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e-invoice - Background:

In 2019, the GST Council approved the phased introduction of electronic invoices (e-invoice) for B2B and export transactions. In the 2020 meeting, certain entities, including Special Economic Zone Units, insurers, banking institutions, goods transport agencies, passenger transportation service providers, and cinema exhibitors, were exempted from mandatory e-invoicing. This move aimed to enhance efficiency and transparency in the Goods and Services Tax (GST) system.

e-invoice – Advantages:

  • Auto-reporting in GST return: Simplifies compliance with a one-time B2B invoice report.
  • Auto-generation of e-way bills: Seamlessly creates e-way bills using e-invoice data.
  • Standardization and Inter-operability: Reduces disputes, enhances overall business efficiency.
  • Improved payment cycles: Streamlines invoicing, reduces processing costs for faster payments.
  • Automation of GST compliances: Single-point reporting minimizes transcription errors.
  • Reconciliation facilitation: Enables buyers to reconcile with Purchase Orders effortlessly.
  • Reduction of tax evasion: Establishes a complete trail of B2B invoices, ensures tax compliance.
  • Fraud mitigation: Enhances security, eliminates the risk of fake invoices.

e-invoice – Schema

  • Promoting Seamless Integration:

    • In response to the diverse electronic invoice formats used by businesses, the e-invoicing initiative aims for machine-readability and uniform interpretation.
    • This initiative facilitates smooth communication among different accounting systems, eliminating the need for manual data entry.
  • Unified Schema for Inter-operability:

    • Recognizing the challenge posed by over 300 accounting software products, a standardized schema (Form GST INV) has been established.
    • Shaped through extensive consultations with industry bodies (CII, PHD, FICCI, ASSOCHAM) and ICAI, this schema ensures that invoices generated by one software can be seamlessly understood by any other, fostering inter-operability.
  • Tailored to Indian Business Practices:

    • In the absence of a national e-invoice standard, the schema was crafted based on international standards (UBL/PEPPOL).
    • This customization ensures alignment with the unique needs and practices of Indian businesses, providing a foundation for a more streamlined and efficient invoicing process.

e-invoice – Process:

  • Seamless e-Invoicing Workflow:

    • In the e-invoicing process, various documents like invoices, credit notes, and debit notes are reported to the ‘Invoice Registration Portal (IRP)’ by taxpayers.
    • IRP, acting as a centralized hub, issues a unique ‘Invoice Reference Number (IRN)’ and digitally signs the e-invoice, validating the GST invoice’s authenticity.
  • QR Code for Offline Verification:

    • IRP takes it a step further by generating a QR code, embedding the unique IRN and other vital details.
    • This QR code, which can be printed on the invoice, offers a convenient way for offline verification. Users can utilize mobile apps or similar tools to verify if the e-invoice has been duly reported to the IRP.
  • Adaptability in Output Formats:

    • The e-invoice schema sets the criteria for reporting to IRP to obtain a signed e-invoice.
    • Suppliers, upon successful reporting, receive a signed JSON from the IRP, inclusive of QR code data. This information can be transformed into a readable PDF format. Moreover, if desired, the taxpayer can opt to print it as a paper invoice, just as they currently do, by adding business logos and other relevant details.
  • Versatile QR Code Inclusion:

    • The PDF and the printed invoice must feature the QR code, ensuring a consistent verification method.
    • This flexibility accommodates the diverse preferences of businesses, allowing them to seamlessly transition between digital and traditional paper invoicing.

Cancellation/Amendment of Reported Invoice:

  • Cancellation/Amendment:

    • Sellers can cancel e-invoice IRN within the specified time.
    • Amendments are made exclusively on the GST portal during GSTR-1 filing.
  • IRP Expansion:

    • Initially one IRP; more to be added for enhanced service.
    • Ensures redundancy, speed, and diverse options for taxpayers.

e-invoice – Detailed Work flow:

The above flow of e-invoice generation, its reporting/registration and receipt of confirmation
can be logically divided into two major parts:
A. Interaction between the business (supplier) and the Invoice Registration Portal (IRP).
B. Interaction between the IRP and the GST/E-Way Bill Systems and the Buyer

Part A: Supplier to IRP Flow:

  1. Invoice Generation:

    • Seller generates the e-invoice using any software utility conforming to the e-invoice schema.
  2. JSON Output:

    • Seller’s software produces a JSON of the final invoice for uploading to the IRP.
  3. JSON Generation Options:

    • Sellers can utilize accounting or billing software, ERP, Excel/Word, or even mobile apps to output JSON.
    • Fin-Tech companies offer services for JSON generation if the taxpayer’s software lacks this capability.
    • Small and medium-sized taxpayers without software can use free accounting systems from GSTN-empaneled providers.
  4. Uploading to IRP:

    • Seller uploads the e-invoice JSON directly on the IRP or via GSPs or third-party solutions.
  5. IRP Processing:

    • IRP generates a unique Invoice Reference Number (IRN) based on hash, ensuring uniqueness through Central Registry confirmation.
    • IRP adds a signature and QR code to the JSON, marking it as a valid e-invoice.
  6. Return to Seller:

    • Digitally signed JSON with IRN and QR code is returned to the seller.


Flow from IRP to GST System/E-Way Bill System & Buyer

Part B: IRP to GST/E-Way Bill & Buyer Flow:

6(a) Data Transmission:

  • Signed and authenticated e-invoice data with IRN is sent to GST and E-Way Bill Systems.

6(b) GSTR-1 Update:

  • GST System updates GSTR-1 based on the received e-invoice data.

6(c) E-invoice Schema Integration:

  • E-invoice schema includes ‘Transporter ID’ and ‘Vehicle Number,’ allowing seamless e-way bill generation if entered during e-invoice creation.
  • E-invoice reporting software enables the simultaneous reporting of e-invoice and e-way bill with the same data.

Key Features of e-Invoice:

a. Unique IRN:

  • Computed using hash for uniqueness, preventing duplication.
  • Confirmation from Central Registry ensures validity.

b. Digital Signing by IRP:

  • IRP digitally signs e-invoice JSON, validating it for business use.

c. QR Code Verification:

  • QR code includes vital invoice details for offline authenticity checks.
  • Facilitates verification by tax officers during road checks.
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