GST e-invoice/IRN System
Frequently Asked Questions (FAQs) relating to GST e-Invoice
Table of Contents
E-invoice – Basics:
What is ‘e-invoicing’?
As per Rule 48(4) of CGST Rules, notified class of registered persons have to prepare invoice by uploading specified particulars of invoice (in FORM GST INV-01) on Invoice Registration Portal (IRP) and obtain an Invoice Reference Number (IRN).
After following above ‘e-invoicing’ process, the invoice copy containing inter alia, the IRN (with QR Code) issued by the notified supplier to buyer is commonly referred to as ‘e-invoice’ in GST.
Because of the standard e-invoice schema (INV-01), ‘e-invoicing’ facilitates exchange of the invoice document (structured invoice data) between a supplier and a buyer in an integrated electronic format.
Please note that ‘e-invoice’ in ‘e-invoicing’ doesn’t mean generation of invoice by a Government portal.
How is ‘e-invoicing’ different from present system?
There is no much difference indeed.
Registered persons will continue to create their GST invoices on their own Accounting/Billing/ERP Systems. These invoices will now be reported to ‘Invoice Registration Portal (IRP)’. On reporting, IRP returns the e-invoice with a unique ‘Invoice Reference Number (IRN)’ after digitally signing the e-invoice and adding a QR Code. Then, the invoice can be issued to the receiver (along with QR Code).
A GST invoice will be valid only with a valid IRN.
For which businesses, e-invoicing is mandatory?
Presently, it is mandated for registered persons whose aggregate turnover (based on PAN) in a financial year is more than Rs. 500 Crores.
From which date, e-invoicing is mandatory for the notified classes of taxpayers?
As per latest notification, e-invoicing will be mandatory w.e.f. 1st October, 2020, for notified classes of registered persons (those having aggregate annual turnover at PAN level more than Rs. 500 Crores).
What are the advantages of e -invoice for businesses?
e-invoice has many advantages for businesses such as Auto-reporting of invoices into GST return, auto-generation of e-way bill (where required).
e-invoicing will also facilitate standardisation and inter-operability leading to reduction of disputes among transacting parties, improve payment cycles, reduction of processing costs and thereby greatly improving overall business efficiency.
What businesses need to do, to be e -invoice ready?
Businesses will continue to issue invoices as they are doing now. Necessary changes on account of e-invoicing requirement (i.e. to enable reporting of invoices to IRP and obtain IRN), will be made by ERP/Accounting and Billing Software providers in their respective software. They need to get the updated version having this facility.
Is an invoice/CDN/DBN (required to be reported to IRP by notified person), valid without IRN?
As per Rule 48(4), notified person has to prepare invoice by uploading specified particulars in FORM GST INV-01 on Invoice Registration Portal and after obtaining Invoice Reference Number (IRN).
As per Rule 48(5), any invoice issued by a notified person in any manner other than the manner specified in Rule 48(4), the same shall not be treated as an invoice.
So, the document issued by notified person becomes legally valid only with an IRN.
E-invoice – Applicability:
What documents are presently covered under e -invoicing?
- Invoices
- Credit Notes
- Debit Notes,
when issued by notified class of taxpayers (to registered persons (B2B) or for the purpose of Exports) are currently covered under e-invoice.
Though different documents are covered, for ease of reference and understanding, the system is referred as ‘e-invoicing’.
What supplies are presently covered under e -invoice?
Supplies to registered persons (B2B), Supplies to SEZs (with/without payment), Exports (with/without payment), Deemed Exports, by notified class of taxpayers are currently covered under e-invoice.
B2C (Business to Consumer) supplies can also be reported by notified persons?
No. Reporting B2C invoices by notified persons is not applicable/allowed currently. However, they will be brought under e-invoice in the next phase.
What is the applicability of e-invoice for import transactions?
e-invoicing is not applicable for import Bills of Entry.
Which entities/sectors are exempt from the e-invoicing mandate?
a. Special Economic Zone Units
b. insurer or a banking company or a financial institution, including a non-banking financial company
c. goods transport agency supplying services in relation to transportation of goods by road in a goods carriage
d. Suppliers of passenger transportation service
e. Suppliers of services by way of admission to exhibition of cinematograph films in multiplex screens
The exemption from e-invoicing is w.r.t the nature of supply/transaction or w.r.t the entity?
It is for the entity.
Do SEZ Developers need to issue e-invoices?
Yes, if they have the specified turnover and fulfilling other conditions of the notification. In terms of Notification (Central Tax) 61/2020 dt. 30-7-2020, only SEZ Units are exempted from issuing e-invoices.
Are Free Trade & Warehousing Zones (FTWZ) exempt from e -invoicing?
Yes. As per Foreign Trade Policy, Free Trade & Warehousing Zones (FTWZ) are only a special category of Special Economic Zones, with a focus on trading and warehousing.
Is e-invoicing applicable for supplies by notified persons to SEZs?
Yes, e-invoicing is applicable for supplies by notified persons to SEZs.
In terms of Notification (Central Tax) 61/2020 dt. 30-7-2020, only SEZ Units are exempt from issuing e-invoices.
There is an SEZ unit and a regular DTA unit under same legal entity (i.e. having same PAN). The aggregate total turnover of the legal entity is more than Rs. 500 Crores (considering both the GSTINs). However, the turnover of DTA unit is below Rs. 100 crores for FY 19-20
In this scenario, as SEZ unit is exempt from e -invoicing, whether e-invoicing will be applicable to DTA Unit?
Yes, because the aggregate turnover of the legal entity in this case is > Rs. 500 Crores. The eligibility is based on aggregate annual turnover on the common PAN.
Is e-invoicing applicable to invoices issued by Input Service Distributor (ISD)?
No
Whether e-invoicing is applicable for supplies involving Reverse Charge?
If the invoice issued by notified person is in respect of supplies made by him but attracting reverse charge under Section 9(3), e-invoicing is applicable.
For example, a taxpayer (say Goods Transport Agency or a Firm of Advocates having aggregate turnover in a FY is more than Rs. 500 Cr.) is supplying services to a company (who will be discharging tax liability as recipient under RCM), such invoices have to be reported by the notified person to IRP.
On the other hand, where supplies are received by notified person from (i) an unregistered person (attracting reverse charge under Section 9(4)) or (ii) through import of services, e-invoicing doesn’t arise / not applicable.
How to know a particular supplier is supposed to issue e -invoice (i.e. invoice along with IRN/QR Code)?
On fulfilment of prescribed conditions, the obligation to issue e-invoice in terms of Rule 48(4) (i.e. reporting invoice details to IRP, obtaining IRN and issuing invoice with QR Code) lies with concerned taxpayer.
However, as a facilitation measure, taxpayers who had crossed the prescribed turnover in a financial year from 2017-18 onwards have been enabled to report invoices to IRP. Note that this list has been prepared based on the turnover of GSTR-3B as reported by GSTINs to GST System. Thus, it is not the final one, in case a taxpayer has or had aggregate turnover in any financial year since introduction of GST, is mandated to report e-invoice to IRP.
One can search the status of enablement of a GSTIN on e-invoice portal: https://einvoice1.gst.gov.in/ > Search > e-invoice status of taxpayer
This information will be eventually made available through “Search Taxpayer” / “Know Your Supplier” Sections on GST portal also.
In case any registered person, is required to prepare invoice in terms of Rule 48(4) but not enabled on the portal, he/she may request for enablement on portal: ‘Registration – > e-Invoice Enablement’.
In case any registered person, who doesn’t have the requirement to prepare invoice in terms of Rule 48(4) but still enabled on the e-invoice portal, the same may also be brought to the notice at support.einv.api@gov.in so that necessary action can be taken.
E-invoice – Reporting to IRP:
What is an Invoice Registration Portal (IRP)?
Invoice Registration Portal (IRP) is the website for uploading/reporting of invoices by the notified persons.
Vide notification no. 69/2019-Central Tax dated 13.12.2019, ten portals were notified for the purpose of preparation of the invoice in terms of Rule 48(4).
The first Invoice Registration Portal (IRP) is already active (trial portal active since 6th January 2020) and can be accessed at: https://einvoice1.gst.gov.in/ Other portals will be made available in due course.
Is e-invoicing voluntary, i.e. can entities with aggregate turnover < Rs. 500 Cr. also report invoices to IRP, if they wish to do so?
No, presently, only the notified class of persons will be allowed/enabled to report invoices to IRP.
Is there any time window within which I need to report an invoice to IRP, i.e. is there any validation to the effect that the ‘document date’ (in the payload to IRP) has to be within a specified time window, for reporting to IRP/generation of IRN?
No such validation is kept presently.
Is the signature (DSC) of supplier mandatory while reporting e -invoice to IRP?
No
Can e-commerce operators generate e-invoices on behalf of the sellers on their platforms?
Yes, if such suppliers, selling through e-Commerce entity are otherwise notified persons and supposed to report invoices under Rule 48(4).
What do I need to generate an e -invoice?
A system/utility to report e-invoice details in JSON format to IRP and to receive signed e-invoice in JSON format from the Portal.
Whether any tool is provided to report invoices to IRP?
Yes. For entities not having their own ERP/Software solutions, they can use the free offline utility (‘bulk generation tool’) downloadable from the e-invoice portal. Through this, invoice data can be easily reported to IRP and obtain IRN/signed e-invoice.
What are various modes for generation of e -invoice?
Multiple modes are available so that taxpayer can use the best mode based on his/her need:
a. API based (integration with Taxpayer’s System directly)
b. API based (integration with Taxpayer’s System through GSP/ASP)
c. Free Offline Utility (‘Bulk Generation Tool’, downloadable from IRP)
Web-based / mobile app-based modes will also be provided in future.
Can IRN be generated by supplier directly?
No. The seller will not be able to create IRN. This will only be returned by the IRP (portal).
Will it be possible for bulk uploading of invoices to IRP?
Yes. It is possible. The offline utility (‘bulk generation tool’) serves this purpose. Further, the ERP or accounting systems used by large taxpayers can be designed in such a way that they can report invoices in bulk to IRP.
However, reporting to IRP and generation of IRN will be one after another (which will not be visible for user). For the user, it will appear like bulk upload and bulk receipt.
