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What is e-Invoicing, Meaning, Benefits & steps to Generate e-Invoice In GST
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An e-invoice is an electronically authenticated invoice generated for Business-to-Business (B2B) transactions under the GST system. It ensures that the invoice is uploaded and verified on the Invoice Registration Portal (IRP), making the invoicing process transparent and accurate for compliance purposes.
The e-invoicing rule mandates that businesses with an annual turnover above a specified threshold must generate and upload invoices electronically through the Invoice Registration Portal (IRP) for B2B transactions. This ensures real-time validation and streamlines GST filing and compliance.
Businesses with an annual turnover exceeding ₹10 crore are required to generate e invoices for B2B transactions as per the GST regulations. This rule applies to notified taxpayers, ensuring compliance with electronic invoicing standards for reporting and tax filing.
Entities like banks, financial institutions, insurance companies, goods transport agencies, and non-B2B service providers are exempt from generating e-invoices under GST. Additionally, businesses with an annual turnover below the prescribed threshold are also not required to use e-invoicing.
The full form of IRN is the Invoice Reference Number. It is a unique identification number generated for each e-invoice uploaded to the Invoice Registration Portal (IRP) under the GST system. This number is essential for tracking and validating e-invoices.
Yes, e-invoicing is compulsory for businesses that exceed the turnover threshold specified under the GST law. These businesses must generate e-invoices for all B2B transactions through the Invoice Registration Portal (IRP) to comply with GST regulations.
Businesses can verify their annual turnover against the prescribed threshold set by GST law to check e-invoice eligibility. If the turnover exceeds ₹10 crore, they are required to comply with e-invoicing rules for B2B transactions. Eligibility can also be confirmed on the GST portal.
Yes, an e-invoice can be cancelled within 24 hours of generation on the Invoice Registration Portal (IRP). However, once an invoice is cancelled, it cannot be edited or reused, and a new invoice must be issued if required.
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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"E-invoicing" refers to the process of generating invoices electronically as mandated by the GST law. Some recognised GST-registered companies are required to provide electronic invoices for business-to-business (B2B) transactions. This is similar to how businesses use e-way bills for product transportation. This system, which digitally validates and authenticates all B2B invoices, was created by the Goods and Services Tax Network (GSTN), which streamlines the-invoicing process. We will define e-invoicing meaning, go over how it works, and also understand its numerous benefits for businesses using the GST system in this blog.
What is e-Invoicing?
Let’s start with understanding what e-invoicing is. While using the e-invoicing, or electronic invoicing system, the GST Network (GSTN) electronically authenticates certain papers and business-to-business (B2B) invoices. It was first adopted for large corporations during the 35th meeting of the GST Council, and subsequently it was expanded to include medium-sized and small businesses.
Invoices generated through the GST system are not the same as e-invoicing, despite what the general public thinks. Instead, businesses create invoices using their own systems and forward them to a common e-invoice platform for validation. After an invoice is accepted, it is assigned a unique identification number by the Invoice Registration Portal (IRP). The data is automatically received by the GST and e-way bill websites, which reduces the possibility of human error and speeds reporting. This process enhances accuracy and efficiency in GST compliance.
How e-Invoicing Works?
In India, e-invoicing under GST is a simplified system where businesses generate invoices in a specific format and get them validated by the Invoice Registration Portal (IRP). Here's how it works-
This process ensures accuracy, reduces manual data entry errors, and simplifies GST return filing and e-way bill generation for Indian businesses.
What is e-invoicing under GST?
Businesses can still use their Enterprise Resource Planning (ERP) systems to create invoices among the new E-invoicing systems. However, ERP providers must make specific adjustments to their systems to match the standardised format required by the GSTN. This standardised format is important as it ensures all invoices follow a consistent structure, making the invoicing process more efficient and proper. Following this standard format benefits businesses by promoting an equal approach to invoicing, ensuring compatibility and easy interactions within the new e-invoicing system.
Benefits of the e-Invoicing System
For businesses, the e-invoicing system has several advantages. It minimises tax evasion through real-time data validation, expedites the submission of GST returns, and improves accuracy by decreasing manual mistakes. Furthermore, by automating the transfer of invoice data to the GST and e-way bill portals, the e-invoice portal streamlines the process and increases corporate efficiency and compliance. Here are the detailed benefits of the e-invoicing system.
Real-time Tracking of Invoices
One of the primary advantages of E-Invoicing lies in its ability to carry out real-time tracking of invoices. With suppliers generating invoices electronically, businesses can enjoy faster access to Input Tax Credit (ITC), enhancing financial easiness.
One-time Reporting of B2B Invoices
Under the e-invoicing system, businesses are required to report/ upload the B2B invoices into the Invoice Registration Portal (IRP). Once B2B invoices are uploaded into the IRP, they generate and assign a unique Invoice Reference Number (IRN) to each invoice and issue the e-invoices. These invoices are then transferred to the GSTR-1 return with automated details, simplifying the manual reporting procedure.
Easy Creation of e-Way Bill
The E-Invoicing system simplifies the generation of e-Way bills. Businesses can quickly generate e-Way bills by updating vehicle details, with Part-A details auto-populated from e-invoices authenticated on the GST portal.
Enhanced Buyer Interaction
Upon authentication, e-invoices are shared with buyers via email. This interaction not only aids buyers in purchasing orders with e-invoices but also allows real-time acceptance or rejection of invoices, showing a transparent and collaborative scene.
Fraud Reduction and Data Entry Accuracy
The real-time availability of data to tax authorities contributes to a reduction in fraud. Simultaneously, auto-populating invoices to the GST portal minimises the need for manual data entry during GST returns filing, consequently reducing data entry errors.
Interoperability
E-invoicing depends on interoperability, enabling invoices generated in a standardised format to be read by different software. This easy integration enhances operational efficiency and collaboration across diverse software platforms.
Curbing Tax Evasion
Real-time data access allows invoice manipulation, as invoices are generated before transactions. This, in turn, reduces the potential for fake GST invoices, ensuring only genuine Input Tax Credits can be claimed by customers. The readily available input and output of tax details help tax officials track and catch fraudulent activities effectively.
QR Code Integration
Including QR codes in e-invoices is a practical solution for instances where invoices may be misplaced or require additional copies. By scanning the QR code, businesses can easily generate the GST e-invoice multiple times in PDF format, with proper accessibility and convenience.
Time limit to generate e-Invoice
In India, businesses are required to generate an e-invoice on the Invoice Registration Portal (IRP) within 30 days from the date mentioned on the invoice, debit note, or credit note. This means that if an invoice is dated, for example, 2nd November 2023, it must be reported to the IRP by 1st December 2023. This 30-day timeframe is critical for ensuring compliance with GST regulations and avoiding potential penalties for late submission.
The e-invoicing system is designed to enhance efficiency and accuracy in the-invoicing process, reducing manual errors and streamlining GST reporting. By adhering to the prescribed time limits, businesses can ensure that their invoices are validated and reflected correctly in the GST returns. This timely submission also aids in the smoother processing of input tax credits and reduces the risk of discrepancies during audits. Keeping track of these deadlines is essential for maintaining good standing with GST compliance requirements.
How to Generate e Invoice?
The introduction of e-invoicing has transformed how businesses handle their invoicing procedures. Taxpayers will continue generating invoices in their own fashion, but with the transition to e-invoicing, the reporting aspect takes on a digital form. Here is a comprehensive guide on the mandatory and optional pointers that taxpayers need to follow while generating an e-invoice:
In addition to the mandatory rules, there are optional rules listed by the Council, which may evolve based on business needs. Once the invoice fields are finalised, taxpayers need to assess whether their accounting or billing software is there to generate a JSON (JavaScript Object Notation) file. Customers can upload JSON files to the Invoice Registration Portal (IRP).
Read Also: Eway Bill - What is Eway Bill? E Way Bill System
Conclusion
E-Invoicing is like a big upgrade for businesses dealing with GST. Managed by the Goods and Services Tax Network (GSTN), it's a new way of handling Business-to-Business (B2B) invoices by checking them digitally.
Even though businesses can still use their usual Enterprise Resource Planning (ERP) systems, they must match the standard format GSTN requires for smooth integration. For those looking to make the most of e-invoicing, AllPay e-invoicing by Kotak Mahindra Bank offers a robust solution. With features like custom branding, easy integration, various payment options, and a single dashboard to manage everything, businesses can simplify payments and make things better for customers.
Thus, e-invoicing is more than just following rules; it's a step toward a better, more efficient future for businesses in the GST system. Adapting to this digital change puts businesses ahead in modern financial practices, ensuring they stay flexible and competitive in today's swift-paced business setting.
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