E-Invoicing for GST means the electronic invoices, which are issued between business entities and are authenticated by the GSTN for the purpose to be used on the common GST portal of India. It is intended to rationalise the procedures for issuing invoices, combating evasion of taxes and eliminating mistakes.

Applicability:

√Threshold: Firstly, it was made compulsory for the companies with turnover of more than ₹500 crore for implementation of e-invoicing. However, with regard to time, this threshold has been scaled down and as at present it applies only to the businesses whose overall turnover is ₹ 5 crore or more.

√Exemptions: Some activity fields such as banking and finances, insurance, organizations that deliver transportation-related goods and services, transport companies, etc. , are excluded from e-invoicing.

How it Works:

√Invoice Generation: The taxpayer prepares the invoice on their own using the software or the Enterprise Resource Planning (ERP) system.

√IRN (Invoice Reference Number): The invoice is input the Invoice Registration Portal (IRP) where it receives an Invoice Reference Number (IRN) and is electronically signed by the GST system.

√QR Code: A QR code is created for the invoice having the essential information like the GSTIN, invoice number, date, and value of the invoice all this is communicated back to the taxpayer.

√Return Filing: Once e-invoiced, data is directly exported into the GSTR-1 form making the returns filing process very easy.

Benefits:

√Reduction of Errors: Since the data is cross validated by the GST system, there are less chances of error by human intervention.

√Simplified Return Filing: E-invoicing demonstrates how invoice data is electronically reported into GSTR-1 and thus eliminates manual data entry.

√Faster Input Tax Credit: Assists in the quicker matching of ITC between the buyer and the supplier.

√Reduced Tax Evasion: Makes certain that the invoices are tracked online which assist in the prevention of fraudulent activities.

Process of E – Invoicing system

• Step 1: The supplier generates the invoice in their internal system (ERP or billing software).
• Step 2: The invoice is uploaded to the IRP in JSON format.
• Step 3: The IRP validates the invoice, generates the IRN and QR code, and returns the e-invoice to the supplier.
• Step 4: The details are automatically sent to the GST and e-way bill portals.

Penalties:

Failure to adhere to e-invoicing standards attracts penalties including fines of up to ₹ 10,000 for every invoice which is incorrect. Furthermore, invoices which are not through the e-invoicing system cannot be deemed to be valid to claim Input Tax Credit.

Conclusion:

E-invoicing introduced in India as a major reform and has a strong potential as a component of the country’s effort to provide a transparent and efficient tax discipline. Looking at the same subject from the principle of the taxpayers, this scheme saves their money from being wasting on mistakes and frauds in the invoices while profits the government through accurate, timeliest invoicing.

DISCLAIMER: The information provided in this article is intended for general informational purposes only and is based on the latest guidelines and regulations. While we strive to ensure the accuracy and completeness of the information, it may not reflect the most current legal or regulatory changes. Taxpayers are advised to consult with a qualified tax professional or you may contact to our tax advisor team through call +91-9871990777 or info@semantictaxgen.in