Covered in GST Amendments Part II - May 2021

Concept 13: All about E-Invoicing

13.1) Advantages of e-invoicing:

1) Auto reporting of invoices into GST return and auto generation of e-way bill (wherever
required)
2) Under e-invoicing business has to report the B2B invoice data only once in the e-invoice form
and the same is reported in multiple forms (GSTR 1, e-way bill.,etc)
3) E way bill can be generated using e-invoice data
4) GSTR 1 can also be auto populated with e invoice data
5) Consequently, there will be a substantial reduction in the transcriptional errors as same
datawill get reported to the tax department as well as to the buyer to prepare his inward
supplies(purchase register)
6) Further, since a complete trail of B2B invoices is available with the department , it will enable
the system level matching of input tax credit and output tax thereby reducing the tax evasion.
7) E-invoicing will eliminate the fake invoices claiming it fictitious ITC by raising fake invoices is
also one of the biggest challenges currently faced by the tax authorities . It will reduce the
number of fraud cases as the tax authorities will have access to data in real time.
Example: A taxpayer (say a firm of advocates) having aggregate turnover a FY of more than 500 crore
is supplying services to a company who will be discharging his liabilities as recipient under reverse
charge mechanism such invoices have to be reported by said tax payer (since it is a notified person) to
IRP.

13.2 Exemptions from E-Invoicing :

Following entities are exempt from mandatory requirement of e-invoicing :

1) Special Economic Zone units**(SEZ developers not exempt)
2) Insurer or banking company or financial institution including NBFC
3) GTA supplying services in relation to transportation of goods by road in a good carriage
4) Supplier of passenger transportation service
5) Person supplying services by way of admission to exhibition of cinematograph films in
multiplex screens
Thus, above mentioned entities are not required to issue e-invoices even if their turnover exceed 500
crore in the preceding financial from 2017-18 onwards.
Example - Maharaja Private Limited has an SEZ unit and a regular DTA unit (both having same PAN).
The aggregate total turnover of Maharaja Private Limited is more than 500 crore (considering both the
GSTINs) However, the turnover of DTA unit is below 100 crore for FY 2019-20.
Solution :
13.3 How e-invoice is generated?

The taxpayer first prepare and generates his invoice using his own ERP/accounting/billing system on
manual system” The invoice must confirm to the e-invoice scheme (standard notify format-discussed
in detail subsequent paras) and must have the mandatory parameter.

The detail of this invoicing or uploaded/reported by the taxpayer to the Invoice Registration Portal
(IRP). This way taxpayer register his supply transaction on IRP. On uploading IRP return the e-invoice
with a unique “Invoice Reference Number (IRN)” (explained in detail subsequent paras) after digitally
signing the e-invoice and adding a QR code (Quick response code). Then, the supplier share the e-
invoice with the receiver (along with QR code).

13.4 How e-invoice data is consumed by GST System for generation of e-way bill or
populating relevant parts of GST return?

IRP sends the e-invoice data along with IRN9 to the GST system as well as to e-way Bill System.
The GST System will be auto-populate them into GSTR-1 of the supplier and GSTR-2A of respective
receivers. With source marked as ‘e-invoice’, IRN and IRN date will also be shown in GSTR-1 and GSTR-
2A.
The invoice scheme includes parameters e.g. ‘Transporter ID’ and ‘Vehicle Number’, etc. that are
required for creating and generating E-way bills. These can be entered if available with seller, at the
time of generation of e-invoice so that e-way bill can be created using this data without any further
requirement of data entry by the user. The e-invoice reporting software already allows reporting of e-
invoice and generation of e-way bill with same data.

13.5 E-invoice Schema

Businesses use various accounting/billing software, each generating and staring invoices in their own
electronic formats. These different formats are neither understood by GST system of suppliers and
receivers.
Examples- An invoice generated by SAP system cannot be read by a machine which is using ‘tally’
system, unless a connector is used. With more than 300 accounting/billing software products, there
was no way to have connectors for all.
In this scenario, ‘e-invoicing’ was introduced aiming at machine-readability and uniform
interpretation. To ensure this complete ‘inter-operability’ of e-invoices across the entire GST eco-
system, an invoice standard is a must. By this, e-invoice generated by one software can be read by any
other software, thereby eliminating the need of fresh/manual data entry. Since, there was no such
standard for e-invoice available earlier, as a first step, a standard/format for e-invoice has finalized.
This uniform standard format (containing specified fields) applicable for all the business across the
country is known as ‘e-invoice schema’. It is notified as Form GST INV-1. E-invoice schema mandates
what particular shall be reported in electronic format of IRP.
13.6 Invoice Registration Portal (IRP)

IRP is the website for uploading/reporting of invoices by the notified person. Following IRPs have been
notified for the purpose of preparation of the e-invoice:
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

13.7 Invoice Reference Number

As seen earlier, GST invoice will be valid only with valid IRN. IRN is different from invoice number.
Invoice no. (e.g. ABC/1/2019-20) is assigned by supplier and is internal to business. Its format can
differ from business to business and also governed by relevant GST rules. IRN, on other hand, is a
unique reference number (hash) generated and returned by IRP, on successful registration of e-
invoice, for instance, 35054cc24d97033afc24f49ec4444dbab81f542c555f9d30359dc75794e06b

Space for Notes