E-invoicing – Next phase will apply to businesses with a turnover of 20 crores from April 1, 2022 - RMPS | Virtual CFO | Internal Audit | GST | Advisory | Investor | MSME

Background

E-invoicing in India will be a big move, due to the volume of business transactions undertaken every day, as well as the different, non-standardized formats used in invoice generation.
The main objective is that an e-invoice generated by one software should be capable of being read by any other software.
New system of e-invoicing aims to make invoice reporting an integral part of a business process and remove the tedious task of invoice-compilation at the end of a return period.
Claiming fictitious Input Tax Credit (ITC) by raising fake invoices is also one of the biggest challenges currently faced by tax authorities.
The e-invoice system will help to curb the actions of unscrupulous taxpayers and reduce the number of fraud cases as the tax authorities will have access to data in real-time.
The basic aim behind adoption of e-invoice system by tax departments is ability to pre-populate the return and to reduce the reconciliation problems.

Brief about E-invoice

E-invoicing is not generation of invoice by a government portal. Taxpayers will continue to create their GST TAX INVOICE, CREDIT AND DEBIT NOTES invoices on their own Accounting/Billing/ERP Systems as per e-invoice schema.
These invoices will then be reported to ‘Invoice Registration Portal (IRP)’. On such reporting, IRP will generate a unique ‘Invoice Reference Number (IRN)’, digitally sign it, and return the e-invoice to the supplier. A GST e-invoice will be valid only with a valid IRN.

Applicability

E-invoicing is not voluntary; only notified persons are enabled to report invoices on IRP.
E-invoicing already applicable with a turnover of 50 crores or more, it is now time for the next phase, which will apply to businesses with a turnover of 20 crores from April 1, 2022.

E-invoicing statutory provisions

Rule 48(4) stipulates that the e-invoice shall be prepared by notified class of registered persons, by uploading such particulars as contained in Form GST INV-01 on the Common GST Electronic Portal and obtain an IRN (Invoice Reference Number), in prescribed manner and subject to prescribed conditions and restrictions.
E-invoicing’ has been introduced for reporting of business to business (B2B) invoices to GST System for certain notified category of taxpayers.
A registered person (except specified class of persons), whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds `20 crores, has been notified as class of persons who shall prepare e-invoice in respect of B2B supplies (supply of goods or services or both to a registered person) or for exports. Thus, presently, such notified persons are not required to report B2C invoices on IRP.
However, reporting of B2C invoices will be brought under e-invoice in the next phase. Further, e-invoicing is also not applicable to invoices issued by Input Service Distributor (ISD).

How to generate e-invoice?

The taxpayer first prepares and generates his invoice using his own ERP/ accounting/ billing system or manual system. The details of this invoice are uploaded/reported by the taxpayer to the Invoice Registration Portal (IRP). This way taxpayer registers his supply transaction on IRP. On uploading, IRP returns 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 shares the e-invoice with the receiver (along with QR Code).

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

IRP sends the e-invoice data along with IRN to the GST System as well as to e-way bill system. This IRN is same as that has been returned by the IRP to the seller.
The GST system will auto-populate them into GSTR-1 of the supplier and GSTR-2B of respective receivers. With source marked as ‘e-invoice’, IRN and IRN date will also be shown in GSTR-1 and GSTR-2B.
The e-invoice schema (discussed subsequently) 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.

Cancellation/amendment of reported invoice

Where needed, the seller can cancel IRN for an e-invoice already reported by reporting it on IRP within specified time.
Amendment of e-invoice already uploaded on IRP will be done only on GST portal (while filing GSTR-1).
Amendment of invoices is not possible through the IRP.

URL or Web site address e – Invoice System (gst.gov.in)

Please refer link for detail user manual and Video.