E-INVOICING-A COMPLETE DETAILED ANYALSIS

E Invoicing is a huge and positive update taken place under GST law such as E Way Bill system in the year 2020. The invoicing practices are implemented by business houses that are different from each another and government desires united and balance approach in invoicing.

The first and foremost reason behind introduction of E invoicing is to restraint fake invoicing. Fraud and tax leakage using means of fake invoices is being a concern of government before introduction of GST law.

Avoidance on account of fake invoicing the government is of the action to authorize every invoice and that can be done only by generating invoices with GST portal and that is called as E invoicing.

PHASES OF INTRODUCTION OF E-INVOICING:- 

In the first leg of implementation effective from 1^st October 2020, E-Invoicing was made applicable to taxpayers with turnover exceeding Rs 500 Crore in any of the preceding financial year starting from 2017-18 to 2019-20.

In the second phase made effective from 1^st January 2021, E-invoicing was made applicable to taxpayers with turnover exceeding Rs 100 Crore in any of the preceding financial year starting from 2017-18 to 2019-20.

Keeping in mind an intention to further uprise the usage of E-invoicing system, the CBIC further decides to get all taxpayers with turnover exceeding Rs 50 Crore in any of the preceding financial year starting from 2017-18 onwards under the ambit of E-invoicing system starting from 1^st April 2021.

Thus, for the computation of the applicability, turnover should be considered of any preceding Financial Year from 2017-18 onwards in the beginning of every Financial Year. As soon as the Taxpayer becomes eligible for E-invoicing, his issuance will be continuous forever (no check once the eligibility is confirmed).

Basics of e-invoice under GST–

• E-invoice is a procedure by which a basic generated invoice is authenticated by GSTN. Soon after the authentication is complete, every invoice should be issued an IRN (that is Invoice Reference Number).
• E-invoice is applicable solely to B2B transactions (that is supply of goods or services or both should be to a registered person).
• E-invoicing essentially aims reduction in evasion of tax; auto-population of various returns and also targets the reduction of reconciliations problem currently prevailing under GST.

“Definition Of E Invoicing

Section 2(6) of the CGST Act: “(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all Indiabasis but excludes central tax, State tax, Union territory tax, integrated tax and cess; “

2) As per the  No. 13/2020 amended vide Not. No. 70/2020 and Not. No. 88/2020, Aggregate Turnover in any preceding Financial Year from 2017-18 onwards needs to be considered to determine the applicability of E-Invoicing. The Aggregate Turnover is in accordance with the GST Returns”

Infrastructure For E Invoicing by Government.

As per the notification CGST Notification 69/2019 states an e-invoicing portals that will give an IT Platform to tax payers to generate E Invoice and  accept e-Invoices, validate the invoice and generate a unique Invoice Reference Number.

Below is the list of websites of this e invoice portal:

• www.einvoice1.gst.gov.in
• www.einvoice2.gst.gov.in
• www.einvoice3.gst.gov.in
• www.einvoice4.gst.gov.in
• www.einvoice5.gst.gov.in
• www.einvoice6.gst.gov.in
• www.einvoice7.gst.gov.in
• www.einvoice8.gst.gov.in
• www.einvoice9.gst.gov.in
• www.einvoice10.gst.gov.in

This portal is known as Invoice Registration Portal (IRP).It was a mindset of taxpayers that E invoicing might be a trouble in changing the current system and moving to E invoicing still E-invoicing has a big start in India.

Procedure of E invoice Generation

Below mentioned is the step-by-step process to issue E invoice.

Step 1) Initially, the formation of the Invoice using the existing infrastructure but one important thing to be kept in mind is that the invoice should have all the mandatory field complete which is needed by E invoice schema.

In case when all the mandatory fields are not synchronized in the present infrastructure, then tax payer are advised to follow IT enable infrastructure.

Step 2) Secondly, here Invoice Authorization and generation of Unique IRN (Invoice Registration Number) is done. The invoice prepared needs to be uploaded to E invoicing portal for the further generation of IRN. For this taxpayer can make use of the mentioned websites notified by the government.

Step 3) Lastly, the generation of QR Code is complete.

Mandatory Points Required to Mentioned for E Invoicing.

Based on the analysis of E invoicing template, the total number of fields in e-invoice schema is about 140, from which around 50 are obligatory or mandatory subject to few circumstances for the normal or small taxpayer. The required data comprises of details such as buyer and supplier information, tax rate, invoice value, description and HSN of goods or service, tax amounts and taxable value. Optional data fields are payment related like pre-tax values, reference document number, bank account no, mode of payment etc. In case where no value is to be given compulsory field taxpayer can use the option “nil” value for successful generation of IRN.

Tax payer reports below mentioned documents under E Invoicing system.

1) Invoice by Supplier for Goods or Services

2) Both credit and debit note

Bill of Supply along with the delivery challan and also transfer documents are not required to be uploaded to E invoicing Portal.

Non-Applicability of E Invoicing.

Provided below are the taxable persons are not included for issuing e-invoice vide GST notification No. 13/2020-Central Tax dated 21st Mar’ 2020:

• An insurance company
• A banking company
• Financial Institution
• NBFCs
• GTA
• Supplier of passenger transportation services
• Supplier of services by means of admission into the exhibition of cinematograph films in multiplex screens
• Special Economic Zones (SEZs) Units (Under Notification No. 13/2020 and 61/2020- Central Tax)
• In accordance with the notifications, exclusion is done for SEZ Unit and not for SEZ Developers.

Advantages of electronic invoicing in businesses

Businesses have the following advantages via e-invoice started by GSTN:

1. E-invoice sorts and plugs a major gap in data reconciliation under GST in order to minimize the mismatch errors.
2. E-invoices created one software that is readable by another, further permitting interoperability and assists in reducing the data entry errors.
3. Real-time tracking of invoices equipped by the supplier is permissible by e-invoice.
4. The process for automation of the tax return filing and backward integration – the applicable details of the invoices would be auto-populated in the numerous returns, particularly for making the part-A of e-way bills.
5. Quicker availability of genuine input tax credit.
6. Less possibility of surveys/audits by the tax authorities meanwhile the information they require is available at a transaction level.

Frequently asked questions: –

1. Who all are applicable for e-Invoicing?

A: This system shall be applied to the GST registered persons whose average turnover in the financial year not more than Rs.100 crore. But exceptions include financial institutions, NBFCs, GTA, passenger transportation service Special Economic Zones (SEZ) units, insurance, banking and sale of movie tickets.

2. Can an e-Invoice be cancelled partially/fully?

A: An e-Invoice cannot be cancelled partially but the cancellation is possible wholly. On cancellation, it must be reported into the IRN within 24 hours. Any attempt of cancellation thereafter, is not possible on IRN and needs to be cancelled manually on the GST portal formerly the returns are filed.

3. Is it possible to do bulk-uploading of invoices for generation of IRN?

A: No at all, invoices should be uploaded one at a time into the IRP. The ERP of a company is designed in such a way that it can place the request for the uploading of individual invoices.

4. Do we have the facility for e-invoice generation on the common GST portal?

A: No, invoices will continue to generate on the individual ERP based software that are at present in use by businesses.

The invoice should adhere to the e-Invoicing format and containall the mandatory parameters. The direct generation of invoices on the common portal is not yet planned.

5. Mention all types of documents that need to be reported into the IRP?

A: The documents that areto be covered under e-Invoicing system are mentioned below-

• Invoices by the Supplier
• Credit Notes by the Supplier
• Debit Notes by the Recipient
• Any other document as notified under GST law to be reported as e-invoice by the maker of the document.

6. How can e-Invoicing curb tax evasion?

A:-It helps in curbing tax evasion in the mentioned ways:

• Tax authorities accesses transactions as they occur in real-time as the e-invoice generated with help of GST portal is a mandate.
• There is minimum scope for handling of the invoices as the invoice is generated soon after the occurrence of the transaction.
• It will minimize the possibility of fake GST invoices and the only authentic input tax credit can be claimed as each and every invoice should generate using GST portal. As both input credit and output tax details can be matched, it is easy for GSTN to track fake tax credit claims.

7. What if you do not follow the rules?

• A:- There will be non-issuance of e-Invoice

In case if your business has an annual turnover of around INR 50 crores or more, there needs to be a generation of an e-Invoice for every B2B transaction obligatorily. If in case an invoice on IRP is not generated, then it is implied the government is not information about the transaction.

An invoice which is issued by supplier without a corresponding IRN is now said to be invalid in all GST-related matters. Thismight incur a penalty equal to 100% of the due tax or INR 10,000, whatever is higher.

8. Generation of incorrect e-Invoice

A:- If there are incorrect or fraudulent details entered during the invoicing, then there is a penalty of INR 25,000 will be imposed on the taxpayer.

9. E-way Bill

A:- If goods transported without a valid e-Invoice and the corresponding E-way bill supplier tries to transport goods, the chances of seizure of goods and the levying of hefty fines upsurges multiple folds because non-compliance.

Disclaimer : The information contained in this article is intended solely for the dissemination of information and does not aim at solicitation of work. Though meticulous care has been taken but the author assumes no liability in respect of any loss/ damage incurred while acting on the information provided in this article. The author can be reached at sanjeev@semantictaxgen.in and can be called at +91-8126700005.