has issued Notification No
68/2019 – CT to 72/2019 – CT to make applicable all the provisions relating to
E Invoicing w.e.f. 1st April, 2020. (Now it extended till 1st Oct, 2020 in 39th
Meeting held on 14th March, 2020)
2) E-invoicing in
India will be a big move, due to the volume of business transactions undertaken
every day, as well as non-standardized formats used in invoice generation. The
main objective is to enable an E-invoice generated by one software should be
capable of being read by any other software. Basically, through machine
readability, an invoice can be uniformly-interpreted.
3) In addition to the
above, this new system of e-invoicing aims to make invoice reporting an
integral part of a business process and remove the tedious task of
invoice-compilation at the end of a return period. Claiming fictitious Input
Tax Credit (ITC) by raising fake invoices is also one of the biggest challenges
currently faced by tax authorities.
4) The e-invoice system
will help to reduce the number of fraud cases as the tax authorities will have
access to data in real-time. The basic aim behind adoption of e-invoice system
by tax departments is ability to pre-populate the return and to reduce the
reconciliation problems.
B) What is E Invoicing:-
1) E Invoicing means
generation of documents such as a Tax Invoice, Credit Note, Debit Note, etc
through a government portal, by transferring each data relating to such
document in JSON file on the portal.
2) Most of People
believe that E Invoicing means invoice will be prepared through government
portal, but it is not true. Invoices will continue to be generated through
regular accounting or invoicing software. But the difference is that, a JSON
file containing all details of the invoice will be generated after preparing
invoice and uploaded on the government portal. The portal will verify the
correctness of the data entered therein and generate a unique Reference Number
known as Invoice Reference Number (IRN).
3) Taxpayer can enter
the invoice details in bulk generation tool available on e-invoice portal which
in turn will create JSON file for uploading on the e-invoice system.
C) Applicability of E-Invoicing:-
1) The provisions
relating to E Invoicing has been made applicable to,
(a) Registered person:-
Whose aggregate turnover in any
preceding financial year from 2017-18 onwards exceeds Rs. 500 Crores:- From
01.10.2020. AND (Notification No. 13/2020 Dt. 21.03.2020)
Whose aggregate turnover in any preceding
financial year from 2017-18 onwards exceeds Rs. 100 Crores:- From
01.01.2021. AND (Notification No. 88/2020 Dt. 10.11.2020)
Whose aggregate turnover in any
preceding financial year from 2017-18 onwards exceeds Rs. 50 Crores:- From
01.04.2021. AND (Notification No. 05/2021 Dt. 08.03.2021)
(b) In respect of all supplies of goods or
Services or both made to Registered Person (B2B Supplies) only
However E-Invoicing Provision shall not apply to the following
Persons as notified by Notification No. 13/2020 Central Tax Dt. 21st March,
2020 & Notification No. 61/2020 Central Tax Dt. 30th July, 2020.
(a) Special
Economic Zone unit.
(b) Insurance
Company.
(c) Banking
Company.
(d) Financial
Institution.
(e) NBFC.
(f) Goods
Transport Agency.
(g) Person
Supplying Passenger transport Service.
(h) Person
providing service of admission to exhibition of cinematograph films in
multiplex screens.
(i) Persons registered in terms of Rule 14 of CGST Rules (OIDAR) (As per FAQs of GSTN Site)
2) As per Notification
No. 14/2020 Central Tax Dt. 21st March, 2020, Invoice issued by a registered
person, whose aggregate turnover in a financial year exceeds five hundred crore
rupees, to an unregistered person (hereinafter referred to as B2C invoice),
shall have Quick Response (QR) code.
Parameters to be captured in the Quick Response (QR) Code:-
a) Supplier GST No.
b) Supplier UPI ID. (In cases where the payment is collected by some person i.e. ECO, authorized by the supplier on his/ her behalf, the UPI ID of such person may be provided in the Dynamic QR Code, instead of UPI ID of the supplier).
c) Payee’s Bank A/c No. and IFSC Code. (If UPI ID mentioned in QR Code then Bank A/c and IFSC code may not be provided).
d) Invoice No. & Invoice Date.
e) Total Invoice Value.
f) GST Amount along with breakup i.e. CGST, SGST, IGST, CESS, etc.
Further, Dynamic QR Code should be such that it can be scanned to make a digital payment.
D) Invoice Reference Number (IRN):-
1) The Invoice
Reference Number (IRN) is a 64 character unique number generated by the
e-invoice system for every document such as an invoice or debit or credit note
to be submitted on the e-invoice system.
2) This shall be
unique to each invoice and hence be the unique identity for each invoice for
the entire financial year in the entire GST System for a taxpayer.
E) QR Code:-
1) E-invoice system
will generate a unique 64 character length Invoice Reference Number (IRN) and
digitally sign the e-invoice and the QR code (Quick response Code). The QR code
will enable quick view, validation and access of the invoices from the GST
system from hand held devices.
2) The QR code will
consist of the following e-invoice parameters:-
(a) GSTIN of
supplier.
(b) GSTIN of
Recipient.
(c) Invoice
number as given by Supplier.
(d) Date of
generation of invoice.
(e) Invoice
value (taxable value and gross tax).
(f) Number of
line items.
(g) HSN Code
of main item (the line item having highest taxable value).
(h) Unique
Invoice Reference Number.
3) The digitally sign
QR code will have a unique IRN which can be verified on the central portal as
well as by an Offline App by officer. This will be helpful for tax officers
checking the invoice on the roadside where Internet may not be available all
the time.
F) Benefits of E-invoice System:-
(a) One time
reporting on B2B, B2G and export invoice data in the form it is generated to
reduce reporting in multiple formats.
(b)
Reconciliation and data verification between suppliers and recipient will be
seamless and thus provide better control over input tax credit computation and
claim.
(c) Reduction
in overall compliance burden. Substantial reduction in input credit
verification issues as same data will get reported to tax department as well to
buyer in his inward supply (purchase) register.
(d)
Auto-generation of Sales and Purchase Registers (ANX-1 and ANX-2). To generate
Sales and purchase register (ANX-1 and ANX-2) from this data to keep the Return
(RET-1 etc.) ready for filing under New Return.
(e) Reduction
of tax evasion, System level matching of input credit and output tax.
(f) Near
real-time availability of information to all the relevant participants in the
supply chain.
(g) On
receipt of info thru GST System as buyer can do reconciliation with his
Purchase Order and accept/reject in time under New Return
(h)
Environment friendly – The need of the paper form of the multiple copies of way
bill is eliminated. Hence, the tons of paper are saved per day.
G) How E-invoice will be beneficial to
taxpayers:-
(a) Save time:- With e-invoicing,
many unnecessary steps are cut out of the invoicing process. Both you and your
customer will be saving time using e-invoicing system.
(b) Reduce costs:- With paperless
invoicing, you do not have to pay for paper or for postal fees. Further, by
saving time with e-invoicing instead of using templates and emailing PDFs, you
save working time. Concentrate on other value-adding tasks instead. We all know
time is money!
(c) Reduce mistakes:- By minimizing
manual input and increasing automation, mistakes and typos are reduced.
(d) Offer better customer service:-
It is more convenient for customer to get an e-invoice to their desired
platform receiving an e-invoice instead of a paper invoice saves up to 90% on
processing costs.
(e) Easier to keep track of invoices:-
Know when an invoice has been sent, viewed, and paid when using E-invoicing
system. You will know for sure that the invoice is sent and received.
(f) A higher degree of control and insight
into the invoicing process:- If you use online invoicing software,
everything is saved on one platform which is accessible from anywhere on any
device.
H) How to generate E Invoice:-
1) Step 1 : Invoice & JSON File Generation.
(a) Registered dealer is required to generate
invoice as per its routine practice in its own accounting software.
(b) The
invoice must confirm to the e-invoice standard. The seller’s software should
support creation of json file containing all details.
(c) If the
supplier’s software does not have feature of json file creation, they can do so
by downloading offline utility for JSON file creation and then submit the same.
(d) Taxpayer
must thereafter raise a normal Tax Invoice on that software. It must provide
all the mandatory fields such as vendor name and address, GSTN of the supplier,
transaction value, Item rate, GST rate applicable, and Tax amount.
(e) Final
JSON file will be uploaded on the IRP (Invoice Registration Portal). IRP will
only take JSON.
2) Step 2 : Uploading of JSON.
(a) The
supplier first needs to register on any one of the 10 IRPs identified by the
government. Registration process would be simple with basic details required.
The government has identified following IRPs.
i) www.einvoice1.gst.gov.in
ii)
www.einvoice2.gst.gov.in
iii)
www.einvoice3.gst.gov.in
iv) www.einvoice4.gst.gov.in
v) www.einvoice5.gst.gov.in
vi) www.einvoice6.gst.gov.in
vii) www.einvoice7.gst.gov.in
viii)
www.einvoice8.gst.gov.in
ix) www.einvoice9.gst.gov.in
x)
www.einvoice10.gst.gov.in
3) Step 3 : Data Validation by IRP.
(a) Once the
data is successfully validated by the IRP, it will register the invoice on the
portal and generate a Unique Invoice Number which is known as the Invoice
Registration Number (IRN).
(b) The IRP
will validate the IRN from Central Registry to ensure that same invoice of that
supplier is not repeated.
(c) Once the
data is confirmed by the Central Registry, IRP will add its signature on the
Invoice Data as well as a QR Code to the JSON.
(d) Invoice
with a valid digital signature of IRP will be a valid invoice.
4) Step 4 : Invoice Sharing
(a) The IRP
will have the facility to directly e-mail the signed invoice to the buyer’s
e-mail address.
(b) The IRP
will also transmit the invoice data from its portal to E Way Bill Portal and
also the ANX 1 of the Supplier and ANX 2 of the buyer.
I) Features of the E-invoice system:-
(a) User friendly System:- The
system is user friendly with lots of easy to use operations by the users.
(b) Easy and quick generation of
methods:- There are a number of methods are provided using which the
users can easily and quickly generate the e-invoices.
(c) Multiple modes for e-invoice
generation:- This system support different modes of e-invoice
generation. The user can register the mode of e-invoice generation and use them
for invoice generation.
(d) Creating own masters:- The
user has a provision to create his own masters like customers, suppliers,
products and transporters. The system facilitates to use them while generating
the e-invoice.
(e) Managing sub-users:- The
taxpayer or registered person can create, modify and freeze the sub-users for
generation of the e-invoice and assign them to his employees or branches as per
need. This system also facilitates him to assign the roles/activities to be
played by the sub-user on the system.
(f) Monitoring the IRN generated:-
The system facilitates the registered person to know the number of INR,
generated by them on a specific date
(g) Generating the GSTR-1 from the
e-invoices:- Based on the e-invoice generated, the system pulls the
GSTR-1 related information and pushes it to the taxpayers GSTR-1 returns. This
avoids the taxpayers in uploading these transaction details.
(h) QR bar code on the e-invoice:-
The QR code on the e-invoice helps for easier and faster verification of the
e-invoices.
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