The implementation of the GST system has transformed the tax landscape, impacting how businesses operate and comply with regulations. In this context, the invoice under GST plays a crucial role by capturing transaction details between buyers and sellers. Now with the advent of e-invoicing, it is even more important to understand the lifecycle of an invoice in the GST regime and it is vital for businesses to navigate tax compliance effectively.

This article aims to simplify the various stages involved, highlighting how the data passes through different stages and various GST returns.

Invoice Under GST

An invoice under GST is a document issued at the time of supply that records a transaction between a supplier and a buyer for goods or services. It includes important information like names, addresses, invoice numbers, GSTIN numbers of both parties, date, description, quantity, value, tax rates, place of supply, payment method, and terms, etc. It helps maintain accurate records, ensures tax compliance, and promotes transparency in the GST system.

Mandatory fields to be printed on an Invoice under GST and an E-invoice under GST

According to Rule 46 of the CGST tax rules 2017, there are essential details that must be included in both an invoice under GST and an e-invoice. These mandatory fields serve as vital components in the invoicing process, ensuring compliance with the GST regulations.

The following fields are mandatory to be printed on the tax invoice under GST referred to in section 31:

1. Name, address, and Goods and Services Tax Identification Number of the supplier
2. A consecutive serial number not exceeding 16 characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolized as “-” and “/” respectively, and any combination, unique for FY
3. Date of its issue
4. Name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient
5. Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is Rs. 50,000/- or more
6. Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than Rs. 50,000/- and the recipient requests that such details be recorded in the tax invoice
7. HSN code for goods or services
8. Description of goods or services
9. Quantity in case of goods and units or Unique Quantity Code thereof
10. The total value of the supply of goods or services or both
11. The taxable value of the supply of goods or services or both taking into account discount or abatement, if any
12. Rate of tax (central tax, State tax, integrated tax, Union territory tax, or cess)
13. Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax, or cess )
14. Place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce
15. Address of delivery where the same is different from the place of supply
16. Whether the tax is payable on a reverse charge basis
17. A signature or digital signature of the supplier or his authorized representative
18. QR code, having embedded Invoice Reference Number (IRN) in it, in case the invoice has been issued in the manner prescribed under sub-rule (4) of rule 48.

Lifecycle of an Invoice – B2B Invoice Data

Invoice Generation Stage:

When a taxable supply of goods or services is made by one registered business entity to another registered business entity, an invoice is generated by the seller. The tax invoice contains specific details such as the GSTIN (Goods and Services Tax Identification Number) of both the supplier and the recipient, along with a description and quantity of goods or services supplied, the value of the supply, applicable tax rates, the amount of tax charged, etc.

Businesses generate invoices using their ERP systems or accounting system.

IRN Generation:

After the invoice is generated, taxpayers are required to send the invoice data to the Invoice Registration Portal (IRP) like IRIS IRP. When an invoice is sent to the Invoice Registration Portal (IRP), the government assigns a number unique for that particular invoice using the hash algorithm under e-invoicing. If a business has crossed the e-invoicing turnover limit, it is mandatory for them to generate IRN. An invoice is considered invalid if a QR Code is not printed on it.

Invoice Data Gets Auto-populated in GSTR 1

GSTR-1 is a monthly or quarterly return that businesses need to file, providing details of their outward supplies (sales). As the IRN is generated on the Government authorized IRP, the data is also shared with the GSTN. Thus, the GSTN also automatically auto-populates the invoice data into GSTR 1 within 2 days.

This automation reduces the manual effort required for data entry, minimizes errors, and enhances the efficiency of the tax filing process. By ensuring that the invoice data is accurately and automatically populated in the GSTR-1 form, businesses can streamline their compliance procedures and meet their reporting obligations in a more convenient and timely manner.

Once GSTR 1 gets auto-populated, the invoice data gets reflected in the counter party’s GSTR 2A. The counterparty can thus claim ITC.

GSTR 1 Filing after Invoice Data is Auto-Populated

GSTR 1 includes information such as the invoice-wise details of sales, supplies made to registered and unregistered persons, exports, and debit/credit notes issued during the reporting period. Filing GSTR-1 accurately and on time is crucial to maintain compliance, avoid penalties, and ensure seamless flow of input tax credit. It is important for businesses to maintain proper records and utilize reliable accounting software to simplify the GSTR-1 filing process and meet their tax obligations efficiently.

GSTR 3B Filing

The sum total of all invoice data is Auto-computed by GSTN in GSTR 3B. Form GSTR-3B consists of summarized details of supplies made during the month along with the details of paid taxes, ITC claimed, purchases under the reverse charge mechanism, etc. It serves as a mechanism for businesses to report their tax liability and pay the applicable tax amount. Filing GSTR-3B requires businesses to provide information such as their total sales, eligible input tax credit, and the amount of tax payable.

Auto-population of Invoice Data in GSTR 9

So, the invoice data from GSTR 1 and GSTR 3B gets auto-populated in GSTR 9 which is the annual return. GSTR-9 is an annual return form that provides a comprehensive summary of a taxpayer’s outward and inward supplies, input tax credit, and tax liability for a particular financial year. This automation reduces the manual effort required for data entry, minimizes errors, and improves the accuracy of the annual return filing.

This is how the invoice data flows through various returns. Understanding how to invoice data flows through various returns is essential for businesses to ensure accurate and efficient GST compliance. The seamless flow of invoice data, from the initial generation to its auto-population in returns such as GSTR-1, GSTR-3B, and GSTR-9, streamline the reporting process, minimizes errors, and improves overall compliance.

Note: For Small taxpayers, the government has released the QRMP Scheme. It allows them to quarterly file their GSTR 1 and 3B. Also, GSTR 4 serves as their annual return.

To ensure that this flow is not disturbed, users need to ensure that IRN is generated properly for correct data.

From the generation of an invoice to its submission, verification, and tax payment, the GST framework has revolutionized the way businesses handle invoicing.

How IRIS GST Software can help?

IRIS GST Software can help you at every step of the way from invoice generation to GST return filing, have a seamless GST reconciliation, and claim maximum Input Tax Credit!

By leveraging IRIS GST Software and IRIS IRP, businesses can simplify data integration, save time, and enhance the accuracy of their returns plus maximize their ITC claim.

Embracing this smooth invoice data flow not only ensures compliance but also facilitates effective financial management and fosters a more transparent and streamlined tax environment.