India e-invoice

The Indian authority overseeing Goods and Services Tax (GST) regime, the GST Council, launched electronic invoicing for B2B transactions from 1 October 2020. This includes pre-clearance of sales invoices by the tax authorities with a unique digital reference, and upload of the invoice to a central clearing system prior to issuance to the customer by the tax authorities.  The objective is to prevent invoice fraud and enable the government to produce draft GST returns.

The Indian e-invoice implementation timetable is as follows:

  • 1 October 2020: annual sales threshold for the obligation is Rs 500 Crore
  • 1 January 2021: annual sales threshold for the obligation is Rs 100 Crore
  • 1 April 2021: all businesses

India also plans to replace the e-way bill platform with the Invoice Registration Portal, used for e-invoices.

The Indian e-invoicing system can also eventually dispense with the present system of filing GST returns for smaller businesses and MSMEs because e-invoice will pre- populate their returns and they have to simply pay the taxes. The returns will be automatically generated for all supplies for which e-invoice have been issued.

The initial launch was voluntary at the start of 2020, with incentives to adopt the new digital reporting system, including elimination of the obligation to issue E-Way Bills where the transaction includes an intra-state movement of goods. GST returns will also be pre-completed by the tax authorities based on submitted e-invoice.

Invoice creation via PEPPOL standard

Vendors must first raise an invoice and which is limited to 100 items per invoice. Credit and debit notes must also be processed through the system. The invoice is based on an agreed schema. Export invoices are included within the new schema. India adopted the Pan European Public Procurement Online (PEPPOL) standard. PEPPOL enables trading partners to exchange standards-based electronic documents over the PEPPOL network (based on a 4-corner model). These documents include e-Orders, e-Advance Shipping Notes, e-Invoices, e-Catalogues, Message Level Responses, etc. The use of PEPPOL is governed by a multi-lateral agreement structure which is owned and maintained by OpenPEPPOL.

Unique Invoice Reference Number

Initial requirements include the creation of a unique Invoice Reference Number (IRN) for each invoice. This will be generated by application to the Goods and Services Tax Network (GSTN), the software portal which administers the GST reporting regime, and Invoice Registration Portal (IRP) which is the e-invoice clearing system. This is done via a JSON file. There is likely to be several routes to obtain the IRN via GSTN, including manual upload of draft invoices; via phone SMS; directly from ERPs; or via specialist outsourcing e-invoice providers.

The invoice and attached IRN will be submitted to the IRP clearing platform in real-time. This will be based on the existing E-Way Bill infrastructure. The clearing platform will validate the IRN and create an approved e-invoice with a digital signature. It creates a QR code in Output JSON for the supplier. 

Pre-completed VAT return

Approved e-invoices will then be available to the customer and vendor on the GSTN or from approved e-invoice providers. In printed or PDF form, this will include a QR code. The IRP sends the approved invoices to GST portal and GST returns. The GSTN will therefore be able to produce draft, pre-completed periodic VAT returns for taxpayers - promised sometime in the next year.

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