FAQ on the GST in India

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What is e-invoicing?

An e-invoice, or electronic invoice, is a digital document exchanged between a supplier and buyer. E-invoicing is the proposed system where business-to-business (B2B) invoices are prepared in a standard format and authenticated by the Goods and Services Tax Network (GSTN). This is to ensure that a common format is followed across all businesses so that invoices can be uploaded to the GST portal.

According to the electronic invoicing system proposed by the GST Council, the Invoice Registration Portal (IRP) will issue an identification number for every invoice generated by a business. These invoices will be managed by the GSTN. All the details available on an invoice will be moved in real time from the IRP to the GST and e-way bill portal. This will eliminate the need for entering data manually while filing returns. 

Is e-invoice mandatory for all businesses?

No. Businesses having aggregate turnover of 5 crore and above will have to comply to e-invoicing starting August 1, 2023.

Why is a standard e-invoicing system important?

Tax departments internationally are keen on making the e-invoicing system a success for two reasons: 1) following a standard format allows invoices to be easily shared and 2) it can be read by the central system.

It will pre-populate fields while filing returns, avoiding discrepancies during data entry and reconciliation. 

When will the e-invoice system be implemented?

In the initial phase, e-invoicing was implemented from 1 October, 2020 for taxpayers with aggregate turnover of 500 crore. This threshold was later reduced to include businesses with turnover exceeding 100 crore from 1 January, 2021. The government proposed on 1 April 2021 that the e-invoice system will be implemented for all taxpayers with aggregate turnover of 50 crores and above. Then, all taxpayers with aggregate turnover of 10 crore and above were also included. Now, recently businesses with turnover more that 5 crore are to be e-invoice compliant from 1 August, 2023.

What is Invoice Registration Portal (IRP)?

Invoice Registration Portal (IRP) is a set of registrars that are responsible for assigning Invoice Reference Numbers (IRN) to the invoice, debit note and credit note. The invoices validated by the IRP after assigning unique IRN will only be considered valid by law.

What is the government’s e-invoice initiative all about?

The government shared a draft of an e-invoice format in an excel sheet for public feedback in August 2019. The draft was later approved by the GST council with a few changes so it was compliant to Indian tax laws and GST norms. This format will help in standardising the format across all industries. 

The e-invoice format primarily contains three parts:

  • The e-invoice schema contains a list of technical field names, their descriptions, and a few other values with notes. It also specifies whether a field is mandatory or not.
  • Masters will inform you about the inputs for specific fields as defined by the GSTN, like state code, invoice type, supply type, etc. 
  • The e-invoice template has been designed in compliance with GST rules. The mandatory fields are highlighted in green while optional ones are in yellow. 
What are the benefits of introducing an e-invoice in our tax system?

Generating an e-invoice is usually the responsibility of a taxpayer who reports to the IRP in GST. Next, the IRP will generate a unique Invoice Reference Number (IRN) and a QR code. This digitally signed document will be sent to the taxpayer and the recipient.

Here are some benefits for businesses if e-invoicing comes into play: 

  1. E-invoicing solves the issue of data reconciliation, allows interoperability, and helps to eliminate errors during manual data entry.
  1. You can track the e-invoices, prepared by the suppliers, in real-time. This is possible only when the supplier has enabled the specific permission. 
  1. An e-invoice system will make the process of filing tax returns easier. The details from the e-invoice will be auto-populated on tax return forms and while generating e-way bills.
  1. Frequent audits or surveys are unnecessary because all transaction details will be made available. The value of input credit and output tax can be matched by the system.
  1. Upon receiving a receipt of purchase via the GST system, the buyer can compare it with their purchase order and accept/reject the information under new returns.
  1. This initiative will also build efficiency within the tax administration by helping to identify fake invoices.
What documents are required while reporting to the GST system?

In addition to documents required by law, the creator of the invoice must also submit the following documents by the supplier to the IRP:

  • B2B invoices
  • Export invoices
  • Credit note
  • Debit note
Will invoices be generated directly from the government’s tax portal?

No. Taxpayers will have to generate invoices using accounting or billing software. Small taxpayers have the option of choosing from one of the eight free accounting software available on the government’s website. 

Is the e-invoicing system being used in any other countries?

There are several other countries across the globe that have implemented the e-invoice system. The list of countries include South Korea, Brazil, parts of Latin America and Europe.

What is an e-invoice schema?

E-invoice schema is a standard format for e-invoice consisting of a list of mandatory and optional fields. The businesses must generate invoices in compliance with this schema. 

Will the e-invoice formats differ for traders, health care facilities, and contractors?

There is a standard e-invoice schema to be followed by all businesses. The form has the option to select from a range of mandatory and non-mandatory fields, which are likely to vary from business to business. 

How long will the generated e-invoice be available in the government portal?

Once the invoice registration system has validated and registered an invoice, it will be made available to the taxpayer in GSTR 1. The counter party can also access it from GSTR 2A. Both the parties can refer to these documents for one financial year, after which it will be archived. It will be available for reference on IRP for only 24 hours.

How will e-invoice help in controlling tax frauds?

The e-invoicing system will curb tax frauds in the following ways: 

  1. With the implementation of e-invoicing, tax authorities will have access to all their transactions as they have to be uploaded on the GST portal. 
  1. Manipulating invoices will not be easy as they will have to be generated before the transaction takes place. 
  1. The system will allow you to spot fake invoices easily by matching the input tax credit with the output tax details on the GSTN portal.
Is a taxpayer also required to sign an e-invoice?

The e-invoice schema has a field for accepting digital signature. If a signed e-invoice is sent to the Invoice Registration portal (IRP), it will be accepted.  Based on the latest updates on the proposed system, the IRP will be validating and digitally signing the e-invoice. Following this, the signed e-invoice will be shared with the creator and the recipient. 

Is there space for company logo in the e-invoice template?

No. The software companies can program their accounting/ billing software to print the logo in the invoices. However, the logo will not be a part of the JSON payload of the invoice being sent to the IRP.  

Can a supplier issue an invoice? If so, does the supplier have to mention invoice number and IRN?

A supplier can issue an invoice which should comply with the e-invoice schema fixed by the GST Council. According to the process flow of the proposed system, the IRP will generate and return the IRN to the seller. 

Is bulk-upload of invoices possible?

Invoices will always be uploaded one at a time. When there are a huge number of invoices to be uploaded by large taxpayers, then it may appear like a bulk upload to the user. In reality, the ERP/ accounting system of these businesses are designed in a way where they can handle requests one at a time. 

Is there a time limit for uploading e-invoices for registration?

As soon as the JSON payload of the invoice is sent to the IRP, it will get registered immediately, at real-time. The e-invoice will not be considered valid without an IRN and validation and registration from IRP. 

Is it possible to partially or fully cancel an e-invoice generated via GST system?

E-invoice mechanism does not allow invoices to be partially cancelled. They have to be fully cancelled. If the cancellation takes place within 24 hours, it will be triggered through IRP else it has to be done on the GST system. Cancellation will be done based on the process mentioned under the Accounting Standards. Once the invoice is cancelled, you cannot generate a new invoice using the same invoice number. 

Can we amend the invoices uploaded on IRP? If yes, how will it be done?

Yes. The invoices reported to IRP will be sent to GST system. Hence the amendments to be made will have to be done on the GST system and not on the IRP. 

How can a foreign service provider integrate with IRP?

If you are foreign service provider within Indian shores, then you can integrate with IRP. 

Is it possible for an IRP to reject a submitted invoice?

IRP is responsible for validating and checking duplication of invoices. If there are duplicate invoices found, then the IRP will return those invoices with an error message without completing the registration. 

Can an IRN be deleted or cancelled?

Once an Invoice Reference Number (IRN) is generated, you cannot cancel or modify it. However, if you have created an e-invoice with the wrong information, then there is a possibility that you can cancel within 24 hours of generating the invoice. Once cancelled, the same e-invoice with the same IRN cannot be uploaded again into the portal.

Can you rectify a mistake or incorrect entry in an e-invoice?

No. The only way is to cancel the document and create a new e-invoice with a fresh IRN.

What happens if an invoice, created by mistake, is not cancelled in 24 hours?

If you cancel an e-invoice from your software program within 24 hours of generation, then it will get cancelled automatically in the e-invoicing portal as well. However, for cancelling invoices after 24 hours since generation, you may cancel that invoice in the GST portal and then mark the invoice as cancelled in your system.

Can we amend the invoices uploaded to the IRP? What options do I have?

Once an IRN is generated, the invoice cannot be amended or modified. There are a few options that you can use to modify an e-invoice.

  1. You will need to cancel the invoice with the error. Generate a new invoice with the corrected data and a new IRN.
  1. Once it’s been more than 24 hours, you’ll need to create a debit or credit note to balance out the invoice information. Afterward, you will have to create a new invoice with a new IRN
  1. Modifications cannot be done on the IRP. However, the changes you want to make in the invoice can be incorporated in the GST portal when filing a GSTR-1 return.
What e-invoice details should be saved in my ERP?

The following information should be saved in your ERP:

  1. Acknowledgement number of invoice
  2. Acknowledgement date of invoice
  3. Digitally signed QR code
  4. Invoice Reference Number (IRN)
What is the maximum number of line items supported by an e-invoice?

The maximum number of line items allowed in an e-invoice is 1,000.

What are the supplies covered under e-invoicing? Is it applicable on exempt supplies?

The following supplies are covered under e-invoicing:

  1. B2B supplies (i.e. Supplies made to registered businesses)
  2. Supplies made to SEZs (either tax paid/ tax free)
  3. Exports (either taxable or tax-free)
  4. Deemed exports