In recent years, India has attempted to implement digital payment systems to simplify tax collection and deduction. The implementation of the e-invoice under the GST regime would assist the country in ushering in a digital era by transitioning away from traditional pen-and-paper processes. The GST e-invoice system assists businesses in saving time and money while increasing efficiency.
Furthermore, e-invoicing in GST will help to reduce the total compliance load. It reduces information duplication and transfers from one system to another. You may undoubtedly profit from the GST portal’s e-invoicing mechanism.
What Exactly Is the GST e-Invoicing System?
The GST e-invoice system is a digitization initiative designed to make it simpler for businesses to maintain tax compliance. The system allows field auto-population, which reduces duplication of effort and saves time. For invoices created for a GSTN, the GST e-invoice option will generate an Invoice Reference Number.
Following that, the system will utilize this information to auto-populate many systems, including GST refund and return forms and eWay invoices. As a consequence, the GST e-invoice function will make doing business easier by lowering the compliance burden.
Implementation of GST e-Invoicing
The idea for introducing a GST e-invoice system was addressed during the 35th GST Council Meeting in June 2019. At the meeting, authorities resolved to start a trial program to allow online B2B e-invoice creation by January 2020. However, due to several problems, the GST e-invoice implementation date has been pushed back.
The third phase of the e-Invoice was introduced on April 1, 2021, and would apply to firms having an annual turnover of 50 crores or more in the previous financial year.
The Advantages of Using an E-Invoice in GST
- Support the change of taxation by establishing a standard for invoicing.
- Ensure that invoice creation and submission are consistent across GST systems.
- Increase efficiency by enabling cross-platform compatibility.
- Removes the requirement for redundant data transmission and re-entry.
- Aids in the smooth flow and processing of input tax credits.
- Eliminates the need to compile invoices, making it easier to do business.
- Businesses’ compliance burden is reduced.
The GST Portal’s e-Invoice System Features
The GST e-invoice system will allow taxpayers to create an Invoice Reference Number for each invoice. This unique ID is then referenced by taxpayers on every invoice sent. The Invoice Reference Number (IRN) is a 64-character long unique ID for all invoices created. For each successful e-invoice upload, the GST Invoice Registration site will generate such a number. To comply with rules, all registered suppliers and dealers must provide the IRN on their invoices. According to the GST Council, there would be no standard format for e-invoices. The most notable difference is that the GST e-invoice system now supports a continuous flow of data. The new regime, according to the legislation, would make it easier to send electronic data to the GSTN invoicing site.
When an invoice is successfully submitted, the system generates an IRN and a QR code. Suppliers must guarantee that this QR code is printed on their invoice. As a result, providers can continue to use their existing billing techniques to generate GST-compliant invoices. The GST e-Invoice system’s QR code will include the following information:
- GSTIN of both the supplier and recipient
- Invoice number, date, and value
- Number of items
- The highest-valued item’s HSN code
- Invoice Reference Number (IRN)
The Invoice Registration Portal will aid in the issuance of IRNs. The government has designated the NIC as India’s first IRP. As the user base grows, the government will construct more IRPs to improve the distributed architecture’s efficiency.
How to Create an e-Invoice Using the GST Portal
- To begin, dealers and sellers must generate an invoice using their accounting or billing software. They must ensure that the invoice created adheres to all of the government’s invoicing criteria.
- Following that, taxpayers must submit the JSON-formatted invoice to the GST Invoice Registration Portal.
- Individuals can use APIs and other offline tools to send invoices in the specified JSON format to the portal.
- The system will next go over the submitted invoice to verify there are no duplicates or other mistakes. Once confirmed, the IRP system will append a digital signature to the invoice, as well as produce an IRN and QR code.
- The gateway will then transmit the digitally signed invoice to the seller together with an IRN, converting it into a legitimate GST e-invoice. Also, the GST e-invoice system will send the information out from the signed invoice to the eWay portal and GSTN system.
Summary:
GST e-invoice system is a digitization initiative designed to make it simpler for businesses to maintain tax compliance. The system allows field auto-population, which reduces duplication of effort and saves time. The third phase of the e-Invoice was introduced on April 1, 2021, and would apply to firms having an annual turnover of 50 crores or more in the previous financial year. GST e-invoice system’s QR code will include the following information: Invoice number, date, and value, HSN code of item with the highest value, Invoice Reference Number (IRN) The government has designated the NIC as India’s first IRP. As the user base grows, the government will construct more IRPs to improve the distributed architecture’s efficiency. This means providers can continue to use existing billing techniques to generate GST-compliant invoices.
