Change is inevitable, they say. For use with e-invoicing under gst, the adage is ideal. E-invoicing has undergone a number of changes since it was introduced in October 2020. According to the most recent guidelines issued by the Goods and Services Tax Council, starting on October 1, 2022, companies with a yearly revenue of at least Rs 10 crore are required to produce invoices for business-to-business transactions. Prior to April 1, 2022, the GST Council required all companies with annual revenues of $20 crores or more to produce invoices for B2B transactions.
Are you confused about the whole process of e-invoicing under GST? Looking for answers that will clear all your doubts about GST e-invoice? To fully grasp e-invoicing under GST, read the entire blog.
What is E-Invoicing?
E-invoicing or electronic invoicing is a digital document that is exchanged between the buyer and the seller. The Goods and Services Tax Network also verifies e-authenticity. invoices (GSTN). The Invoice Registration Portal (IRP) of GST seamlessly integrates Input Tax Credit, GST filing, and an e-way billing system. This helps provide interoperability between the buyer and the seller and makes the end-to-end communication between them hassle-free.
GST E-Invoicing: The First Steps
Let's go back a few years so you can comprehend e-invoicing better. The GST Council mandated e-invoicing for B2B transactions for businesses with an annual revenue of Rs 500 crores or more starting on October 1, 2020 during its 37th meeting on September 20, 2019. From January 1, 2021, this was expanded to include businesses with a yearly revenue of at least Rs 100 crore in the second phase.
How Did the System Operate Before?
The sellers had to report the generated invoices in two different systems prior to the implementation of the new return system. These systems were: the GST portal and E-Way bill.
In the past, companies produced invoices using different software and fed them through an API into the GSTR 1 return. Following that, the data will appear on GSTR-2A, where recipients can view it with 'view only' access. Same way, transporters must generate an e-way bill. They can produce it directly or manually import the invoices into an excel sheet or JSON. The entire process is both laborious and filled with plenty of paperwork. The government rolled out the new return system to end this long, exhausting process.
Why Do You Need a Standard Invoicing System?
To ensure that all invoices can be conveniently prepared in a central system, tax agencies worldwide are implementing a uniform invoicing system. Also, having a standard format allows invoices to be easily shared.
How to Generate E-Invoices Under GST?
Creating invoice
The initial step is creating an electronic invoice. The process of creating an e-invoice is typical, but the crucial action here is electronic reporting. First, create the invoice in the billing and accounting software used by your company. While generating the invoice, you must follow the e-invoice structure and fill out all the essential fields. Aside than the necessary fields, there are optional factors that you will be filing out. Below is a list of necessary parameters:
Document details
Transaction details
Supplier details (GSTN number, address, etc) (GSTN number, address, etc.)
Buyer information (GSTN number, address, pin code, etc) (GSTN number, address, pin code, etc.)
Dispatch address details (If it is different from supplier details, it is mandatory) (If it is different from supplier details, it is mandatory)
Item details
Invoice details
Batch number (if applicable) (if applicable)
After completing the required fields for the invoice, you should use your accounting or billing programme to create a JSON file, which you should then upload to the IRP.
Generating a unique IRN
The IRP creates a hash parameter based on information like GSTIN, document type, document number, etc. The IRP also makes sure that the same invoice is present in the central registry at the same time. If there are no duplicates, the IRP will add a QR code and signature on the JSON data of the invoice. The invoice reference number, or IRN, is the hash produced by the IRP. The IRN is a unique number that is allotted to every valid invoice.
Modernizing the GST and e-way bill systems
The supplier is then sent the JSON file that has been digitally signed. The invoice data is then shared with e-Way systems and GST. The GST system will then update the GSTR-1 for the seller and GSTR-2A for the buyer. Additionally, the system will construct the e-Way Bill using the Transporter ID and Vehicle Number provided in the GST e-invoice format.
Remember, it is not the job of the government portal to generate an invoice. The invoice is created by the seller’s accounting or billing software. The IRP will just validate and digitally sign the invoice.