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Ever since the concept of e-invoicing was approved by the GST council, the buzz around e-invoicing has gained importance among the business community. The introduction of e-invoice was approved by GST council at its 37th meeting held in the month of September,2019 with the key objective to ensure inter-operability of e-invoices across the GST eco-system.
Invoice being a key document and e-invoicing being a reform related to it, it is super important for businesses to understand it fully and accordingly prepare towards to it.
In this article, let’s discuss and understand everything about e-invoicing under GST.
e-Invoice known as ‘Electronic invoicing’ is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.
Post successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by IRP. Along with IRN, each invoice is digitally signed and added with a QR code. This process is collectively called as e-invoicing under GST
Know more on IRN, Format and process to generate it.
In spite of invoices generated by each software looks more or less the same, the computer system can’t understand it, though the business users can understand them fully. For example, an invoice generated by accounting Software “A” cannot be read by a machine which is using “B” accounting software.
Today, there are hundreds of accounting/billing software which generates invoices and all of them have their own formats to store the information. Owing to this, the GST system can’t read and understand these invoices, although the information in the invoice remains the same.
To cut the long story short, today the same information is presented in different invoice format and there is no way a system can understand it.
Hence, a need was felt to standardize the format in which electronic data of an invoice will be shared with others to ensure there is interoperability of the data.
The basic aim behind the adoption of the e-invoice system is to pre-populate the returns and reduce the reconciliation challenges. This is achieved by the design of the IRP system which shares the invoice data to the GST system and e-way bill system. Thus, continuous uploading of invoice will ensure that most of the details required in returns as well in the e-way bill get auto-populated.
The following are some of the key benefits of e-invoicing:
To ensure that businesses get enough time to adapt to the new system of electronic invoicing, the GST Council has approved the introduction of e-invoicing in a phased manner.
Electronic Invoicing will be applicable to all the business who are registered under GST and issuing B2B invoices in phased manner as discussed above.
Under the concept of e-invoice, the seller has to electronically upload the invoice to the IRP system and capture the QR code and IRN (Invoice Reference Number) in the physical copy of the invoice issued to the recipient.
Following documents are covered under the concept of e-invoice. Meaning the creator of these document needs to upload it to the IRP system.
E-invoice is a system in which the invoice needs to be electronically uploaded and authenticated with a unique invoice reference number (IRN) and digitally singed QR code. The change is that the seller needs to print the QR code and IRN number on the invoice before issuing it to the buyer.
Businesses using ERP/ business management software that seamlessly connects with IRP system and automatically prints the QR code and IRN on the invoice will find it easy to manage e-invoice requirements without much changes to the business process.
Multiple modes will be made available so that the taxpayer can use the best mode based on his/her need. The following are different mode of generating e-Invoice?
Know more about e-Invoices in GST
How to Generate e-Invoice in GST, How to Transit to E-Invoice System, Invoice Reference Number (IRN), Who Should Issue an E-Invoice in GST, Working of E-Invoice System, Date of implementing e-invoicing in GST