New E-invoice system under GST
Dilpreet Singh 28 Jan 2020

New E-invoice system under GST

What is E-invoicing?

E-invoicing or electronic invoicing is a process of validating invoices electronically through GST Network (GSTN) for further use on common GST portal. It does not mean generation of invoices from a central portal of tax department. The GST council has notified that e-invoice is mandatory for registered person whose aggregate turnover in a financial year exceeds Rs. 100 crores.

'E-invoicing' or 'electronic invoicing' is a method where GSTN electronically authenticates B2B invoices for further use on the standard GST portal.

Under the proposed electronic invoicing system, the Invoice Registration Portal (IRP) to be operated by the GST Network (GSTN) which will issue an identification number against each invoice.

E-invoicing benefits

E-invoicing is the new system by which GSTN electronically authenticates business to business (B2B) transactions for further use on the common GSTN portal. Currently, a trade is made directly between the manufacturer and the buyer, without the government having any evidence of the sale. With e-invoicing, a unique number called IRN (Invoice Reference Number) will be given when an invoice is made, it will be submitted to the GSTN portal where pre-validation will be performed. When IRN is released it will also exchange the tax invoice with the receiver.

This system could be a blessing for a nation like India where tax evasion is widespread. Such real-time monitoring of invoices can be done by both vendors and government, leading to a reduction in fraud and fake GST invoices.

Secondly, when it comes to GST return filing process, e-Invoice further improves the automation. Currently GSTR filing requires enormous manual work vulnerable to error. The e-invoicing can provide this process with ease, speed and accuracy. When IRN is released, it will update the Supplier's Annexure–1 & if e-waybill is needed, Part–A of the same will be modified. It will also upgrade the recipient's Annexure-2.

Initiative of GSTN’s E-invoicing

The draft version of the e-invoice format was published in an excel prototype by GSTN and made available for public feedback on 20 August 2019. The same was approved by the GST Council at the 37th meeting on 20 September 2019, with some amendments. ICAI-associated GSTN drafted the format to comply with the GST and other Indian tax laws. Besides these, the format adheres to the standards of the international and various industries. The e-invoice interface looks exhaustive and provides various industries and companies with a single format.

Modes of Generation of E-Invoice under GST

Multiple modes will be made available so that taxpayer can use the best mode based on his/her need. The modes given below are envisaged at this stage under the proposed system for e-invoice, through the IRP (Invoice Registration Portal):

1. Web based

2. API based

3. SMS based

4. mobile app based

5. offline tool based and

6. GSP based.

The Road Ahead

E-invoicing represents a push for a digital economy. Curbing tax evasion and increasing government tax collections may ensure the government does not further raise GST rates. For every record that exists, e-invoices can be generated-from debit or credit notes to vehicle invoices. The resultant positive effect on performance would result in reducing, if not eradicating, mistakes in data entry and greater transparency.

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