GST E-Invoicing Software

E-invoicing under GST refers to the electronic generation of invoices as mandated by GST regulations. Similar to the requirement for GST-registered businesses to issue e-way bills when transporting goods, specific GST-registered businesses are also required to generate electronic invoices for Business-to-Business (B2B) transactions.

As of the latest updates, starting from August 1, 2023, e invoicing becomes mandatory for all GST-registered individuals whose aggregate turnover (as per their PAN) in any preceding fiscal year from 2017-18 onwards exceeds five crores.

To facilitate a smooth transition to e-invoicing, IndiaFilings introduces the LEDGERS GST e Invoicing software, which is designed to simplify and streamline the e-invoicing process for businesses.

Try LEDGERS today! 

e Invoicing under GST

The e-Invoice system is a digital verification mechanism under India’s GST framework, where B2B invoices are authenticated electronically by the GST Network (GSTN). This system facilitates the issuance of a unique identification number for every invoice via the Invoice Registration Portal (IRP), managed by GSTN.

Upon generation, all invoice details are instantaneously transmitted from the invoice portal to the GST and e-way bill portals. This synchronisation eliminates the need for manual data entry during the GSTR-1 return filing and the generation of part A of the e-way bills, streamlining these processes.

Benefits of the e invoicing system

The e invoicing system was implemented primarily to streamline GST return filing and improve reconciliation accuracy. Here’s a combined overview of its key benefits:

• Streamlined Reporting and Efficient Record-Keeping: E-Invoicing facilitates one-time reporting of B2B invoices at the point of generation, eliminating the need to report in multiple formats. This simplification extends to maintaining sales and purchase registers, which can be effortlessly generated from e-invoice data, aiding in efficiently preparing GST returns under the new system.
• Automated Tax Filing and E-Way Bill Generation: The integration of e-invoice data with the GST portal simplifies the tax filing process by auto-populating return forms and reducing manual efforts. Additionally, e-way bills can be seamlessly generated using this data, enhancing the logistics and transportation process.
• Enhanced Reconciliation and Real-Time Tracking:  e invoice in GST minimises the need for reconciliation between financial records and GST filings, thereby saving time and reducing errors. Real-time tracking of invoices also speeds up the validation of input tax credits and reduces verification issues, leading to quicker financial turnovers.
• Fraud Prevention and Elimination of Fake Invoices: With real-time data access, tax authorities are better equipped to detect and prevent fraudulent activities. Moreover, the e invoicing system helps eliminate the generation of fake GST invoices, preserving the tax system’s integrity and ensuring compliance.
• Reduced Audits and Enhanced Financial Management: The detailed, transaction-level information provided by e invoicing GST minimises the likelihood of audits and surveys by tax authorities, decreasing the administrative burden associated with tax compliance. This transparency builds trust and facilitates better financial management and cash flow for businesses.

E-invoicing offers several advantages, notably its effectiveness in reducing tax evasion. Since eInvoices are generated before transactions are completed, the opportunity for altering invoices is significantly reduced.

Businesses Eligible for GST e invoice

e invoice GST will apply to all businesses registered under the Goods and Services Tax (GST) system and issue Business-to-Business (B2B) invoices.

GST einvoice Applicability

As mentioned, The Indian government has steadily reduced the GST eInvoice limit for mandatory e-invoicing. As per the latest amendment, any business with a total turnover exceeding Rs. 5 crore in the previous financial year must generate e-invoices for all covered transactions. This revision came into effect on August 1st, 2023.

Transactions and Documents Requiring GST e-invoicing

If your business falls under the current threshold and deals with any of the following transactions, you must generate e-invoices through the GST portal:

• Documents: 
  • Tax invoices, credit notes, and debit notes are defined under Section 34 of the CGST Act.
• Transactions:

• Taxable Business-to-Business (B2B) sales of goods or services
• Business-to-Government (B2G) sales of goods or services
• Exports and deemed exports
• Supplies to Special Economic Zones (SEZs) with or without tax payment
• Stock transfers or supplies of services to distinct persons within a SEZ
• Transactions with SEZ developers
• Supplies made under the reverse charge mechanism (Section 9(3) of the CGST Act)

Who is exempted from generating e nvoice GST?

While e invoicing GST is becoming increasingly mandatory, certain categories of registered persons are exempted from these provisions. Here’s a breakdown of who can skip e invoicing for now:

• Financial Institutions: This exemption covers a broad range of entities within the financial sector, including:
  • Insurers
  • Banking companies
  • Financial institutions
  • Non-banking financial companies (NBFCs)
• Goods Transport Agencies (GTAs): If your business provides services related to the transportation of goods by road (in a goods carriage), you’re exempt from eInvoice.
• Passenger Transport Service Suppliers: This exemption applies to businesses offering passenger transportation services.
• Multiplex Cinemas: Registered individuals providing services through admission to exhibition of cinematograph films on multiplex screens are not required to generate e-invoices.
• SEZ Units: Businesses operating within Special Economic Zones (SEZs) are exempt from e invoicing. It’s important to note that this exemption applies only to SEZ units and not SEZ developers.

GST invoice Format

The e-invoice format, as specified in GST rules, is designated as Form GST INV-1. In simpler terms, the structure or schema for e invoicing is outlined through Form GSTR INV-1. This form serves as a standardised template for electronically recording invoice details. To report these details to the Invoice Registration Portal (IRP), they must be presented in JSON format.

The e-invoice format encompasses eight main categories, under which various details will be provided. These categories are as follows:

• Basic Details
• Invoice Period
• Preceding Document / Contract Reference
• Receipt / Contract References
• Supplier Information
• Buyer Information
• Payee Information
• Delivery Information

Specific information, such as invoice item details, document totals, and additional data like port codes and batch details, must be included within these broad categories.

It’s important to note that per the e-invoice format, specific details are mandatory when submitting invoice information to the IRP. However, including some details may be optional depending on the nature of the business and specific transactions. This structured approach ensures consistency and accuracy in the electronic reporting of invoices.

Mandatory Information for e Invoicing

When preparing eInvoices, specific details are mandatory to ensure compliance and accurate reporting. These essential details include:

• Code for Supply Type: Indicating the supply type, such as B2B for business to business, EXPWP for export with payment, or SEZWP for SEZ with payment.
• Code for Document Type: Identifying the document type, such as INV for Invoice, CRN for Credit Note, or DBN for Debit Note.
• Document Number: The invoice number follows GST rules and regulations.
• Document Date: The date on which the invoice was issued.
• Supplier Legal Name: The legal name of the supplier, consistent with their GST registration.
• GSTIN of Supplier: The GST Identification Number of the supplier.
• Supplier Address: The complete address of the supplier, including specific details like flat number and building number.
• Supplier Place, State Code, and PIN Code: The location details of the supplier, including the place, state code, and six-digit PIN code.
• Buyer’s Name and GSTIN: The buyer’s legal name, along with their GST Identification Number.

• Place of Supply (State Code): Indicating the state code for the place of supply.
• List of Items: Providing comprehensive information about the goods and services invoiced, including item descriptions, HSN codes, prices, and more.
• Document Total Details: Provide details of the document total, including taxes, discounts, and other relevant calculations.
• Ship-To Details (if applicable): Furnishing details regarding the shipping location if different from the buyer’s address.

These mandatory details ensure e invoices conform to regulatory requirements and facilitate accurate and efficient record-keeping and reporting.

Types of Documents Reported to the IRP

The  e invoicing system encompasses the following types of documents:

• Invoices by the Supplier
• Credit Notes by the Supplier
• Debit Notes by the Recipient

Any other document required by law must be reported by the document creator.

Time Limit to Generate GST-invoices

The rules surrounding the timeframe for generating GST e-invoices have undergone recent changes. Here’s a breakdown of the current situation:

A strict deadline exists for taxpayers with Aggregate Annual Turnover (AATO) exceeding Rs. 100 crore (as of May 1st, 2023). You must generate e-invoices for tax invoices and credit/debit notes (CDNs) within seven days of the invoice date. Please comply with this deadline to avoid your invoices and CDNs being considered non-compliant.

No specific time limit is mandated by law for taxpayers with AATO to generate e-invoices below Rs. 100 crore

Documents Required for E Invoicing

For e invoicing under the GST framework, the following documents are necessary:

• Tax Invoices, Credit Notes, and Debit Notes: These should be issued in accordance with Section 34 of the CGST Act.

Applicable Transactions:

• Taxable Business-to-Business (B2B) Transactions: Includes the sale of goods or services to other businesses.
• Business-to-Government (B2G) Sales: Involves transactions where the government is the recipient of goods or services.
• Exports and Deemed Exports: Transactions that involve sending goods or services out of the country or those treated as exports under GST laws.
• Supplies to Special Economic Zones (SEZs): This can be with or without tax payment and includes supplies made to SEZ developers.
• Stock Transfers or Services to Distinct Persons: Transactions within the same company but across different states or jurisdictions.
• Supplies Under Reverse Charge: As specified under Section 9(3) of the CGST Act, where the recipient is liable to pay GST.

Procedure for Generating & Uploading the eInvoice

The GST einvoice system follows a standardised format for generating and transmitting invoices. Here is a step-by-step process of how it works:

Step 1: Generation of E-Invoice

Taxpayers will generate invoices as usual but must also report these invoices electronically following the e-invoice schema, which includes mandatory fields. Key details required include:

• Invoice Basics: Type, number, date
• Supplier Information: Name, GSTIN, address
• Buyer Information: Name, GSTIN, address, payment details
• Transaction Details: Dispatch and item details, tax amount, payment status
• Goods Details: Serial number, quantity, rate, GST rate, total value

The invoice data must be converted into JSON format using one of the following:

• An updated accounting/billing system
• A utility or tool integrating with the system, ERP, or via an offline tool

Step 2: Generation of Unique IRN

Suppliers may generate a preliminary ‘hash’ (a unique code) using details like GSTIN, invoice number, and financial year. This is done using the SHA256 algorithm. If the hash is validated, it becomes the Invoice Reference Number (IRN).

Step 3: Uploading the JSON

The JSON file of the invoice can be uploaded through various means:

• Directly on the Invoice Registration Portal (IRP)
• Via a GST Suvidha Provider (GSP)
• Through third-party apps, including APIs

If the supplier generates a hash, it can be uploaded along with the JSON. Once the invoice is successfully uploaded, the seller must electronically capture and include the QR code and the Invoice Reference Number (IRN) on the physical invoice issued to the recipient.

Step 4: IRP Validation of Invoice Information

The IRP checks the uploaded JSON for accuracy and generates an IRN while ensuring there is no duplication in the Central Registry of GST. The generated IRN uniquely identifies the e-invoice throughout the financial year.

Step 5: QR Code and Digital Signature

Once the IRN is generated, digitally sign the e-invoice and the accompanying QR code. The QR code includes critical details such as supplier and recipient GSTINs, invoice number, date, invoice value, number of line items, and the HSN codes of main items.

Step 6: Data Transmission to E-way Bill Portal and GST System

The information from the IRP is shared with the GST system and the e-way bill portal, facilitating the auto-population of GST annexures.

Step 7: E-Invoice Receipt Sent to Supplier’s ERP

Finally, the IRP sends the JSON file, IRN, and QR code back to the seller’s ERP system. The invoice is then forwarded to the buyer via email.

Here’s the video explaining the generation of an “e-invoice GST” using LEDGERS GST e Invoicing Software to avoid non-compliance,

Integration of e invoicing with GST Returns

The integration of e invoicing with GST Returns involves a systematic process:

• Validation and Registration: A GST eInvoice is eligible for inclusion in the corresponding GST return only after it has undergone validation and registration by the invoice registration system. This ensures compliance with established requirements.

• Recipient Access: After successful validation, the e invoice becomes visible to the recipient within the new return system, allowing for viewing and necessary actions.

The primary objective of this integration is to facilitate the pre-population of GST returns, effectively addressing reconciliation challenges. With e Invoicing, invoice data can seamlessly populate the relevant sections of tax returns, eliminating the need for manual data entry.

Integrating e invoicing with GST Returns aims to enhance efficiency, accuracy, and compliance in the tax reporting process while reducing reconciliation-related issues.

Cancellation of eInvoices

When it comes to amending or cancelling e-invoices, there are specific rules and limitations:

• Partial vs. Full Cancellation: An e-invoice cannot be partially cancelled; it must be completely cancelled.
• Reporting Within 24 Hours: If you decide to cancel an e-invoice, it must be reported to the Invoice Reference Number (IRN) within 24 hours of uploading.
• No Post-24-Hour Cancellation on IRN: It’s important to note that no cancellations are allowed after the initial 24-hour window has passed. In such cases, Cancellation must be made manually on the GST portal before filing returns.

Amendments to an eInvoice

Any amendments to an e invoice GST can only be performed through the GST Portal. If changes or corrections are required for an e-invoice, taxpayers must access the GST Portal and follow the designated procedure for making amendments.

Amending e-invoices through the GST Portal ensures accuracy and compliance with the GST system’s regulations, allowing businesses to maintain accurate records and fulfil their tax obligations effectively.