New GST invoicing rule,
e-invoicing, e-billing, ebilling
- Analysis of Changes in GST Invoicing System effective from 1st April 2020. This includes E-Invoicing, Inclusion of Quick Response Code, and Facility of Digital payments to recipients. This also has a direct implication on availment of ITC and filing of GST Returns. It is important for organizations to understand the same as all of the above would not only require. customization in their accounting/ ERP software but also require modification in the. process of generation of invoice. It does not mean generation, it just means the invoice is not issued in the manner specified in rule 48(4).Study of GST Invoicing Program improvements effective April 1st, 2020
- The Invoicing Framework is GST expected for a significant overhaul in the financial year ahead. This involves e-invoicing, including Quick Answer Code and a Digital payment facility for recipients. It is important for companies to realize the same thing as all of the above would require not only adjustment in their accounting / ERP software but also modification in the invoice generation process. This also has a direct impact on ITC supply and GST Returns filing.
- Let us examine each of them on the basis of the knowledge currently available:
- 1. E- Billing
- Judicial Decision:
- In accordance with Rule 48(4) of the CGST Rules, the invoice shall be prepared by the class of registered persons as may be notified by the Government on the advice of the Council by providing the information contained in the FORM GST INV-01 by uploading the information contained therein on the Common Goods and Services Tax Electronic Portal in such a manner and subjugation.
- The Defined Persons would therefore be needed to obtain an Invoice Reference Number (IRN) by uploading information filled out into the popular portal in Form GST INV-01.
- According to Rule 48(5) of the CGST Rules, any invoice given by a person to whom Rule 48(4) applies in any manner other than the manner stated in that subsection[i.e.]. Law 48(4)] shall not be called invoice].
- In compliance with Rule 48(6) of the CGST Laws, the provisions of Rule 48(1) and 48(2) shall not extend to an invoice prepared in the manner laid down in Rule 48(4). Thus, E-invoice in the case of products or duplicate in the case of services need not be prepared in triplicate.
- Mandatory e-invoicing where aggregate turnover exceeds Rs 100 crores w.e.f. 01-04-2020: In accordance with Notification No. 70/2019 – Central Tax dated 13-12-2019 with effect from 01-04-2020, the registered person whose aggregate turnover in the financial year exceeds Rs 100 crore rupees as a class of registered person who shall prepare the invoice in accordance with Rule 48(4) of those rules for the supply of goo rupees
- Notified E-Invoice Vide Scheme No. 02/2020 – Central Tax 1-01-2020: CBIC amended CGST Rules by notifying the E-Invoice Scheme in Form INV-01.
- E-Invoice Definition
- E-invoice does not mean issuing invoices from a central tax department site, because any such centralization would result in needless constraints on the manner in which trade is carried out. Taxpayers often have specific criteria and standards, which can not be met from one program that produces e-invoices from a database for the entire world.
- It was reported that the invoice generation process would remain the same for assessees (i.e. assessees will continue to generate their invoices through their current accounting software), and they would not be required to generate any invoices on the GST portal or any other portal.
- These produced invoices will therefore need to be submitted to the Invoice Registration Portal (IRP), which will then produce the Invoice Reference Number (IRN) and the Fast Answer code.
- This aspect will be allowed by accounting software vendors via an interface between the accounting software and the popular portals, and the assessee would only have to click a button to get the Invoice Reference Number (IRN) created from the Invoice Registration Portal (IRP). The generation of the IRN will thus be a faceless system, in which the assessee does not know the generation process but will be provided the desired output.
- E-invoice generation will be the responsibility of the taxpayer who will be expected to report the same to GST 's Invoice Registration Portal (IRP), which will in effect create a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also create a QR code. The QR Code will contain essential e-invoice parameters, and return the same to the taxpayer who first created the text. The IRP will also send the signed e-invoice on the e-mail given in the e-invoice, to the recipient of the document.
- Document form to report to GST framework
- As per GSTN's concept paper on e-invoicing method, although the word 'invoice' is used in the name of e-invoice, it includes certain documents that the author of the document would be expected to send to IRP:
- -- Manufacturer invoices
- -- Manufacturer credit notes
- -- Dealer debit notes
- -- Any other document to be submitted to the author of the document as required by law
- It should be noted that in the case of the procurement of goods or services, or both, Rule 48 of the CGST Rules deals with the way in which invoices are given. It does not deal with debit problem or credit notes. There has been no corresponding improvement in legislative provisions relating to the issue of debit or credit notes in respect of e-invoice issue. The definition note also uses the word 'invoice' for invoice, credit note and debit note.
- In addition, as set out in paragraph 2(66) of the CGST Act, "invoice" or "tax invoice" means the tax invoice referred to in section 31. The definition notice therefore refers to the term E-invoice and for every other document as needed by law to be registered by the document author. Therefore, it can be argued that licensed individuals supplying exempted goods may also issue e-invoices for Bill of Supply in the event of supply of exempted goods or services, or both. No corresponding amendments have been made to the legal regulations concerning Bill of Supply. Consequently, the issue needs more clarification from the Government.
- It appears that there is an agreement that all documentation produced by the supplier in relation to the B2B transaction should be through E-invoice. However in statute it would need further change.
- E-Invoicing Process
- The e-invoice program introduced worldwide by tax departments is composed of two
- Key pieces, namely,
- (A) Invoice generation in standard format so that the invoice created on one system can be read from another system.
- B) e-invoice reporting to the central system;
- The basic goal behind the adoption by tax departments of the e-invoice system is the ability to pre-populate the return and the the problems of reconciliation. This journey has been made possible by a substantial increase in technological maturity, increased internet penetration along with the availability of computer systems at affordable cost and thus more than 60 countries are in the process of implementing the e-invoice.
- The e-invoice generation flow, registration, and confirmation receipt can logically be divided into two major parts;
- PART A: The first part is the contact between the Client (invoice supplier) and the Invoice Registration System (IRP).
- PART B: The second aspect is the relationship between the IRP and the Customer and the GST / E-Way billing systems.
- This includes taking next steps;
- Phase 1: is the seller's invoice generation within its own accounting or billing method. The invoice must be in compliance with the published e-invoice scheme (standards) and have the necessary criteria. The optional criteria that be based upon the supplier's business needs. The supplier's program (seller's) should be able to produce a JSON of the final invoice ready for upload to the IRP. The IRP takes e-invoice only from JSON.
- Stage 2: This involves generating the unique Reference Number of Invoices (IRN). This is a facilities move. This may also be created by the seller and uploaded along with invoice details. The three parameters to produce an IRN (hash) are:
- i. GSTIN Source,
- ii . ii. Item number of the manufacturer and,
- And iii. Year for Finance (YYYY-YY).
- Phase 3: is to upload the e-invoice JSON (if produced, along with the hash) into the seller's IRP. The JSON can be submitted directly to the IRP or through GSPs, or via Apps provided by third parties.
- Step 4: If submitted by the Supplier, the IRP will also produce the hash and verify the hash of the uploaded data. The IRP will test the hash from the GST Device Central Registry to ensure that the same supplier invoice belonging to the same Fin Year is not uploaded again. IRP will add its signature on the Invoice Data as well as a QR code to JSON upon receipt of confirmation from Central Registry. The QR code will include seller and buyer GSTIN, invoice number, date of invoice, number of line products, major product HSN included in the invoice as per value, hash etc.
- Phase 5: Exchanging uploaded data with both the GST and the e-way billing system. This refers to following
- · Exchange the signed e-invoice data with the IRN (the same as the IRP returned to the seller) to the GST and the E-Way Bill Program.
- · The GST program updates the seller's ANX-1 and the buyer's ANX-2 which in effect decides liability and ITC.
- • Part-A of the e-way bill will be generated using this data to which only vehicle number would have to be added in Part-B of the e-way bill.
- Move 6: will require the return to the seller of the digitally signed JSON with IRN, along with a QR file. The registered invoice will also be sent as given in the invoice, to the seller and buyer on their mail ids.
- Make an E-Invoice
- Modes to get registered invoice: Several modes will be made available to allow taxpayers to choose the right mode depending on their needs. At this point, the following modes are envisaged under the proposed e-invoice framework, through the IRP (Invoice Registration Portal):
- a. On the Internet,
- b. Easy API,
- c. Easy SMS,
- d. Mobile mobile app,
- e. Offline method, and
- f. Basic GSP.
- API mode: Major taxpayers and accounting service providers can use API mode to communicate with the
- API mode: The large tax payers and accounting software providers can interface their systems using API mode and pull the IRN after passing the necessary invoice details in JSON format. To create an IRN, the API request will process one invoice request at the time. Also, this mode will be used for the bulk requirement (user can pass the request one by one and get the IRN response within fraction of a second). Same approach is supported by the e-way bill program.
- FAQ as GSTN provides on E-Invoice
- Generic e-Fact Questions
- Q 1. Q. Do companies now have to create e-invoices on the GST portal or on the e-invoice portal or the IRN portal?
- Answer. a. No. No.
- b. Businesses must continue to produce e-invoices on their internal systems-whether ERP or their accounting / billing systems or some other program.
- c. Only the invoice scheme and standard are defined by the e-invoicing system to be interoperable among all accounting / billing software and businesses.
- Q 2. Q. Please explain if the new e-invoice scheme is for Govt to issue the invoice or has the taxpayer to keep it in the IT system?
- Answer. a. The invoice scheme must be retained, and the taxpayer himself must produce invoices using this schema.
- b. The GST portal or Invoice Registration Portal (IRP) does NOT have invoice generation facility. IRP is for collecting data on invoices only.
- c. Only invoices are created by the ERP or accounting billing program, or some other program method to produce the seller's e-invoice.
- Q 3. Q. Do Retailers, Medical Stores, Practitioners and Contractors need different invoice formats?
- Answer. a. No. No.
- b. All types of companies must use the same e-invoice schema. The schema has compulsory and non-commanding areas. Both taxpayers have to fill out compulsory sector. The non-obligatory area of choice is for the business. It covers most of all business needs, and different business sectors that choose to use certain non-obligatory fields they or their eco-system need.
- Q 4. Q. How long will the produced e-invoice be available on the Government portal?
- Answer. a. Again it is explained that the e-invoice on the GST portal will not be created.
- b. Only on the seller's system can it be produced – whether ERP or the seller 's accounting / billing system / other software tools.
- c. Only after it has been checked and registered by the invoice registration program can it be entered into the GST ANX-1.
- d. It will be accessible to the counter party in his ANX 2 after it has been checked and is usable in the ANX-1.
- e. It will then be accessible and available, and archived for the entire financial year.
- f. As for IRP info, it will only be held there for 24 hours.
- Q 5. Q. While all companies simultaneously produce invoice, how does the server react?
- Answer. a. The companies must produce the invoice on their network and thus will not influence the IRP servers.
- b. The system 's ability at IRP is designed to handle the expected simultaneous upload loads based on data recorded in GSTR1 over the past two years.
- c. Multiple registrars of invoices will then be made available who will be able to allocate the load for registration of invoices.
- Q 6. Q. Is it possible to auto populate e-invoice fields based on entered credentials? This way, errors in data entry can be minimised.
- Answer. This can be incorporated into the seller's ERP or invoicing method, as the invoice generation is to occur at the business end. This facility is provided by most such software in the name of item master, supplier master, buyer master etc.
- Q 7. Q. Would it also be appropriate to add information about the transporter?
- Answer. a. No. No.
- b. The information of the transporter need to be entered in the E-Way billing system.
- E-Invoice Material
- Q 1. Q. Today there are some areas that are optional and some obligatory. How is it to use these?
- Answer. a. For an invoice to be valid under e-Invoice Standard, the required fields are those which MUST be there.
- b. The optional ones are the ones which might be appropriate for the seller / business' unique business needs. Based on existing market practices in India, these were integrated into the schema.
- c. It would only be possible to file an e-invoice once it has ALL the necessary fields submitted to the Invoice Registration Portal (IRP).
- d. A compulsory area with no interest can be stated using Zero.
- Q 2. Q. What is e-invoice approved maximum number of line items?
- Answer. a. Per e-invoice the maximum number of line items is 100.
- Q 3. Q. Does the e-invoice scheme provide the maximum duration of the different fields in the schema?
- Answer. a. Eh.
- b. -- field specification has been given the type of characters to be entered, as well as their length.
- Q 4. Q. What is the threshold condition for the applicability of E-Invoicing?
- Answer. a. That will be informed at the time of rollout by the Government.
- b. The rollout of the e-invoice system will be in phases as already described above.
- Q 5. Q. Would there be columns on the e-invoice to display invoice currency?
- Answer. a. Yeah, the seller will have the currency displayed. Default is INR.
- Q 6. Q. How to catch the IRN in the Supplier's ERP?
- Answer. a. GST Framework will create the IRN (hash) using supplier or document creator GSTIN, financial year, and specific contract / invoice serial number. The seller will produce the IRN, too.
- b. For a Financial Year, the serial number of invoices would be unique to a GSTIN and the same must be registered by the ERP of Supplier.
- c. Supplier would have to hold the IRN against each of their invoices. It is best to hold the same in the ERP as invoice would not be a legal document without IRN.
- Q 7. Q. Whether the produced e-invoice will also need the taxpayer to sign again?
- Answer. a. Not obligatory. But if a signed e-invoice is sent to IRP, it must accept the same.
- b. After authentication the e-invoice will be signed digitally by the IRP. The e-invoice signed along with QR code will be exchanged with the document author as well as the receiver.
- c. If it is signed, no-one else would need to sign it.
- Q 8. Q. That the facility at line item-level to add discount sum will be compulsory in nature?
- Answer. a. The e-invoice contains a provision to catch discount at line item level.
- b. Discounting at line item level is to be discussed only when and where necessary in the transaction in question.
- Q 9. Q. Can the seller insert their logo in the prototype for the e-invoice?
- Answer. a. There will be NO placeholder given for the company logo in the e-invoice schema.
- b. In the billing / accounting process that is for the software provider to have so that it can be printed on the invoice using its printer. But the logo won't be submitted to IRP. In other words, the uploading to the IRP will not be part of JSON format.
- Q 10. Q. A space should be given for placement of the QR code.
- Answer. a. If the invoice is entered into the Invoice Registration system, the QR code will be given to the seller and the same is recorded there.
- b. Seller the print the same on Invoice, at his choice.
- Q 11. Q. Will we be able to provide information on the e-invoice about the address and the bill-to-party and PAN?
- Answer. A. Well.
- b. All those information can be given in the placeholders specified in the schema.
- Q 12. Q. Will the supplier be permitted to issue his own invoice and, if so, would the amount of the invoice and the IRN be required?
- Answer. a. Yes, the supplier must issue the invoice in his own method, in the published standard e-invoice schema. The invoice number is a compulsory element for GST, and thus for e-invoice.
- b. IRN (Hash) may be issued upon positive submission of the e-invoice to the IRP. E-Invoice is only true when it has IRN.
- Q 13. That is, Q 13. The present e-invoice design provides for all goods or services with absolute discount. Can the e-invoice make that possible?
- Answer. a. Eh.
- b. There is a system and placeholders for offering element level discounts as well as overall discounts on the invoice amount.
- Q 14. Q. Will there be an choice for linking several debit/ credit note invoices?
- Answer. a. Yeah, the credit / debit notes will be allowed to be connected as previously.
- Q 15. Q. Will the e-invoice system allow for reverse charging?
- Answer. A. Well.
- b. E-invoice framework also has a monitoring feature for the reverse payment.
- E-Invoice reporting method to GST system
- Q 1. Q. In addition to the above, we understand that electronic invoice will be authenticated and IRN allocated for each created e-invoice that will be uploaded to GST portal.
- Answer. a. Yeah, the IRP's digital signature (Invoice Registration Portal) authenticates the e-invoice.
- b. The hash generated by the IRP will be IRN (Invoice Reference Number)
- c. The registered invoice is valid for commercial use.
- Q 2. Q. Will the bulk uploading of e-invoicing invoices be possible as well?
- Answer. a. Please send invoices to IRP one at a time.
- b. The IRP should be able to manage and verify a broad sequence of recorded invoices. Essentially large taxpayers that produce large quantities of invoices would require bulk upload. Their ERP or accounting system would need to be structured in such a way that requests are made one by one. That won't make any difference for the customer.
- Q 3. Q. Will the supplier 's requirement for the authentication of these invoices using a digital signature / signature be eliminated?
- Answer. a. The seller would need to upload the e-invoice into the database for registration of invoices.
- b. Signing by seller of e-invoice is not necessary.
- Q 4. Q. Should there be a time limit for registration e-invoice uploads?
- Answer. a. Yeah, the Government must inform that. If e-invoice is not registered the same will not be valid. It will make the necessary amendments in the law.
- b. When submitted to the registration system for invoices (IRP), it will be registered in real-time instantly.
- Q 5. Q. Will it be possible to download and/or save on handheld devices invoices that are registered on the invoice registration system / portal?
- Answer. a. Eh.
- b. After the invoice is processed, the IRP program will send back digitally signed e-invoice for the supplier's record. It will also be forwarded to the recipient's email address given in the e-invoice.
- Q 6. Q. Will the e-invoice be available to print?
- Answer. a. Eh.
- b. Both the seller and the buyer will be able to print the invoice, using the QR code and signed e-invoice returned by the Invoice Registration Portal (IRP).
- Change / cancelation of e-invoices
- Q 1. Q. Whether it is possible to partially / fully cancel e-invoices created via GST system?
- Answer. a. Can not partly cancel e-invoice. It has to be scrapped entirely.
- b. The e-invoice system allows for the cancelation of invoices. Reporting this to IRN within 24 hours. Any cancelation after 24hrs may not be possible on IRN, but before filing the returns one may manually cancel the same on GST portal.
- Q 2. Q. How will e-invoice revisions be allowed?
- Answer. a. Changes to e-invoices are required on the GST platform in compliance with GST legislation. All e-invoice modifications can only be performed on the GST server.
- Link to e-way bill
- Q 1.With the advent of e-invoices, what documents are required to carry during the transit of the goods?
- Answer. a. As before, the e-way bill will continue to be compulsory for the shipment of goods, based on rules for the value of invoices. When this process is notified this feature will be notified by the Government.
- Export / Importation
- Q 1. Q. Please explain if e-invoice enforcement will be needed for exports.
- Answer. a. Eh.
- b. Even the e-invoice model allows for export invoices. The e-invoice schema is based on the most general format, which will support the e-invoice interpreted by the buyer's framework.
- Q 2. Q. Does the e-invoice enable for export invoice declaration / zero rating supplies?
- Answer. a. Eh.
- b. It makes export invoice declarations / zero rating supplies.
- Additional
- Q 1. Q. What would the End-to - End e-Invoice process be?
- Answer. a. The end to end process will be given by the e-invoice system at the time of deployment.
- Q 2. Q. Will the industry be given enough time to prepare for this?
- Answer. a. Eh.
- b. The e-invoice system is scheduled to be voluntarily rolled out in stages from 1 January 2020.
- c. The e-invoice process would initially be permitted to taxpayers above a certain turnover or above a certain invoice value or to volunteers, too.
- d. It will then be allowed in a staggered, step-wise manner for all tax payers.
- e. Details of these are to be published later.
- 2. Fast Response Code- QR Code
- Judicial Ruling
- Pursuant to the sixth provision of Rule 46 of the CGST Rules, the Government may, by notification, decide, on the Council 's recommendations and subject to the conditions and restrictions stated therein, that the Quick Response ( QR) code shall be used for the tax invoice.
- In this respect, the CBIC released Notification No. 72/2019-Central Tax dated 13-12-2019. According to the Notification with effect from 01-04-2020, an invoice issued to an unregistered individual (hereinafter referred to as B2C invoice) by a registered person, whose aggregate turnover in a financial year exceeds INR 500 Cr, shall have the Fast Answer (QR) code. Furthermore, if any registered person makes a Dynamic Quick Response ( QR) code accessible to the receiver via a digital display, such a B2C invoice shall be considered to have a Quick Response ( QR ) code provided by that registered person containing a cross-reference of the payment.
- For companies with aggregate turnover above INR 500 cr, QR Code would also be compulsory for all B2C Supplies. This provides supplies to workers including Canteen and other recuperations.
- 3. Facility to pay the Receiver directly
- Vide Finance (No. 2) Act,2019 w.e.f. 01-01-2020 was incorporated into Section 31A. According to section 31A, the Government may, on the advice of the Council, prescribe a class of registered persons who provide specified methods of electronic payment to the recipient of the supply of goods or services or both made by the recipient and provide that recipient with the option of making payment accordingly, in the manner and subject to the conditions and restrictions that may be specified.
- Recommendation by Author
- It is recommended that all companies with aggregate turnover in excess of INR 100 cr should configure their systems to allow e-invoicing together with QR code. This will become compulsory from 1st April 2020 for all B2B transactions. The invoice will therefore only be true invoice if it has the Invoice reference number listed in it. Since E-invoice data will be used to produce Part A of E-way billing, it is critical that the entities' invoicing systems are completely configured to handle the workload at all times.
- Multiple Invoice Registration Portals (IRPs) have been approved by the Government to promote and handle the workload. But their exact efficiency can only be measured when the program is up and running.
- As this data directly feeds seller's GST ANX-1 (Statement of Outward Supplies) and buyer's GST ANX-2 (Virtual Purchasing Register or GSTR-2A), it will help to reconcile both.
- The operational problem faced by the organizations that can not cancel E-invoice after their generation lasts 24 hours. So if any invoice needs cancelation or alteration, this can only be accomplished by raising a debit or credit note.
- From the point of view of the agency, this will significantly reduce the problem of Bogus invoicing which is one of the government's core concerns.
- Similarly, the provision of QR code and Digital payment facility for B2C payments that bring great efficiency to retail and e-commerce businesses.