E-invoicing under GST was made mandatory for companies with a turnover of Rs 5 crore and above. This e-invoice is a document with IRN associated with it and the digitally signed QR code is also printed on it.
The IRP generates a unique Invoice Reference Number (IRN) for each invoice once you have successfully completed the authentication process. IRN and each invoice must be digitally signed and added with a QR code. The collective process is known as e-invoicing under GST. Read on to know the benefits, types, modes of generating e-invoices, and other essential aspects.
An electronic invoice or e-invoice is digital proof of validating a monetary transaction between a buyer and supplier and approved by a government tax portal. E-invoicing is a system proposed in which invoices of B2B are prepared digitally in a format authenticated by the Goods and Services Tax Network (GSTN). The e-invoicing system ensures that all businesses follow a similar format before reporting their invoices to the GST authorities.
The government shared an e-invoice draft for public viewing in August 2019. The GST Council later modified the draft to make it compliant with its regulations. The standard format of e-invoices makes compliance easier. Furthermore, it increases transparency across the GST ecosystem since it covers multiple industries.
Though invoices generated by most software look the same, more or less, they are still indecipherable by computer systems. For example, if software A generates an invoice, software B wouldn’t be able to read it. However, taxpayers and business owners can comprehend it.
Currently, various billing and accounting software are available, each using a different format for generating invoices. Therefore, the GST system can’t read and understand these invoices despite all information in invoices remaining the same.
Eventually, the need arose to establish a standard format in which electronic data of invoices are shared with others to ensure the interpretation of invoice data.
Some of the prominent benefits of the GST e invoice applicability are listed below:
The GST council has approved the GST e invoice applicability in a phased manner for ensuring that business owners and taxpayers have ample time to adapt to the new invoicing system via a digital approach.
The e-invoice applicability under GST will apply to all businesses registered under GST and issue B2B invoices in a phased manner.
A seller should electronically upload all invoices to the IRP system and capture the QR code along with the invoice reference number (IRN) in the physical copy of the invoice that has been issued to the recipient according to the e-invoicing under GST.
The taxpayer is required to upload the following documents to the IRP system:
The GST e-invoice system requires taxpayers to electronically upload and authenticate all information with a unique invoice reference number (IRN) and an electronically signed QR code. However, the difference between e-invoicing and the current practice of invoicing is that the seller must print the IRN and QR code on the invoice before it can be issued to the buyer.
Businesses can use ERPs or business management software to connect seamlessly to the IRP system. It can help businesses automatically print the QR codes and IRN on their invoices. Furthermore, it gets easier for businesses to manage requirements and e-invoice rules under GST without hampering other business activities.
Several modes are available for e-invoicing under GST to assist taxpayers in selecting the best one matching their needs. E-invoices can be generated in the following different modes:
The e-invoice applicability under GST not only helps streamline the GST processes but also helps tax authorities keep track of all B2B transactions since businesses are required to upload all information to the GST e-invoice portal. It shall go a long way in preventing tax crimes. Furthermore, businesses will have fewer opportunities to manipulate invoices as they are generated before the transactions occur. Lastly, authorities can identify fake invoices by matching the input tax credit to output tax on the GSTN portal.
Ans: Partial cancellation of an e-invoice is not possible. E-invoices must be fully or wholly cancelled if they must be cancelled. The IRN must be notified within 24 hours of the cancellation when this occurs. After that period, you cannot cancel an e-invoice using the IRN. If you want to cancel, you must manually do it through the GST portal. Before filing the returns, this must be done. Invoice numbers cannot be reused when you cancel, and a new one must be generated; otherwise, the IRP will reject it.
Ans: E-way bills can be generated by taxpayers when they generate an e-invoice. However, they can generate an e-way bill at a later time as well. It is necessary to submit an e-invoice with the e-way bill in order to ensure the validity of the e-way bill. It is often believed that the e-way bill has been rendered obsolete since e-invoicing was introduced, but that is not the case. It is a very important document when transportation of goods takes place and e-way bills are required.
Ans: An unregistered person can generate an e-invoice if he or she is a consumer, as this is a business-to-consumer transaction. An ITC will not be claimed by the customer or an unregistered individual. Currently, there is no requirement for B2C transactions to be processed electronically. However, dynamic QR codes must be generated for B2C transactions. For taxpayers with a turnover exceeding Rs. 500 crores since December 1, 2020, this is a mandatory requirement.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
|Section 145A||Section 80P||Section 92CD|
|Section 281||Section 32(2)||Section 270A|
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|Section 35AD||Section 80C||Section 32|
|Section 206AA||Section 92E||Section 9|
|Section 153||Section 10(10D)||Section 194DA|
|Section 10AA||Section 80GG||Section 80TTB|
|Section 80JJAA||Section 1940||Section 23B|
|Section 206AB||Section 44AB||Section 87A|
|Section 115JB||Section 154||Section 194D|
|Section 194J(1)(ba)||Sectio 80U||Section 194K|
|Section 56-59||Section 80TTA||Section 234C|
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