Avalara > Blog > Goods and Services Tax > E-invoicing in 3 Minutes

E-invoicing in 3 Minutes

  • Jun 2, 2020 | Divita S Gupta

In her second Budget presentation, Finance Minister, Nirmala Sitharaman stressed on introducing a robust infrastructure system to facilitate the easier and efficient filing of GST returns. One of the most significant moves under GST 2.0 is the introduction of e-invoicing for business to business transactions.

Here's everything you need to know about e-invoicing in under 3 minutes.

What is e-invoicing?

  • E-invoicing as a system will be the process of validating your invoice from a Government empanelled e-invoice portal.
  • E-invoicing does not mean the generation of invoices from a central portal of the tax department.

Is e-invoicing applicable to everyone?

  • From October 1, 2020, e-invoicing needs to be undertaken by registered taxpayers whose aggregate turnover in any financial year from FY 2017-18 exceeds Rs.500 crore in respect to the supply of B2B goods or services or both.
  • Businesses below the Rs.500 crore turnover can voluntarily opt to undertake e-invoicing - the process is currently open to businesses to try on a voluntary basis.

How does e-invoicing work?

  • The e-invoicing process starts with updating your current invoice format to the prescribed standardized invoice schema for invoice generation - your billing software provider will provide it to you in an updated software version.
  • Once you generate an invoice using the standardized e-invoice schema, you need to share the invoice with the Invoice Registration Portal (IRP) which will validate your invoice and generate your Invoice Registration Number (IRN).
  • There are multiple ways to upload your invoice data to IRP - 
  • The three parameters which will be used to generate an IRN (hash) are:
    • Supplier GSTIN
    • Supplier's invoice number
    • Financial year (YYYY-YY)
  • The IRP will check the hash from the Central Registry of the GST System to ensure that the same invoice from the same supplier pertaining to the same financial year is not being uploaded again.
  • Once validated, the IRP will add a digital signature and share the uploaded data with the GST and e-way bill system - this means no more multiple data entry.

What are the benefits of e-invoicing?

  • Freedom from multiple data entries and human errors once the taxpayer adopts e-invoicing as they will be required to report B2B invoice data just once. This will subsequently reduce reporting in multiple formats, i.e. one for GSTR-1 and another for e-way bills. But that's not all; the same data will be used while filing ANX-1 for sales, ANX-2 for purchase register and for filing new returns under GST.
  • Fewer disputes and faster reconciliation of issues around verification of input credit as data from the e-invoice will not only be reported to the tax department, and it will also be sent to the buyer in their purchase register, allowing them to accept or reject the data in time.

Is an e-invoice the only document required for filing GST returns?

No. Taxpayers will need to report the following documents to the GST system along with their e-invoice.

  • Invoice by Supplier
  • Credit Note by Supplier
  • Debit Note by Supplier
  • Any other document as required by law to be reported by the creator of the document

Looking for an e-invoicing solution? Get a demo of Avalara India GST e-Invoicing solution which can seamlessly and easily integrate with your system to generate e-invoices with IRN and QR code under GST compliance rules.

Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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