e-Invoicing under Goods and Services Tax Laws

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E-Invoicing under Goods and Services Tax is a way of electronically authenticating business-to-business ( B2B ) invoices. If your business falls under certain categories, you’re required to generate e-invoices for B2B transactions.

In simple terms, under Goods and Services Tax rules, an “invoice” or “tax invoice” is a document required by the Goods and Services Tax Act, 2017. This law says that anyone selling goods or services must provide an invoice or a bill of supply for each transaction. Issuing an invoice is necessary for people involved in selling goods or services.

An Overview of the Goods and Services Tax Invoice Registration Portal (IRP)

The Invoice Registration Portal ( IRP ) is like a website where businesses upload their invoice details. It quickly generates a unique code for each invoice and puts it in a QR code. This code helps track the invoice easily. The IRP also works with other government systems to make filing taxes and generating transport documents easier for businesses. It’s managed by the government’s NIC and provides all necessary information on its interface.

Notification number 69/2019 – Central Tax, dated December 13, 2019, was issued to announce ten website addresses for registering invoices according to rule 48(4). The first Invoice Registration Portal ( IRP ) has been active for the past two years and is accessible at “https://einvoice1.Goods and Services Tax.gov.in”. This portal is managed by the National Informatics Centre ( NIC ) and more taxpayers are being included under the ‘e-invoice’ rule. Another portal, “https://einvoice2Goods and Services Tax.gov.in”, has been set up by NIC to ensure continuous operation 24/7. Additionally, four new IRPs have been introduced by private companies, offering unique value-added services.

Name of IRP Web Address (URL)
National Informatics Centre (NIC) www.e-invoice1.Goods and Services Tax.gov.in & www.e-invoice2.Goods and Services Tax.gov.in
Cygnet www.e-invoice3.Goods and Services Tax.gov.in
Clear Tax www.e-invoice4.Goods and Services Tax.gov.in
Earnest and Young LLP www.e-invoice5.Goods and Services Tax.gov.in
IRIS www.e-invoice6.Goods and Services Tax.gov.in

Recent Updates in E-Invoicing.

– Two-Factor Authentication Mandate (July 15, 2023): Taxpayers with turnover exceeding Rs.100 Crore must adhere to this additional security measure.

– ‘E-Invoice QR Code Verifier’ App (June 9, 2023): Goods and Services TaxN introduces a user-friendly app for hassle-free e-invoice verification.

– 6th Phase Rollout (August 1, 2023):E-invoicing becomes mandatory for businesses with a turnover of ₹5 Crore or more.

– Time Extension for Reporting Old E-Invoices (May 6, 2023): The deadline is extended by three months.

– 7-Day Reporting for High Turnover Businesses (May 1, 2023): Taxpayers with turnover equal to or exceeding Rs.100 Crore must report tax invoices within 7 days.

– NIC’s E-Invoice Portal Updates (January 30, 2023): Introduces features like selecting ’96-Other Country’ as POS state code and new error code 2295 for duplicate requests.

– Goods and Services Tax Council’s Hint on Next Phase (October 11, 2022): Hints at the next phase for businesses with a turnover exceeding Rs. 5 Crore.

The Goods and Services Tax e-invoicing Process: A step-by-step Guide:

Setting Up E-Invoicing

To initiate e-invoicing, businesses must ensure their ERP system aligns with PEPPOL standards, incorporating prescribed e-invoicing standards and mandatory parameters from CBIC.

Creating Invoices

Upon technical setup completion, businesses generate regular invoices on their software, incorporating essential details like billing information, Goods and Services TaxN, transaction value, item rate, Goods and Services Tax rate, and tax amount.

Uploading to IRP and Authentication

The invoice details, especially mandatory fields, are then uploaded to the Invoice Registration Portal ( IRP ). The IRP authenticates B2B invoice details, checks for duplications, and generates an Invoice Reference Number ( IRN ).

Integration with Goods and Services Tax and E-Way Bill Portals

The authenticated payload is sent to the Goods and Services Tax portal for returns, and relevant details are forwarded to the e-way bill portal if applicable. The Goods and Services TaxR-1 of the seller is auto-populated, determining their tax liability.

Advantages of e – invocing through Goods and Services TaxN

1. Error Reduction: Fixes errors in data reconciliation, reducing mistakes.

2. Interoperability: Invoices from one software are easily understood by another, minimizing data entry errors.

3. Real-Time Tracking: Enables real-time monitoring of supplier invoices.

4. Automation of Goods and Services Tax Return Filing:Streamlines the process with invoice details automatically populating returns.

5. Quick Access to Input Tax Credit:Facilitates quicker access to genuine input tax credit.

6. Audit Reduction: Decreases the chance of tax audits as required information is available at a transaction level.

7. Access to Formal Credit Routes: Enhances opportunities for invoice discounting or financing, especially for small businesses.

8. Improved Business Relations: Small businesses can strengthen customer relations and explore opportunities with larger enterprises.

Required Documents for E-Invoicing –

Businesses need to report invoices, credit notes, debit notes under section 34 of the Central Goods and Services Tax and other documents specified under Goods and Services Tax law as e-invoices.

Turnover & e- Invoice Limits: An Overview

PHASE TURNOVER THRESHOLD APLLICABLE DATE NOTIFICATION NUMBER
1. RS 500 CRORE 01.10.2020 61/2020, 70/2020- CENTRAL TAX
2. RS 100 CRORE 01.01.2021 88/2020- CENTRAL TAX
3. RS 50 CRORE 01.04.2021 5/2021-CENTRAL TAX
4. RS 20 CRORE 01.04.2022 1/2022- CENTRAL TAX
5. RS 10 CRORE 01.10.2022 17/2022-CENTRAL TAX
6. RS 5 CRORE 01.08.2023 10/2023- CENTRAL TAX

If your business’s sales exceeded a certain limit between 2017-18 and 2021-22, or if it goes beyond that limit in the current financial year, you need to use e-invoicing from the next financial year (starting FY 2023-24). This rule applies if the combined sales of all your Goods and Services Tax numbers under one PAN in India surpass the specified limit.

E-Invoicing under Goods and Services Tax is akin to upgrading from handwritten letters to instant messaging for businesses. Recent updates and added features highlight continuous improvements, making the invoicing process more efficient and error-free in the digital age. It’s not just about staying current; it’s about enhancing business operations and collaboration opportunities.

The Limit to upload invoice for IRN.

Under Goods and Services Tax law, there’s no extra time given to upload invoice data for IRN generation. The rules state that certain registered persons need to prepare invoices using specific details in Form Goods and Services Tax INV-01 and get an IRN by uploading it on the common portal. Any invoice issued differently won’t be considered valid. Also, a QR code with IRN is mandatory for invoices issued by certain notified persons. Additionally, Part A of the e-way bill is generated automatically based on the invoice data uploaded.

Sure, here are the rules outlined in bullet points:

– Rule 48(4): Certain registered persons must prepare invoices using specific details in Form Goods and Services Tax INV-01 and obtain an IRN by uploading it on the common portal.

– Rule 48(5): Invoices issued in any other manner than specified in Rule 48(4) will not be considered valid.

– Rule 46(r): A QR code embedded with IRN is mandatory for invoices issued by notified persons under Rule 48(4).

– Rule 138A(3): Part A of the e-way bill is generated only based on the invoice data uploaded at IRP.

All the rules mentioned indicate that for notified persons under Rule 48(4), invoices must strictly follow the guidelines set in Rule 48(4). It’s important to ensure that the data on the invoice document matches the data of the IRN, especially when transitioning between months or years.

An advisory from Goods and Services TaxN stated that starting from May 1, 2023, a 7-day time limit was set for uploading old invoices for entities with an Annual Aggregate Turnover ( AATO ) over ₹100 Crore. However, this 7-day time limit was deferred for three months as informed by Goods and Services TaxN.

Additionally, as a one-time measure, a grace period of 30 days was allowed to obtain IRN for invoices issued between October 1, 2020, and October 31, 2020, as per Notification 73/2020 dated October 1, 2020.

Sure, here it is in a more expanded form:

How e-invoicing records / documents are Secured and Saved:

Rule 57 states that it’s necessary to keep electronic backups of e-invoice records in good order and store them securely as outlined. These backups should be readily accessible if requested by the Goods and Services Tax Proper Officer. Furthermore, Section 36 specifies the requirement to retain documents and records for a period of 72 months, which equals six years.

Most Important Goods and Services Tax e-Invoicing Features :

Attaching a Digital Signature Certificate ( DSC ) to an Invoice

Requirements:

– Accounting software capable of generating JSON data for the invoice

– “emSigner” tool from Goods and Services Tax installed on your system

Steps:

1. Generate JSON payload of the invoice using your accounting software.

2. Upload the JSON data to the IRP ( Invoice Registration Portal ).

3. Choose a valid digital signature from the options provided.

4. Click ‘Sign’ to attach the chosen digital signature to the invoice.

Using QR Codes for Invoices

What is a QR Code?

– A two-dimensional code for machine readability.

– Contains invoice details such as supplier and recipient Goods and Services TaxIN, invoice number, date, value, line items, HSN code, and a unique IRN or hash.

Requirement:

– All B2B taxpayers generating invoices must print the QR code on their invoices as per e-invoice schema mandated by the Goods and Services Tax Council.

Takeaway: Streamlining Invoice Processes.

– Businesses can use accounting software to generate compliant invoices.

– The e-invoicing system assigns an IRN, attaches a DSC, and generates a QR code.

– Auto-population of certain fields on return forms reduces data entry errors.

– Real-time upload of documents helps in tracking invoices, reducing fake invoices, and aiding in record-keeping and tracking to combat tax evasion.

Notifications and Circulars Relevant to e-Invoicing under CGoods and Services Tax ACT

SI. NO. NOTIFICATION ACT DATE BRIEF SUMMERY PAGE
1 68/2019 Central Tax 13-12-2019 CGoods and Services Tax Rule 48(4), 48(5),48(6) by CGoods and Services Tax (Eighth Amendment ) Rules, 2019 188
2 69/2019 Central Tax 13-12-2019 Goods and Services Tax Common Portal (10 numbers) u/s 146 for CGoods and Services Tax Rule 48(4) 188
3 70/2019 Central Tax 13-12-2019 Specified person who has ATO 100 Crore notified for CGoods and Services Tax Rule 48(4) and effective date 1/4/2020 189
4 02/2020 Central Tax 01-01-2020 Schema for INV-01 notified. Later this schema substituted by Notification 60/2020,dated 30/07/2020 189
5 13/2020 Central Tax 21-03-2020 Exempted person specified in Rule 54(2) “Insurer/ Banking company/Financial Institution ( including NBFC), Rule 54(3) Passanger Transportation services, Rule 54(4A) admissionto exhibition of Cinema in Multiplex Screen and effective date changed to 01/10/2020 213
6 61/2020 Central Tax 30-07-2020 Exemption extended to SEZ Unit and coverage for e- invoicing enhance from 100 crore to 500 Crore. 213
7 70/2020 Central Tax 30-09-2020 Exports of Goods and Services included for E-invoice and clarification for scope of ATO threshold during any year from Fy 2017-18 213
8 72/2020 Central Tax 30-09-2020 Sub rule 46® inserted w.r.t QR Code , Provision in Rule 48 inserted giving power to commissioner for relief in Exceptional circumstances with person/class of person, Rule 138A(2) Substituted for e-invoice acceptance in place of physical copy. 213
9 73/2020 Central Tax 01-10-2020 Specia relaxation to obtain IRN within 30 days of issue of e-invoice during 1/10/2020 to 31/10/2020 215
10 88/2020 Central Tax 10-11-2020 Specified Person scope expanded by reduction of threshold limit for e -invoice from 500 crore ATOto 100 crore w.e.f 1/1/2021 215
11 05/2021 Central Tax 08-03-2021 Specified Person scope expanded by reduction of threshold limit for e -invoice from 100 crore ATO to 50 crore w.e.f. 1/4/2022 215
12 23/2021 Central Tax 01-06-2021 Exemption extended to “Government Department” and “Local Authorities” with retrospective effect 216
13 01/2022 Central Tax 24-02-2022 Specified Person scope expanded by reduction of threshold limit for e -invoice from 50 crore ATOto 10 crore w.e.f. 1/4/2022 216
14 17/2022 Central Tax 01-08-2022 Specified Person scope expanded by reduction of threshold limit for e -invoice from 20 crore ATO to 10 crore w.e.f. 1/10/2022 217
15 10/2023 Central Tax 10-05-2023 Specified Person scope expanded by reduction of threshold limit for e -invoice from 10 crore ATO TO 5 CRORE W.E.F.1/08/2023 217

Summary of Notifications Issued Relevant to E-Invoice under CGoods and Services Tax

1 186/18/2022 Goods and Services Tax (Pt.3) 27.12.2022 217

Summary of Advisories issued by Goods and Services TaxN relevant to E- Invoice under Goods and Services Tax laws

1 Deferment of Implementation of time limit on reporting old e- invoice. 6.5.2023 220
2 Time for reporting invoice on the IRP portal 13.4.2023 221
3 HSN code reporting in e invocie on IRPs portal 22.3.2023 221
4 Goods and Services TaxN launches e- invocie registration services with private IRPs 4.3.2023 222
5 New e invocie portal 25.2.2023 223
6 E invoice Verifier App by Goods and Services TaxN 8.6.2023 224

Offences Under e-Invoice System

An offence in the context of the E-invoice system refers to breaking the law. Although not specifically defined in the CGoods and Services Tax Act or related Goods and Services Tax laws, an offence generally means violating the provisions of these laws, including rules related to E-invoicing such as rule 48(4), rule 48(5), rule 46, rule 47, rule 57, section 31, section 36, and others.

Similarly, the term “penalty” is not explicitly defined in Goods and Services Tax law, but it typically refers to a fine or monetary punishment imposed by law for committing certain offences.

To conclude, the e-invoicing method under Goods and Services Tax regulations represents a crucial aspect of modern business operations. By grasping its intricacies and adhering to its requirements, businesses can ensure compliance with tax laws while also enhancing efficiency and transparency in their transactions. Embracing e-invoicing facilitates smoother B2B interactions and fosters trust among stakeholders. Therefore, understanding and implementing e-invoicing practices are essential steps for businesses aiming to thrive in the dynamic landscape of Goods and Services Tax regulations.

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