When it comes to GST in 2020, e-invoicing GST has been the largest and one of the most talked-about modifications. Invoicing activities were rather sector-specific. Given the proprietary methods of processing invoices, the general taxpayers took the collective approach of e-invoicing in good spirit. And recently, after active adoption by companies with turnover of more than Rs. 500 CR, companies with turnover of more than Rs. 100 CR also went LIVE with E-invoicing mandate from 1 January 2021. (that went LIVE from 1st October 2020).

What is the E-Invoice Framework for GST?

The GST e-invoice is the implementation of a digital invoice for products and services rendered by the company created on the GST portal of the government. In order to minimize GST evasion, the idea of the GST e-invoice generation system has been taken into consideration.

By providing the companies with a mechanism by which it will become necessary for them to produce ‘e-invoice’ for all sales on the government GST site, the GST officers have reached a conclusion. This scheme would only apply to those whose turnover threshold is higher than the defined threshold, i.e. a threshold limit will be set by the government.

An official said that when an e-invoice is created, a unique number will be issued to businesses that will fall below a certain threshold. This number can be compared by the companies with the invoices reported in the sales return and the taxes charged for verification.

New E-invoice Update Under the GST System

In addition to the development of the GST framework, the council is currently in the process of officially installing a new GST E-invoice or electronic invoice in the form of a business asset reporting (B2B) system for GST systems. This provision will come into effect on 1 January 2020 voluntarily. All new provisions require some degree of adjustment to achieve the goal. The basic level of e-invoice is completed after negotiations with trade/industry organizations and ICAI members to ensure the full implementation of the new e-invoice under the GST system. So far there has been no standard set for e-invoicing.

The effectiveness of e-invoicing is regulated in such a way that invoices generated by one software work with another software eliminating the need to re-digit digit for new input. The adoption of this particular standard will allow the seller, buyer, bank or agent, or other interested people to learn about the machine and capture unnecessary information which is why it eliminates errors. This is the main purpose of changing the structure of e-invoicing GST.

It was at the 37th GST council meeting hosted by Union FM Nirmala Sitharaman, the issue of the new e-invoice machine was discussed and adopted and the same and the programs published on the GST website.

Applicability of e-Invoicing 

E-Invoicing has been implemented from 1 October 2020 to all businesses with combined profit exceeding the R5 million limit in any previous financial year from 2017-18 to 2019-20. Notice No. 61/2020 – The Income Tax determines the benefit limit for the implementation of the e-Invoice from 1 October 2020. Notice No. 71/2020 – The Income Tax defines the time limit for determining eligibility under e-Invoicing.

In addition, from 1 January 2021, e-Invoicing will apply to businesses in excess of Rs.100 crore turnover limit for any financial year between 2017-18 to 2019-20, as indicated in Notice No. 88/2020 – Central Tax.

However, regardless of the benefit, will not apply to the following categories of people currently registered, as announced in CBIC Notification No. 13/2020 – Central Tax:

  • The insurance company or banking company or financial institution, including NBFC
  • Freight forwarding Agency (GTA)
  • A registered person who provides passenger services
  • A registered person who provides services in the form of a welcome to a cinema film show with multiplex services
  • SEZ Unit (issued by CBIC Notification No. 61/2020 – Medium Tax)

How the e-invoice system will work and its procedure?

The e-invoice system will not affect the current invoice issuance process unless the invoice will now be approved by the Invoice Registration Portal. The GST invoice production process is similar to the e-way bill. However, it should be noted that the IRN can only be made by the provider and not by the buyer or carrier. 

Below is an overview of how the e-invoice system will work. 

  1. Invoice creation: – The goods retailer or service provider will create an invoice in a format determined by mandatory forums using their appropriate software. Jason’s file will then be produced for B2B assets using its software. Jason’s created file will have to be uploaded to the Invoice Registration Portal.
  1. Invoice Reference Number (IRN): – The IRN must be provided with Invoice documents, Debit Notes and Credit notes for local, international, and export transactions. There are a few IRN production methods outlined below to get the right reference for students
  • Offline tool – Upload invoices in a standard format and generate IRN simultaneously
  • API – Direct integration – System-to-System integration using an API directly from the taxpayer system
  • API – Using the GSTIN-enabled sister – System-to-System Integration uses an API by a sister company of taxpayers with the same PAN if enabled API.
  • E-Way Bill API Enabling Taxpayers – System-to-System integration using Taxpayers API already enabled E-Way Bill

It should be noted that there is a user center to cancel the IRN if the applicable e-way bill does not exist.

  1. Invoice submission: – The taxpayer must upload the full invoice details, manually or through an internal ERP / accounting system ie Jason file, and IRN for each invoice to be uploaded to the Invoice Registration Portal (IRP) .
    1. Invoice verification: – Uploading the invoice submission by the taxpayer to the Invoice Registration portal, the system will verify the Jason file with the IRN code and authorize that file through the central GST registrar.
    2. Signed Invoice and QR Code: – After proper verification of data, the system returns the IRN with a signed invoice and QR code returned to the taxpayer. The IRN, ACK No, Date, and QR code must be printed by the taxpayer on the invoice provided to the consumer. The in-invoice will be sent to the buyer id registered by the Invoice Registration Portal.
  1. Real-time link: –  All uploaded invoices will be transferred from IRP to GST and e-way bill portal in real-time. As the data is transmitted and linked in real-time to the IRP, the GST portal, and the e-way bill portal, it will therefore eliminate the need for manual replenishment of ANX-1 / GST benefits and Part-A e-bills way.
  1. Signed Invoice and QR Code: – After verification of the relevant data, the system returns the IRN with the signed invoice and the QR code returned to the taxpayer. The IRN, ACK No, Date, and QR code must be printed by the taxpayer on the invoice provided to the consumer. The E-invoice will be sent to the buyer’s registered email ID by IRP.

Consumers, taxpayers, foreign agencies such as financial institutions can check the authenticity of the QR Code and invoiced printed content via the Mobile App (for Android and iOS). One can also upload the generated and signed IRN invoice file and verify it on the true IRN website.

What are the benefits of e-invoice?

The primary purpose of the adoption of the e-invoice system is to advance the benefits and reduce the reconciliation challenges. This is achieved through the creation of an IRP system that shares invoice information in the GST Registration system and the e-way bill system. Therefore, continuous loading of the invoice will ensure that most of the information required for the refund and e-way bill is available to full persons.

The following are some of the key benefits of invoicing:

  • Reduce the reporting of the same invoice details time and time again in various ways. Just a one-time upload and everything, as needed, will be built first.
  • Part A of the e-way bill will be taken automatically and only submission details are required to update it.
  • In loading invoices, details will be automatically taken from GSTR-1 returns. Under the new GST return framework, the sales and purchasing register (ANX-1 and ANX-2) is overcrowded and on this data, a large Return (RET-1 or Sugam) is almost ready to be filed.
  • Significant reduction in credit guarantee challenges as similar details will be reported to the tax department and the consumer in his or her internal purchasing register (GSTR-2A).
  • Upon receipt of information about the GST system, the buyer may reconcile with his Purchase register and accept/reject it on time under New Return.
  • Complete compliance of B2B invoices and comparisons of system input credit and exit tax helps to reduce tax evasion
  • Increase efficiency in tax administration by deleting fake invoices.

Documents to be informed under E-Invoicing to the GST Framework

The following records need to be reported by the taxpayers to the e-invoice system.

  • Invoice by Provider
  • Note of Credit by the supplier
  • Supplier’s Debit Notice

Therefore, Challan/Job Work Challan’s Bill of Supply and Distribution need not be recorded under E-Invoicing.

Software/application can be used to generate E-invoices under GST

Contrary to the current belief that an E-invoice should be made on a standard size, an E-invoice can be created with any software/tool that supports the provided e-Invoicing format. It is important to prepare a system for sending and receiving invoice data.

It is important to note that invoicing will continue to be done by taxpayers. In IRN production, taxpayers can choose solutions that can be embedded in their current payment systems or use personalized options. However, there are many functions to send an IRN generation eg to get a printed invoice with a QR code, looking at the default population in GSTR 1, etc. It is therefore recommended that a solution be chosen that can provide for all the needs surrounding e-invoicing compliance and GST compliance.

IRIS Onyx is a complete solution for e-invoicing applications that can help you make your e-invoicing journey a smooth ride. It is an integrated cloud-based e-invoicing solution that can integrate into many ways with your billing systems and help you produce IRN easily without affecting your current business processes.

Renew invoice for GST systems and e-way methods

The digitally signed JSON and IRN are sent to the seller. Invoice data uploaded and shared with GST program and e-Way Bill. The GST program will review GSTR-1 for merchants and GSTR-2A for consumers, which will help in obtaining credit with ITC. The GST invoice schema will contain information such as ‘Transporter ID’ or ‘Vehicle Number,’ which will be used to generate the e-Way Bill.

The state tax office is not responsible for the invoice of e. It will be built with the help of the merchant’s calculation/payment software and their ERP programs. The IRP will only accept, confirm, and sign following the number of invoices submitted by the seller.

How will it curb tax fraud?

Tax authorities will now have access to a full trial of B2B invoices from taxpayers with the implementation of e-invoicing as they will be submitted to the GST portal. Because invoices are issued before any actual transaction takes place, there is a decrease in the ability to manipulate invoices. By comparing the input tax credit to the output tax on the GSTN portal, the system will detect fake invoices, thus preventing tax crimes.

Conclusion

The e-invoicing system will act as an efficient platform that will support companies around the country and the Government of India. On the one side, corporations would benefit from freedom from multiple data entries, efficient return filing, automated big reconciliations, etc., saving the existing system a lot of time and errors. This would lead to a productive and effective business tax process and greatly reduce the number of issues relating to the verification of input tax credits and the reduction of conflicts and encounters with the tax authorities.

Besides, the Government of India would benefit from the e-invoice system in the form of a reduction in tax losses due to tax evasion, i.e. in the case of the issuance of false invoices for input tax credit claims. This new system would undoubtedly enable the government to improve its tax administration efficiency.

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