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Complying with the GST e-Invoicing system is now mandatory for businesses with a turnover of over ₹5 Crore. According to a notification by the Central Board of Indirect Taxes and Customs (CBIC), businesses with a turnover of more than ₹5 crore will have to generate electronic or e-invoice for all B2B transactions.
This is the sixth phase of e-invoicing. The government had mandated e-invoicing compliance for large scale businesses with a turnover of over ₹500 crore for any financial year between 2017-18 to 2019-2020 in 2021. This was the first phase of e-invoicing. It gradually reduced the turnover threshold and now businesses with over ₹5 crore plus turnover in any financial year from 2017-18 must issue e-invoices with effect from August 1, 2023.
If you are a small business entity that must file e-Invoice for transactions this article will help you understand all about e-Invoicing system and how your business can get ready to comply with the new rule.
What is e-Invoicing?
e-Invoicing or electronic invoicing is a process wherein businesses generate their invoices digitally. Under the GST regime, e-invoices are supposed to be generated digitally through the Invoice Registration Portal [IRP], the central registry of the government for invoices. IRP then assigns a unique number to each invoice called Invoice Reference Number (IRN).
What are the benefits of e-invoicing?
Given below are the benefits of e-invoicing system for a business:
- Real-time tracking: Automatically identify and track invoices prepared by you as a supplier in real time
- One-time reporting: Post authentication, invoice details are automatically updated to the GSTR-1 return
- Faster ITC: Avail Input Tax Credit (ITC) faster with quicker authentication of invoices
- Easier generation of e-Way bills: As a consignor just update vehicle details and it will be auto-populated in Part-A of the e-Way Bill
- Quicker reconciliation: With authenticated e-invoices visible to the buyer in real time, reconciliation can be done faster than before
- Reduction in manual errors: Manual errors in GSTR-1 and e-Way Bill reduced due to auto-population of invoice details
- Reprint invoices with QR Code: Scan the QR code on the e-invoice to reprint invoices (in PDF)
- Faster bulk upload: Linkage of the e-invoice portal with your accounting software/ERP makes bulk upload of invoices faster
How will the revised e-Invoicing rule affect your business?
There will be no need for businesses to manually upload invoices on the GST portal for tax compliance. e-invoicing system automates the uploading of invoices on the GST portal by automatically filling in certain parts of various GST forms.
If your business comes under the new rule, then you must first register on the e-invoicing/Invoice Registration Portal: einvoice1.gst.gov.in
Follow the below steps to register on the portal:
- Visit Invoice Registration Portal (IRP)
- Click on registration
- Enter your GSTIN in the form that appears
- Click on Go
- Your applicant details, applicant name and trade name will automatically appear
- Verify these details and request OTP
- Enter a username and password
- Login to IRP using the login credentials
How to upload e-Invoices on IRP?
Here is how you can upload an e-Invoice on IRP:
Step 1: Creation of the invoice
The CBIC has prescribed a standard format for uploading invoices. The format template contains both mandatory and optional fields. All the mandatory fields must be filled in to register an e-invoice on the e-invoicing portal.
Step 2: Uploading the e-invoice
Your business IT infrastructure and current accounting software must be aligned to comply with the new rules and e-invoice format. This will help you save time when reporting e-invoices. Contact your accounting/billing software provider or IT team to ensure the prescribed format is captured by your software.
Once your accounting system produces e-invoice in the prescribed format, it must be converted into a JSON file to be uploaded on IRP
Step 3: Generating the Invoice Reference Number (IRN)
The Invoice Reference Number (IRN), also known as hash, is a unique number which is generated by IRP using a hash generation algorithm. For every invoice uploaded, a unique 64-character IRN will be generated.
Currently, the e-invoice system features two modes through which a business can generate the IRN, namely offline and API.
Under the offline mode you can use the GePP tool or the Bulk IRN generation tool given in the Help section under Tools. GePP tool is a Simple, user-friendly form based on Excel tool to enter the invoices one by one and generate the IRN Numbers. The bulk IRN generation tool helps you to enter all the invoices and generate unique IRN numbers for each at one go. The procedure to follow for each offline tool is given in the Tools page of IRP.
Under the API mode, the business’s accounting system is directly integrated with the e-Invoicing system. The API integration will need to be tested in a sandbox environment on the sandbox portal hosted by the IRP.
After the test, business will need to submit the test summary report on the sandbox portal. Once the test summary is evaluated and approved, the accounting system of a business will be successfully integrated with the e-Invoicing system.
Step 4: Generating the QR code
After generating the IRN, the e-invoice system will digitally sign the e-invoice and generate a QR code for the same.
The e-invoice data will be sent to the GST system where GSTR-1 of the supplier and GSTR-2B and GSTR-2A of the buyer will be auto-populated based on the details entered in the invoice.
e-invoicing system aims to capture all the invoices of a business correctly so that it makes it easier for companies to pay GST. Automating e-invoice system helps to reduce errors and process invoices faster for GST filing.
It’s an initiative that will enable faster, quicker and better digitisation and technology adoption by small businesses in India.