An e-invoice in GST is for businesses with annual turnover above Rs. 10 crores. If this is the yearly turnover of your business, it falls under the 6th wave of e-invoices in India. It denotes electronic invoicing, which is defined in the GST law. GST refers to Goods and Services Tax, and businesses are registered under the GST.
These businesses use an e-way bill when transporting goods from one place to another. However, the threshold for this is above Rs.50,000. Similarly, these businesses must generate e-invoices for B2B (Business-to-Business) transactions.
This article will give you a comprehensive guide to understanding GST E-invoices.
Table of Contents
What is E-invoicing GST?
Electronic invoicing or e-invoicing is a system wherein a few documents and B2B invoices are authenticated by GSTN electronically. These are further used on the common GST portal. The GST Council decided to implement e-invoicing covering specific individuals and primarily large enterprises.
Now, it has been expanded to cover all small and mid-sized businesses.
E-invoicing GST does not only generate invoices on the IRP portal but submits already generated invoices on a common portal by using e-invoice software. Thus, an e-invoice automates multi-purpose reporting with one-time input details.
An identification number under this electronic invoicing is issued against each invoice by the IRP Invoice Registration Portal, which is managed by the GSTN GST network.
Thus, an e-invoicing GST eliminates the requirement of manual data entry and generation of e-way bills getting directly transferred to the GST portal.
The Process of Getting an E-invoice
The below-mentioned stages are involved in generating or raising e-invoice
- Taxpayers must ensure the use of an ERP, Enterprise Resource Planning system, or business management software like TallyPrime. They can coordinate with software service providers to get the standard set for this e-invoice. However, they must have mandatory notification parameters by the CBIC.
- After that, the taxpayer can raise a regular invoice on that e-invoice software by giving all necessary details such as an address, billing name, GSTN, item rate, tax amount, and applicable GST rate
- Moving on, the invoice can be raised on the billing software. Further, all details regarding the invoice: the Invoice Registration Portal (IRP) acts as the primary registrar for e-invoicing authentication
- IRP then can validate the primary details of the B2B invoice, checking for duplications and thus generating an invoice reference number
- IRP then can generate the invoice reference number, digitally sign the invoice, and create a QR code for the supplier. Similarly, the seller gets intimated regarding the e-invoice generation through e-mail
- Finally, IRP sends the payload to the GST portal for returns
- Additionally, all details are forwarded to the e-way bill portal, if applicable. Also, it determines the tax liability
The taxpayer can decide to continue to print the invoice with a logo. This system only mandates the taxpayers to report invoices in electronic form.
How Does E-invoice Help Curb Taxes?
- It gives tax authorities access to transactions in real time since the e-invoice is generated through the GST portal
- Less scope for manipulation of invoices as it generates before a transaction
- Reduces the chances of fake e-invoices and genuine input. The input credit needs to be matched with the tax output details, thus making it easier for GSTN to record and track fake credit claim taxes. e-Invoicing even enables businesses with real-time invoice tracking that enables faster availability of ITC, thereby improving compliance.
It is extremely important that GST E-invoices primarily adhere to the GST invoicing rules. Also, it must accommodate invoicing policies or systems followed by various industries or sectors in India. Certain information is mandatory, and the rest is only optional for businesses.
Also, e-invoicing helps resolve and plug a significant gap under GST to reduce any mismatch errors with a faster availability of an input tax credit that is genuine.