Businesses can generate E-invoices on government-approved software. It is to be uploaded to the Government-approved Invoice Registration Portal (IRP).
What is E Invoicing under GST: Definition, Benefits, Procedure
Learn What is E-Invoicing under GST. Get To Know E-Invoice Applicability, Its Systems, Format, Rules, Registration & Know How to Generate An E Way Bill.
Is your business ready for GST? If you're not sure what that means, don't worry – we're here to help! In this post, we'll give you a primer on e invoicing under GST. What is e invoicing under GST, and why is it so important and e invoicing under GST applicability for businesses? Stay tuned to find out!
What is E Invoicing in GST?
E Invoicing in GST is an online system for businesses to generate and send invoices electronically. This system is designed to streamline the invoicing process and help businesses save time and resources. Under this system, businesses will be required to generate invoices using approved e-invoicing software.
This software will then create a unique QR code for each invoice, which can be scanned by the recipient. The QR code will contain all of the necessary information about the invoice, including the GST number, value, and date. E invoicing under GST will help to improve the efficiency of the invoicing process and help businesses minimize errors.
Why E-invoice is required?
Now that you are familiar with what is GST e invoice, let's move ahead with the invoicing under GST applicability. Tax fraud has been a problem since the dawn of taxation itself. But in recent years, India has been taking steps to crack down on this insidious crime. One of the most effective tools in the fight against tax fraud is e-invoicing.
Thanks to e invoicing under GST, taxpayers can now track their invoices in real-time, report all GST filings in one go, and easily claim input tax credits. This has not only made it easier for businesses to comply with the law but also made it much harder for unscrupulous characters to get away with tax evasion
So next time you're feeling frustrated with the tedious process of filing your taxes and wondering what is GST e invoice, just remember: it could be worse. With an e voice e way bill, you can rest assured that your taxes are prompt and regular.
The current E Invoice system
The current e invoice system in India is quite simple. Businesses issue an invoice to their customers, which includes a GST number. Customers then use this GST number to file their taxes. The E-Invoicing system is designed to streamline this process and make it easier for businesses to comply with GST regulations.
The system also allows businesses to track their invoices and ensure that they are being filed correctly. In short, the e Invoicing under GST system is a valuable tool for businesses operating in India.
Major Challenges of E-Invoicing Under GST
Despite the fact that e invoicing under GST has been around for a while now, there are still many businesses that are yet to make the switch. This is often because they are unaware of the benefits of e-invoicing or they haven't had the time to familiarize themselves with the process.
Here are some of the major challenges of e-invoicing under GST and with e invoice e way bill requirements in India:
1. Lack of awareness
As mentioned earlier, one of the biggest challenges is that many businesses are still unaware of e-invoicing and its benefits. With the rollout of GST e invoice, there has been a lot of confusion and chaos surrounding tax compliance. As a result, many businesses are yet to realize the importance of making the switch to e invoicing under GST.
2. Lack of resources
Another challenge is that many businesses don't have the resources or manpower to generate invoices electronically. This is often because they don't have access to technology or they lack trained personnel who can operate the system.
3. Lengthy and complicated process
One of the biggest complaints about e-invoicing is that it's a lengthy and complicated process. For businesses that are already struggling with GST compliance, having to generate invoices electronically can be an additional burden.
4. High costs
One of the main reasons why businesses haven't made the switch to e-invoicing is that it can be quite expensive. The costs associated with setting up and maintaining an e-invoicing system can be quite high, especially for small businesses.
Despite these challenges, e-invoicing is still considered to be one of the best methods for tax compliance in India. With the government mandating all businesses to generate invoices electronically, it's only a matter of time before everyone makes the switch. If you're still using paper invoices, now is the time to make the switch to e-invoicing and reap its benefits.
For better clarity read about GST filing.
The link between an E-Invoice and E Way bills?
If you're transporting goods worth more than Rs. 50,000, there will be an e-way bill requirement. This document is required in order to move goods between states in India. Whenever there is an e-way bill requirement and you generate one, you'll be assigned a unique E-way Bill Number (EBN).
This number can be used by the supplier, recipient, and transporter to track the movement of goods. E-way bills are directly integrated with the e-invoicing system. This means that you can generate e way bill at the time of e-invoice generation or later by using the IRN as a reference.
However, it's important to note when you generate e way bill that, it will be invalid without a valid e-invoice. So if you're transporting goods worth more than Rs. 50,000, make sure you have all your documentation in order!
To whom is E-Invoicing applicable?
In this section, we will explore more about the e-invoice applicability under GST for businesses.
In a move that has been welcomed by businesses large and small, the Indian government made e-invoicing mandatory for all businesses with an annual turnover of more than Rs. 500 crores from October 1, 2020.
This move will help to streamline the invoicing process, and will also provide businesses with a valuable data source that can be used to improve efficiency and boost sales.
In addition, the government also announced plans to extend e-invoicing to all businesses with a turnover of more than Rs. 100 crores from January 1, 2021, and to businesses with a turnover of more than Rs. 50 crores from April 1, 2021.
So, make sure your business complies with the GST e-invoice system.
Who need not comply with E-Invoicing?
The e invoice applicability under GST is not for everyone. There are some businesses that just can't get on board with the program, and that's okay. We've compiled a list of businesses that are exempt from e-invoicing, so you can rest assured that your business is not one of them. So, get an overview of e invoice applicability.
Financial institutions, banking companies, insurance companies, NBFC, registered individuals supplying passenger transportation services, goods transporting agencies, registered individuals involved in the service of the exhibition of cinematographic films in multiplex services, and special economic zone (SEZ) units are all exempt from e-invoicing.
If your business falls into one of these categories, you can breathe a sigh of relief knowing that you don't have to comply with the e invoicing system.
How Does E Invoicing under GST Work?
Now that you are versed on all about e invoicing under GST let's move ahead with the working of it.
For e invoice registration, businesses must first register with the IRP (Invoice Registration Portal). Once registered, businesses can then issue e-invoices to their customers. The IRP will then validate the e-invoice and assign it a unique number.
If the validation is successful, a QR code will be generated for both the buyer and the seller to confirm its authenticity and to prove that it has been registered in the GST system. Finally, the e-invoice will be made available to both parties in the portal. However, if the response is negative, a message detailing the reason for rejection will be sent.
What are the Systems before & after E Invoicing under GST?
Before e invoicing under GST, businesses had to rely on paper invoices to bill their customers. This created a number of problems, including the need to print and mail invoices, as well as the difficulty of tracking payments.
E-invoicing has made the billing process much simpler and more efficient. With e-invoicing, businesses can send invoices electronically, either through email or an online portal. This means that customers can receive their invoices instantly, and businesses can track payments more easily.
In addition, e-invoicing eliminates the need for paper invoices, which can save businesses money on printing and mailing costs. Overall, e-invoicing is a more efficient and cost-effective way to bill customers.
What is the process of generating an E-Invoice?
Let's have a quick look at the different processes of generating an e-invoice. For more information on GST registration, read here.
Generating an E-Invoice
Registering to the Invoice Registration Portal is simple and easy, and it only takes a few minutes to complete. Just log in or signup to the portal, and if you're already registered on the e-way bill portal, you can use the same credentials to log in to the IRP.
Once you're logged in, you just need to follow the instructions on the screen to generate your e-invoice. And that's it! You're all set to start using e-invoices for your business transactions.
Creating a unique IRN
To register for GST e invoice, every business must obtain a unique IRN (invoice reference number). This number is used to identify the businesses that are registered for GST.
Updating the invoice to the GST and E Way bill systems
For business owners, one of the most important things to keep track of is invoices. After all, this is how you ensure that you're getting paid for the products or services that you've provided. However, with the recent introduction of the GST e invoice system and the e way bill requirement, it's important to make sure that your invoicing system is up to date.
Otherwise, you could end up paying more than you owe - or worse, end up on the wrong side of the law. Fortunately, updating your invoicing system is relatively easy; simply download the latest GST invoice template from the government website and start using it for all your transactions.
What type of documents are to be reported to the GST system?
In India, the types of documents that are to be reported to the GST system include invoices, credit notes, debit notes, receipts, and payment vouchers. These documents must be reported to the GST system in order to ensure that the correct amount of tax is being charged on each transaction.
In addition, these documents help to provide a record of all business transactions, which can be helpful in case of an audit.
E-Invoice Format Sample Example
When it comes to e invoicing under GST, there's more than one way to skin a cat. There are multiple formats available for businesses to choose from. This level of customization is a major selling point, as it allows businesses to create invoices that reflect their brand values and reinforce their credibility. So, your business can select an e-invoice format that suits your industry needs.
There are both optional and mandatory fields in e invoicing under GST. Some of the mandatory fields include the following:
- Invoice type code
- Preceding invoice date
- Billing name
- Payee name
- Invoice number
- Supplier legal name
- Billing GSTIN
- Payee financial account
- Invoice date
- Supplier GSTIN
- Billing POS
- Mode of payment
- Invoice period start date
- Supplier address 1
- Billing Address 1
- Financial institution Branch
- Invoice period end date
- Supplier state
- Billing state
- Dispatch from details
- Items list
- Tax total
- Paid amount
- Amount due for payment
- Tax total
- Paid amount
- Tax scheme
- Shipping to name
- Shipping to GSTIN
- Shipping to address 1
- Shipping to PIN code
- Shipping to state
- Subsupply type
- Transaction mode
- Company name
- Address 1
- State
- PIN code
- Rate
- Assessable value
- GST rate
- Iamt or IGST
- Camt or CGST
- Samt or SGST
- Total invoice value
- Batch name
Optional fields include the following:
- Vendor purchase order
- References to contracts
- Phone number or email ID
- E-way bill number
- Place of dispatch of goods
The Mandatory Fields of an E Invoice
The E-invoice document is made of 12 parts (required and optional), 6 annexures, and a grand total of 138 fields. Remember that 5 of the 12 parts are mandatory, and the other 7 are optional. Also, there are two compulsory annexures.
The five required sections are:
- Basic information
- Supplier information
- Receiver information
- Invoice item details
- Document total
Here's a list of the mandatory information you need to add to the document:
Field Name |
Information to be Added |
Document Type Code |
Specify the type of document like invoice, debit note, credit note, etc.
|
Supplier Legal Name |
Your legal name must be as per the PAN card
|
Supplier GSTIN |
If you are the supplier, add your GSTIN number here
|
Supplier Address |
Your Building/Flat no., Road/Street, Locality, etc.
|
Supplier Place |
Mention your location, such as city/town/village
|
Supplier State Code |
Select the state from the latest list given by GSTN
|
Supplier Pincode |
Your (locality/district/state) must be added here
|
Document Number |
In order to get unique identification of the invoice, you will need a sequential number within the business context, time frame, operating systems and records of the supplier. Don't use any identification scheme.
|
Preceding Invoice Reference and date |
Add the detail of the original invoice, which is being amended by a subsequent document such as a debit and credit note.
|
Document Date |
Add the date when the invoice was issued
|
Recipient Legal Name |
Add the name of the buyer as per the PAN Card
|
Recipient's GSTIN |
Add buyer's GSTIN
|
Recipient's Address |
Building/flat no., road/street, locality, etc., of the buyer
|
Recipient's State Code |
Add the place of supply state code
|
Place Of Supply State Code |
Select the state from the latest list given by GSTN
|
Pincode |
The place (locality/district/state) of the buyer
|
Recipient Place |
Buyer location (City/Town/Village)
|
IRN- Invoice Reference Number |
A unique number will be generated by GSTN after uploading the e-invoice on the GSTN portal
|
Shipping To GSTIN |
GSTIN of the buyer
|
Shipping To State, Pincode and State code |
State or place to which the goods and services delivered
|
Dispatch From Name, Address, Place and Pincode |
The name and city/town/village from where goods are dispatched
|
Is it a Service? |
Answer in Yes/No if the supply relates to the service
|
Supply Type Code |
Select a code from the list
|
Item Description |
Write a relevant description
|
HSN Code |
Add the HSN code for goods/service
|
Item Price |
The unit price, exclusive of GST
|
Assessable Value |
Add the price of an item, exclusive of GST, after removing the item price discount.
|
GST Rate |
The GST rate represented as a percentage
|
IGST Value, CGST Value and SGST Value Separately |
For each individual item, IGST, CGST and SGST amounts should be mentioned
|
Total Invoice Value |
Add the total amount of the Invoice with GST. This should be rounded to a maximum of 2 decimals
|
To Whom Does E-Invoicing Apply?
According to reports, the fifth phase of the deployment of e-invoices started on October 1, 2022, and it would apply to companies with annual turnovers greater than 10 crores in any prior fiscal year. Before this, e-invoicing was adopted for companies with a 50 crore annual revenue threshold. As of April 1, 2022, e-invoicing was applied to companies with annual revenue of over 20 crores.
How does E Invoicing Impact Businesses?
E invoicing has a positive impact on businesses. Now businesses can track invoices in real-time, enjoy a single time reporting of B2B invoices, can easily create E-way bills, enjoy reduction in data problems, frauds and also curb tax evasion! E invoicing is truly a boon for businesses!
What are the Advantages of E Invoicing Under GST?
The term "e-Invoicing" in the GST law refers to electronic invoicing. Now that you know about what is e invoicing under GST, here are the top three advantages of E-invoicing under GST:
1. Your GST Returns will be Auto-Generated
One of the most significant benefits of e invoicing under GST is GST returns will be automatically prepared for submission under the new GST system because there will be an accurate record of a business's complete sales and purchases. GST e invoice is truly a simple process.
2. Faster Processing in Real Time
Another great benefit of e invoicing under GST is that there will be real-time invoice submissions from the supplier. This will speed up the processing of your input tax credit, allowing you to access the credit more quickly and accurately.
3. Creating E invoice E Way Bill is Easier
E-invoicing is recommended because it will make it simpler to generate e way bill because the taxpayer will need to update the vehicle's details. When an e-invoice is authorized using the GST site, the information in Part-A of the e-way bill will automatically be filled in. The e way bill requirement is important to be noted. This is another great benefit of e invoicing under GST.
How will E Invoicing curb tax evasion?
One of the government's "Digital India" tenets is e invoicing under GST. The GST e invoice system offers the possibility for progressive change. The new system of a government-confirmed receipt has many benefits for the government and the people, making it even easier to continue working.
The government has been combating tax leakage and fraud involving phony invoices even before the GST era. Tax evaders have been found using phony invoices in several cases over the years to avoid paying taxes or claiming more Income Tax Credits (ITC). To help tackle this situation, E-invoicing was created! Governments worldwide increasingly require E-invoicing, especially in light of GST evasion.
Since the GST was incorporated into the country's tax code, GST officials have worked diligently to develop a system to combat tax cheating. Real-time invoice reporting deters unauthorized modifications and revisions in the future. Soon, this might result in fewer tax frauds. It is safe to say that E invoice applicability under GST is a good thing.
E-Invoicing time for implementation for business turnover under GST
Here is a timeline of E invoice implementation under GST:
- February 24, 2022 The e invoicing system was extended to businesses with a yearly aggregate turnover of more than Rs. 20 crores to Rs. 50 crore. This was to start on April 1 2022.
- August 1, 2022 The e-Invoicing system for B2B transactions was extended to businesses with a yearly turnover of more than Rs. 10 crores to Rs. 20 crores. This was to start on October 1 2022.
- October 11, 2022 The GST Council announced implementing the next phase of e-invoicing for businesses with an annual turnover of more than Rs.5 crore from January 1 2023.
Latest Update for E-Invoicing Under GST
According to the latest reports, the GST Council may begin implementing the next phase of electronic invoicing (E-invoicing) from January 1, 2023, for businesses with a yearly income of more than Rs. 5 crores. By the end of the following fiscal year, the phase may be expanded to include companies having a turnover of more than Rs. 1 crore. According to a report, the government intends to bring enterprises with a revenue of more than Rs 1 crore within this framework by the following fiscal year so that it will be possible to further close revenue gaps and boost compliance.
How does Amazon Business ensure compliance for customers?
With Amazon Business, you can filter out items that issue GST bills with our special GST Compliant filter. This capability is available for all product categories on Amazon Business. Amazon Business has used several criteria to make it easier for customers to identify the finest products, including GST-compliant invoices. Some features that assist users in determining the appropriate items across all categories are the GST Invoice filter and GST Invoice Badge.
You can manage your B2B GST bills, keep track of your spending, enable your team to place orders on your behalf, and more with compliance tools. Additionally, you can activate rules that limit purchases of goods without a GST invoice. Amazon Business helps you connect with sellers who list their GST-registered goods and send their customers GST invoices.
Amazon Business will give a 28% discount on the GST Input Tax Credit if you are a GST-registered buyer. Note that if your business is GST registered, you may qualify for the Input Tax Credit.
Conclusion
E invoicing under GST is a great boon for the financial upkeep and the development of our country. If every business person takes up the responsibility of getting GST-registered and complies with E invoicing under GST, we are sure our nation will be on the pathway to super development. We hope this blog has helped you understand all about E invoicing under GST applicability.
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