Must Knows

What is an E invoice and why is it important in 2022?

[ecis2016.org] In this article we have outlined the importance of E invoice

What is e invoice?

E-invoicing, also known as electronic invoicing, is a process in which B2B invoices are validated electronically by GSTN before being uploaded to the common GST site for further usage. The Invoice Registration Portal (IRP), which is controlled by the GST Network, will assign a unique identifier to each and every invoice that is processed electronically as part of the system for electronic invoicing. The first IRP may be found at einvoice1.gst.gov.in, which was established by the National Informatics Centre.

The GST site and the e-way bill website will get all invoice data in real-time from the e-invoice portal. As the data is sent directly from the IRP to the GST site, it eliminates the need for human data input for submitting GSTR-1 returns and generating part-A of the e-way invoices.

Electronic invoicing does not necessarily include the creation of invoices via the GST system. E-invoicing actually entails uploading a copy of a standard invoice that has already been prepared into a centralised online platform for e-invoicing. A single invoice entry is all that is needed to perform multiple reporting functions.

As of the first of April 2022, businesses with an annual aggregate sales of more than Rs 20 crore and up to Rs 50 crore would be eligible to use the electronic invoicing system, as per circular no. 1/2022.

Existing mechanism for issuing invoices

At the moment, companies create invoices by using a variety of different software, and the information of these statements is routinely input into the GSTR-1 report. As soon as the various suppliers have submitted the GSTR-1, the data on the invoice will be reflected in the GSTR-2A for the receivers, where it will only be viewable. On the other side, the vendor or transporter is responsible for manually inputting the invoices in spreadsheet or JSON format in order to manually produce e-way bills.

The procedure of producing and uploading invoice information will continue to function in the same manner under the e-invoicing system, which is scheduled to go into effect on October 1, 2020. It will be accomplished by incorporating data using the spreadsheet tool or JSON, or it will be done through API, either locally or via a GST Suvidha Provider (GSP). The creation of the GSTR-1 tax return, as well as the generation of e-way bills, will go without a hiccup owing to the data. The electronic invoicing system will serve as the primary instrument necessary to make this possible.

E invoice: Who is eligible?

The electronic invoicing system is available to GST-registered businesses and organisations whose annual sales are more than Rs 50 crore, the threshold for eligibility. Those having revenue of business exceeding Rs 20 crore on the first of April 2022 would be required to comply with it.

You also need to be aware that electronic invoicing is a requirement for your company if your annual revenue exceeds Rs 20 crore in any of the fiscal years beginning with 2017–18. Therefore, you are required to begin using electronic invoicing if your annual revenue was less than Rs 20 crore the year before but exceeded Rs 20 crore during the current year.

Nevertheless, there are several exemptions, such as units located in Special Economic Zones (SEZ), health coverage, banks, investment firms, non-bank financial corporations (NBFCs), GTA, consumer transportation services, and the sale of cinema tickets. 

E invoice: How to acquire?

The process of producing or creating an e-invoice consists of the steps listed below.

  • The taxpayer is responsible for ensuring that the reworked ERP system is used in accordance with PEPPOL guidelines. It is possible for them to collaborate with the software provider in order to integrate the standard established for e-invoicing, which is referred to as the e-invoice schema (standards). At the very least, it is required to have the necessary parameters declared by the CBIC.
  • There are essentially two alternatives available to each taxpayer for the production of IRNs:
  1. For a direct API interface or a linkage via a GST Suvidha Provider (GSP), the Internet Protocol location of the computer system may be approved on the e-invoice site.
  2. You may upload a large number of invoices at once by downloading the bulk creation programme. It will produce a JSON file which can be published to the e-invoice site in order to create a large number of IRNs at once.
  • The taxpayer is then required to provide a standard invoice for that software. He is obligated to provide all of the pertinent information, including the personal invoicing details, the GSTN of the provider, the acquisition cost, the product value, the GST rate that is relevant, the tax amount, and so on.
  • After selecting one of the aforementioned alternatives, issue an invoice on the Erp system or billing system that is appropriate for your company. After that, use the JSON file or a platform provider (app or GSP) or a direct API to submit the invoice data, in particular necessary fields, to the IRP. For e-invoicing and verification, the IRP will serve as the central registrar. IRP has a variety of ways to engage with it, including SMS and mobile apps.
  • IRP will evaluate the main facts of the B2B invoice, check for any duplicates, and produce an invoice identifier (hash) for documentation. IRNs are created based on the following four parameters: 
  1. The Seller GSTIN
  2. The invoice number
  3. The fiscal year expressed as YYYY-YY
  4. The kind of document (INV/DN/CN).
  • IRP is responsible for producing an invoice identifier (IRN), digitally signing the invoice, and producing a QR code for the vendor in the Output JSON format. On the other hand, the electronic invoice creation will be sent to the supplier of the product or service by electronic mail.
  • The authorised payload will be sent by IRP to the GST site so that GST returns may be processed. Furthermore, the facts will be sent to the e-way bill site, if appropriate, if the situation requires it. The seller’s GSTR-1 form will have the applicable tax period pre-populated with the appropriate information automatically. 

A taxpayer is able to continue printing his invoice in the same manner as before, although with a logo. The electronic invoicing system simply requires all taxpayers to record invoices on IRP in an electronic format as a mandatory requirement.

E invoice: How would it assist companies?

When companies use the e-invoice system, they will be able to enjoy the following benefits:

  • E-Invoices address and bridge a critical gap in data validation regarding GST, which helps eliminate mismatch mistakes.
  • Electronic invoices generated using one piece of software may be recognised by another, which enables interoperability and helps decrease the number of data input mistakes.
  • E-invoice makes it possible to keep track of invoices in perfect sync while they are being created by the provider.
  • Vertical merger and standardisation of the procedure of tax filing would occur, with the pertinent information of the invoices being auto-populated in the different forms, notably for the generation of the part-A of e-way bills. 
  • Improved access to real input tax credits in a more timely manner.
  • Because the information that the tax authorities demand is accessible at the transaction level, there is a decreased likelihood that they will conduct audits or surveys.

E invoice: How can it prevent tax evasion?

The following are some of the ways in which it will aid in the fight against tax evasion:

  • Since the electronic invoice will be required to be issued by businesses using the GST site, the tax department will have accessibility to interactions as they are taking place on a regular basis. This exposure will be possible due to the fact that e-invoices will be required to be generated.
  • Since the invoice is prepared prior to carrying out a transaction, there will be less room for altering the invoice.
  • Because all invoices would have to be created via the GST system, the possibility of falsified GST invoices will be decreased, and this will ensure that only real input tax credits can be claimed. Since the specifics of the input credit and the details of the tax liability can be verified, it is now much simpler for GSTN to trace false tax credit applications.

E invoice: Which fields must be filled in?

e-Invoices are required to conform, in the first place, to the regulations governing GST invoices. In addition to this, it should be able to adapt the system of billing or the regulations of billing that are used by each company or industry in India. Certain pieces of information are required to be provided by companies, while others may be provided if they so want.

A large number of areas have also been made more flexible, and users have the option of just filling out those that are important to them. In addition to that, it has included a description of each field, as well as examples of how users should fill them out. One can notice that some needed data from the format of the e-way bill is now used in the electronic invoice.

The following is a summary of the e-invoice format. 

  • There are 138 fields spread throughout 12 sections (both required and elective) and six annexures of the form.
  • Five of the 12 segments are required, while the other seven are elective. There must be two annexures.
  • The five areas that must always be completed are the fundamental facts, information about the supplier, information about the receiver, data about the invoice items, and the total of the document. The breakdown of the components, as well as a total for the paper, make up the two obligatory appendices.

FAQs

Is it possible to cancel an e-invoice in whole or in part?

It is not possible to just cancel a portion of an electronic invoice; rather, the whole thing may be cancelled. Within twenty-four hours of the cancellation, it is required to be notified to the IRN. Any effort to terminate after that will fail on the IRN and will need to be withdrawn manually via the GST site before the returns can be submitted.

Is there going to be an option to generate e-invoices on the GST portal?

No, companies will not need to make any changes to how they create invoices since they may continue to do so using their existing ERP software. The invoice has to be formatted according to the standard for electronic billing, and it needs to contain all of the essential characteristics. At this time, there are no plans to implement a system that would allow users to directly generate invoices on a shared site.

Is it possible to generate IRN by mass uploading invoices?

No, each invoice has to be submitted separately to the IRP. The enterprise resource planning system (ERP) of a company will need to be modified so that it may accept requests to submit individual invoices.

What sorts of documents are required to be submitted to the IRP?

The following documents will be included in the scope of coverage provided by the electronic billing system: Invoices sent in by the provider Notes of credit issued by the provider Notes deducted from the recipient’s account Any other document that is required to be submitted as an electronic invoice by the originator of the document must be in accordance with the GST legislation.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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