News Flash: E Invoice

In the direction of making the E-Invoices compulsory for the trade as a whole, the Government has put the basic framework and format of the proposed E-Invoice in the public domain. The main objective of the entire exercise is of-course to curb the menace of fake invoices. We provide below the major highlights of E-Invoicing system:

Objective of introduction of E-Invoices

  • Standardisation and inter-operability of invoices across the software;
  • Pre-population of returns;
  • Reduce the reconciliation issues;
  • Complete trail of documents.

Interfaces in Generation of E-Invoice

Invoice Registration Portal (IRP)

·      Obtain E-Invoice JSON;

·      Generate hash (Invoice reference number IRN), signing digitally and Bar Code;

·      Send back to supplier;

·      Send to GSTN. E-Way Bill system and Buyer;

·      Store invoice for 24 Hrs

GST Network

·      Generate ANX-1 and ANX-2;

·      Prepopulate the returns;

·

Supplier End

·      Generate E-Invoice in prescribed format on its own accounting software;

·      Push the E-Invoice in JASON to IRP

 

Modes of Generation of E-Invoices

  • Option 1: Uploading E-Invoice JASON directly from accounting / billing software or ERP;
  • Option 2: Offline tool to key in data of the invoice. Offline tool will generate JSON for submission to IRP.

Obligation of Suppliers

  • Create the E-Invoice in the prescribed format. E-invoice will not be created at the GSTN end. At its option, supplier can generate hash tag (IRN) which will in turn be validated by IRP;
  • Maintain the IRN generated / validated by IRP against any E-Invoice. E-Invoice is invalid without IRN;
  • Print the invoice as usual and send to customer;
  • Optional to print QR code on the invoice.

 

 Format of IRN

IRN will comprise of:

  • GSTIN supplier;
  • Supplier invoice number; and
  • Financial year in format of YYYY-YY.

Mandatory Fields in an E-Invoice

  • IRN as generated / validated by the IRP;
  • Invoice Type: In terms terms of B2B, B2C, SEZ with or without payment of tax, Export with or without payment of tax, Deemed Exports, Sale from bonded warehouse etc.;
  • Whether reverse charge applicable or not;
  • Supplier information:
    • GSTIN;
    • Invoice no. and date;
  • Recipient information:
    • GSTIN;
    • State Code;
    • Place;
    • PinCode
  • Shipped to information:
    • GSTIN;
    • State Code;
    • Supply type;
    • Transaction mode
  • Item details:
    • Description;
    • Quantity;
    • Rate;
    • Discount;
    • Transaction value;
    • GST Rate and amount;
    • Invoice Value.

 

Comparison of Options

Based on the broad guidelines as provided under the FAQs, following are major factors distinguishing the options:

Particulars Option 1 Option 2
Uploading JSON of invoice to IRP ·   ERP or accounting software to directly upload the E-Invoice JSON;

·   IRP to provide the IRN in the E-Invoice and send to  supplier ERP, buyer and GSTN;

·   Supplier to provide the invoice copy of E-Invoice to buyer

·   Providing the invoice details in offline tool;

·   Offline tool to generate the E-invoice JSON to IRP;

·   IRP to provide the IRN in the E-Invoice and send to  supplier, buyer and GSTN;

·   Supplier to provide the invoice copy of E-Invoice to buyer

As seen from above both the options have merits and demerits in terms of finance structure in any organisation. In case of centralised accounts function wherein one person is handling both tax and accounting, probably Option 1 will make more sense as it will assist in auto-populating the details in the returns the moment the invoice is generated. Also, any corrections or amendments in the invoices will be taken care by the same persons who are responsible for invoice generation and tax compliances. On the other hand, in the case of decentralised finance function probably Option 2 will be better in terms of better visibility to compliance team in terms by way of data and return filings.

While both the options are aiming to provide the identical objective, this initiative will have far reaching consequences in terms of how the functions will be organised in any company and relevant services.

 

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