GST e-invoice system, As per Rule 48(4) of CGST Rules, notified class of registered persons have to prepare invoice by uploading specified particulars of invoice (in FORM GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).
After following above ‘e-invoicing’ process, the invoice copy containing inter alia, the IRN (with QR Code) issued by the notified supplier to buyer is commonly referred to as ‘e-invoice’ in GST.
Because of the standard e-invoice schema (INV-01), ‘e-invoicing’ facilitates exchange of the invoice document (structured invoice data) between a supplier and a buyer in an integrated electronic format.
Please note that ‘e-invoice’ in ‘e-invoicing’ doesn’t mean generation of invoice by a Government portal.
difference between ‘e-invoicing’ and present invoicing system
There is no much difference indeed.
Registered persons will continue to create their GST invoices on their own Accounting/Billing/ERP Systems. These invoices will now be reported to ‘Invoice Registration Portal (IRP)’. On reporting, IRP returns the e-invoice with a unique ‘Invoice Reference Number ( IRN)’ after digitally signing the e-invoice and adding a QR Code. Then, the invoice can be issued to the receiver (along with QR Code). A GST invoice will be valid only with a valid IRN.
businesses, whom e-invoicing is mandatory
Presently, GST e-invoice system is mandated for registered persons whose aggregate turnover (based on PAN) in a financial year is more than Rs. 500 Crores.
Effective date for e-invoicing
As per latest notification, GST e-invoice system will be mandatory w.e.f. 1st October, 2020, for notified classes of registered persons (those having aggregate annual turnover at PAN level more than Rs. 500 Crores).
Legal provisions governing GST e-invoice system
CBIC have issued a couple of notifications regarding the provisions governing e -invoice
| Notification No. | Particulars |
|---|---|
| 68/2019 Dt. 13-12-2019 | CGST(Eighth Amendment) Rules Inserted below new sub-rules in Rule 48 of CGST Rules, 2017: (4) The invoice shall be prepared by such class of registered persons as may be notified by the Government, on the recommendations of the Council, by including such particulars contained in FORM GST INV-01 after obtaining an Invoice Reference Number by uploading information contained therein on the Common Goods and Services Tax Electronic Portal in such manner and subject to such conditions and restrictions as may be specified in the notification. (5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other than the manner specified in the said sub-rule shall not be treated as an invoice. (6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in the manner specified in sub-rule (4). |
| 69/2019 Dt. 13-12-2019 | Notified 10 Common Goods and Services Tax Electronic Portals for the purpose of preparation of invoice in terms of rule 48 (4) |
| 70/2019 Dt. 13-12-2019 | Notified registered person, whose aggregate turnover in a financial year exceeds one hundred crore rupees, as a class of registered person who shall prepare invoice in terms of sub-rule (4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person; notification to come into force from the 1st day of April, 2020 (This notification superseded by 13 of 2020 Dt. 21-3-2020) |
| 2 of 2020 Dt. 1-1-2020 | Substituted Form GST INV-1 as e-invoice schema (Schema further amended vide Notification 60/2020 Dt. 30-7-2020) |
| 13 of 2020 Dt. 21-3- 2020 (in supersession of 70/2019 Dt. 13-12- 2019) |
e-invoicing to start from the 1st October, 2020; Notifies registered persons, other than those referred to in sub-rules (2), (3), (4) and (4A) of rule 54 of the said rules, whose aggregate turnover in a financial year exceeds Rs. 100 Cr., as a class of registered person who shall prepare invoice and other prescribed documents, in terms of sub-rule (4) of rule 48 of CGCT Rules, 2017, in respect of supply of goods or services or both to a registered person. (Further amended by 61/2020 Dt. 30-7-2020) |
| 60/2020 Dt. 30-7-2020 | Central Goods and Services Tax (Ninth Amendment) Rules, 2020 New form substituted for GST INV-01 (i.e. notified revised Schema/format for e-invoice) |
| 61/2020 Dt. 30-7-2020 | Amended notification 13/2020 Dt. 21-3-2020 Special Economic Zone units also excluded from e-invoicing mandate Aggregate Turnover of registered persons (required to prepare invoice in terms of Rule 48(4)) enhanced to Rs. 500 Cr. |
The advantages of GST e-invoice system
e-invoice has many advantages for businesses such as Auto-reporting of invoices into GST return, auto-generation of e-way bill (where required).
e-invoicing will also facilitate standardization and inter-operability leading to reduction of disputes among transacting parties, improve payment cycles, reduction of processing costs and thereby greatly improving overall business efficiency.
Preparation for e -invoice system
Businesses will continue to issue invoices as they are doing now. Necessary changes on account of e-invoicing requirement (i.e. to enable reporting of invoices to IRP and obtain IRN), will be made by ERP/Accounting and Billing Software providers= in their respective software. They need to get the updated version having this facility.
Validity of invoice without IRN
As per Rule 48(4), notified person has to prepare invoice/ Credit Note/ Debit Note by uploading specified particulars in FORM GST INV-01 on Invoice Registration Portal and after obtaining Invoice Reference Number (IRN).
As per Rule 48(5), any invoice issued by a notified person in any manner other than the manner specified in Rule 48(4), the same shall not be treated as an invoice. So, the document issued by notified person becomes legally valid only with an IRN.
Applicability of E-invoice
below mentioned documents are presently covered under e -invoicing
i. Invoices
ii. Credit Notes
iii. Debit Notes,
when issued by notified class of taxpayers (to registered persons (B2B) or for the purpose of Exports) are currently covered under e-invoice.
Though different documents are covered, for ease of reference and understanding, the system is referred as ‘e-invoicing’.
supplies covered under e -invoice
At present covered supplies are, Supplies to registered persons (B2B), Supplies to SEZs (with/without payment), Exports (with/without payment), Deemed Exports, by notified class of taxpayers are currently covered under e-invoice.
Business to Consumer ( B2C ) supplies under e-invoicing
Reporting B2C invoices by notified persons is not applicable/allowed currently, However, they will be brought under e-invoice in the next phase.
Applicability of e-invoice for import transactions
e-invoicing is not applicable for import Bills of Entry.
Entities/sectors which are exempt from the e-invoicing mandate
a. Special Economic Zone Units
b. insurer or a banking company or a financial institution, including a non-banking financial company
c. goods transport agency supplying services in relation to transportation of goods by road in a goods carriage
d. Suppliers of passenger transportation service
e. Suppliers of services by way of admission to exhibition of cinematographic films in multiplex screens
e-invoicing applicability for supplies involving Reverse Charge
If the invoice issued by notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.
For example, a taxpayer (say Goods Transport Agency or a Firm of Advocates having aggregate turnover in a FY is more than Rs. 500 Cr.) is supplying services to a company (who will be discharging tax liability as recipient under RCM), such invoices have to be reported by the notified person to IRP.
On the other hand, where supplies are received by notified person from (i) an unregistered person (attracting reverse charge under Section 9(4)) or (ii) through import of services, e-invoicing doesn’t arise / not applicable.
How to know a particular supplier is supposed to issue e -invoice
On fulfillment of prescribed conditions, the obligation to issue e-invoice in terms of Rule 48(4) (i.e. reporting invoice details to IRP, obtaining IRN and issuing invoice with QR Code) lies with concerned taxpayer.
However, as a facilitation measure, taxpayers who had crossed the prescribed turnover in a financial year from 2017-18 onwards have been enabled to report invoices to IRP. Note that this list has been prepared based on the turnover of GSTR-3B as reported by GSTINs to GST System. Thus, it is not the final one, in case a taxpayer has or had aggregate turnover in any financial year since introduction of GST, is mandated to report e-invoice to IRP.
One can search the status of enablement of a GSTIN on e-invoice portal: https://einvoice1.gst.gov.in/ > Search > e-invoice status of taxpayer
This information will be eventually made available through “Search Taxpayer” / “Know Your Supplier” Sections on GST portal also.
In case any registered person, is required to prepare invoice in terms of Rule 48(4) but not enabled on the portal, he/she may request for enablement on portal: ‘Registration -> e-Invoice Enablement’.
In case any registered person, who doesn’t have the requirement to prepare invoice in terms of Rule 48(4) but still enabled on the e-invoice portal, the same may also be brought to the notice at support.einv.api@gov.in so that necessary action can be taken.