An electronic invoice as the name suggests, is a digital document that details the various products or services which are purchased by buyers. It also indicates the value of such merchandise and services and the terms and conditions regarding the payments. You have to ensure your brand details, business details, unique identification number, dates, and the amount of value-added tax (VAT) are accurate.
The government has made e-invoicing in the post-pandemic business world mandatory. All business invoices, especially in the B2B category, are digitised. The Goods and Services Tax Network validate all digital invoices. The GST council has laid down distinct guidelines and a uniform format that is easy to comply with. This is adhered to by all businesses before they submit the invoices to the GST website. This makes it extremely easy to share the invoices wherever and whenever required. This also enables the central system to easily access the invoices and go through them.
Did you know?
E-invoicing has been mandatory for all businesses with a turnover of ₹50 crores.
E-Invoicing Under GST and its Implications
The government has always been challenged by fraudulent invoices. The government of India has made it mandatory for all invoices to be digitised which has led to a reduction in tax leakages. This new mechanism under GST makes it binding for all businesses (B2B) and exporters to register their invoices with the portal of invoice registration. Once they do this, they are given a unique identification number for every individual invoice. This number is referred to as the invoice reference number or IRN. The invoice registration portal generates a QR code that is signed digitally and includes various details of the invoice. This invoice which carries a digital signature and a printed QR code is then validated and uploaded on the E-way bill as well as the GST websites.
E-Invoicing and the Businesses to Which It Is Applicable
E-invoicing under GST is dependent on the total turnover of a business. This is explained as follows:
Date from which e-invoice came into effect
Category of business
October 1, 2020
Business or individual – where the total turnover exceeds ₹500 crores in one financial year
January 1, 2021
Business or individual - Where the total turnover exceeds ₹100 crores in one financial year
April 1, 2021
Business or individual – where the total turnover exceeds ₹50 crores in one financial year.
There are some categories that, despite experiencing a business turnover as mentioned, are not required to raise an e-invoice. These categories include:
- An agency that deals in the transportation of goods
- A company involved in banking
- A finance-based institute
- Non-banking financial companies
- Businesses that operate in the special economic zone
What is the Current System in Place for Issuing Invoices?
What is the process of getting an e-invoice?
Generating an e-invoice involves the following:
- The concerned commercial entity has to establish a network with the invoice registration portal
- There has to be seamless communication between the purchaser, the e-way Bill and GST portals.
- The invoices are prepared in the normal fashion, but the details of the same have to be submitted electronically.
- The invoice has to include the following:
- All details about the trade transaction
- The coordinates of the business entity – name, postal and GSTN addresses, as well as the requisite pin codes
- The above requirements also apply to the purchaser
- The postal address from where the seller will be dispatching the said goods
- All details regarding the shipment
- Product details like the Harmonised System of Nomenclature code (HSN) – this is binding on all B2B and B2c business invoices
- Total value of the said products, the GST rate
- If shipments are going to be made in batches, the supplier has to provide the batch numbers
- The total value of the invoice
Process of generating an e-invoice
- Access the e-invoice portal
- Register with all your accurate details
- Create your identity along with a password
- Log-in to your account
- Select the section titled, E-invoice. Now click on that and select the new option
- Key in all the necessary details, save, and then preview the entire e-invoice
- You can now submit the same. You will be able to view the IRN and Ack numbers as well as the QR code
- Once the details are validated, you will be given the option to take a printout of the same.
How Will E-Invoicing Benefit Businesses?
Some of the key benefits of e-invoicing are as follows:
- Accurate entries when details are being uploaded manually
- Reconciliation of data
- Businesses can communicate without hindrances
- Real-time tracking becomes possible
- Eases the process of tax returns
- Ease of access to all the trade transactions consistently. This reduces the burden of audits and surveys at frequent intervals
- Easy to compare the input credit with the output tax and understand the difference in data speedily
- Helps to easily detect fraudulent invoices
Also Read: How to modify or correct an e-invoice?
How will e-invoicing curb tax evasion?
As all e-invoices are uploaded to the GST portal, there is no scope for any manipulation of details. Thus it eliminates all chances of any tax evasion or any other discrepancies.
What Are the Mandatory Fields of an E-Invoice?
There are some sections in an e-invoice that are binding and require accurate details. These are as follows:
- All requisite and accompanying documents and the date therein
- Details of the Business entity supplying the products or services – name, address, GSTIN, pin codes as well as all other relevant details as per requirements
- Details of the receiver or beneficiary – name, address, location, PAN card details, GSTIN, the location where the supplies will be made, list of items to be received, date of approximate delivery
- Details of all the products
- Details of the total value
This article informs you about the various advantages of e-invoicing and how it has eased the process of trade transactions and helped curb fraudulent invoicing.
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