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Understanding e-Invoices

The Indian government has declared that e-invoicing has become compulsory for certain categories of business from the beginning of April 2020. E-Invoicing in GST or electronic invoicing stands for a document containing the sum due for all goods and services in the business proceedings. The taxpayer has to generate the e-invoice and has to report to the GST system of the government and it will be considered as a mark of authentication for all B2B e-invoices by GSTN. In the recent changes made by the Indian government for the format of reporting e-invoices, a new portal has been introduced named IRP. IRP is the abbreviation for invoice registration portal and it is now being used to validate the uniqueness of every invoice that reaches the government.

What should the e-invoice contain?

  • A unique feature that every invoice must contain is the digital signature. Contrary to popular perception, the digital signature must not be confused with the signature of the taxpayer. An e-invoice can only be declared valid if there is a digital signature present in it, which is returned from the IRP.
  • Another important feature of the new format for generating e-invoice is that it must contain and unique invoice reference number (IRN) and will be assigned to individual invoices via the invoice registration portal or the IRP.
  • The QR code in the invoice should compulsorily be provided. The QR code is once again generated by the invoice registration portal and it might be used to scan and view the invoice at any point of time.
  • Some of the other mandatory fields that an invoice must contain are the invoice number, the buyer’s and seller’s GST identification number, their address, HSN code, tax scheme and the invoice date.

Why are e-Invoices advantageous to tax payers?

  • E-Invoices set certain uniformity in the standards of generating invoices all over India, independent of the software used by the buyer and supplier
  • The use of e-invoices will certainly reduce a large number of manual and transcriptional errors occurring at the time of entry
  • All the invoices will directly be reported to the invoice billing software automatically, reducing manual labor. The GST return will also get auto-populated by the GST portal
  • Continuous following of records arranged by the provider is empowered by E-Invoices
  • In reverse combination and automatic generation of the tax return filing – the applicable subtleties of the invoices would be auto-populated in the different returns, particularly for creating the section A of e-way charges

Final Note

The invoicing system applies to every GST registered person who has an annual turnover of more than a hundred crores rupees in a single financial year. Even then there remain some exceptions in this invoicing system. The SEZ (Special Economic Zones), financial institutes, insurance and banking agencies, services involving transportation and sale of movie tickets are some of the anomalies of the e-invoicing system. Inability to create IRN is viewed as a disappointment to generate an electronic invoice. Assuming an invoice isn’t enlisted on the IRP, such an invoice would not be treated as a legitimate tax invoice for all GST related issue and would henceforth draw in a punishment of rupees 10,000 for each example of resistance or non co-operation.

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