The implementation of E-invoicing is all set to be rolled down for B2B transactions in India from the month of January 2020. As per the recommendations of the GST council, the proposed E-invoicing system has 2 aspects i.e.
- Adoption of a standard for the invoice, which will enable standardization and swift data exchange
- Registering the standard invoice with Government, through Invoice Registration Portal (IRP), which will ensure the authenticity of invoices.
The E-invoicing system initially will be available on voluntary basis for taxpayers fulfilling the criteria (having a certain turnover or specific invoice value), subsequently introducing the same for all the taxpayers.
In a quick overview, E-invoicing under GST is a mechanism being introduced to curb tax evasion and enable an invoicing standard in India. With the implementation of E-invoicing, the GST system shall be able to validate all the B2B transactions electronically and pre-populate the same in taxpayer’s GST return forms, as per the corresponding details.
Perks of GST E-invoicing system
The perks of introducing E-invoicing under GST include:
- Auto-Populated GST Anx 1, GST Anx 2 and GSTR 1 (for B2B invoices).
- Auto-populated Part A for Eway Bill generation (taxpayer will have to provide vehicle details in Part B to complete EWB generation)
- Auto-sharing of uploaded invoices (on IRP) with the buyers for reconciliation.
- The system will auto-match input credit liability with output tax.
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Highlights of proposed E-invoicing system in India
Clearing the fog about a major misconception surrounding the E-invoice generation, it is not mandatory for a taxpayer to generate E-invoice through the government’s tax portal. In fact, the taxpayer can continue using any accounting software of his preference, with the only necessity being, the software’s ability to generate the invoice in the given e-invoicing format.
Additionally, the supplier/vendor is required to submit these E-invoices on the GSTN portal for the validation purpose, following which, it can be used for return filing and EWB generation. Decoding the entire process of E-invoice generation, right from the invoice creation to sharing the same with buyers (for reconciliation), here is a step-by-step guide for generating a Valid E-invoice:
- Invoice is created using an accounting or billing software as per the prescribed format for E-invoicing.
- Supplier can generate a unique Invoice Reference Number (IRN) using a standard hash-generation algorithm. Generation of IRN by supplier is optional. In absence of IRN, the IRP system of government will generate the same.
- JSON file for each B2B invoice (generated through the accounting software or any third party tool), along with the IRN, if generated is uploaded on the Invoice Registration Portal (IRP)
- The IRP will validate the generated hash/IRN attached with JSON (if uploaded by the supplier)or generate an IRN and authenticate the file against the central registry of GST for any duplication. The IRN will be the unique identity of the E-invoice for the entire financial year.
- Upon successful verification, the invoice will be updated with IRP’s digital signature on the invoice data and a QR code will be added to the JSON file.
- The uploaded data will be shared with the E-way bill and GST system, which will be used for auto-population of GST Annexures and
- The portal will send the digitally signed JSON along with IRN and QR code back to the seller. The invoice will also be sent to the buyer on their registered email id.
While the E-invoicing system is being introduced to curb tax evasion and simplify GST compliance for a taxpayer, it should be noted that selecting the right invoicing solution can play a crucial role in your compliance journey. IRIS Onyx, an e-invoicing solution from IRIS GST, is a one-stop platform for you to view, share and collaborate with your customers and suppliers alike, while managing the entire communication with the GST systems in a hassle-free manner.
For any queries or to schedule a demo, connect with us at firstname.lastname@example.org