If you have a Sales tax registered business in India then you have to provide GST invoices to your customers for the sale of services or goods.
Starting October 1, 2020, the country will move from voluntary to mandatory e-invoicing- the rollout is phased.
There is no specific format for an invoice, however, the invoice must have the following mandatory fields.
- Invoice Contents
- Time for Issuing an Invoice
- Type of Invoices
- E-invoicing in India
- Advantages of Electronic Invoicing in India
- Frequently Asked Questions – E-Invoicing in India
1) Name of the supplier
2) Address of the supplier
3) GSTIN of the supplier
4) Tax invoice number ( each invoice must have a unique serial number for that financial year)
5) Date of issue
6) If the buyer is registered with the sales tax then the name, address, and GSTIN of the buyer must be mentioned.
7) if the buyer is not registered with the sales tax and the value of the invoice is more than INR. 50,000/- then the sales tax invoice should carry the following details:
- Name of the buyer
- Address of the buyer
- Delivery address
- State name and state code
8) HSN code of goods / SAC code of services
- If the turnover is less than 1.5 crores HSN code is not required.
- If the turnover is greater than 1.5 crores but less than 5 crores – then 2 digit HSN code is required.
- If the turnover is greater than 5 crores – then 4 digit HSN code is required.
9) Quantity of the goods/unit of the goods (meter, liter, kilogram, etc)
10) Description of goods or services
11) The net value of goods or services
12) The taxable value of goods or services
13) GST rate applied by CGST, SGST and IGST
14) Signature of the supplier or his/her authorized representative
Time for Issuing an Invoice
The time to issue the invoice is as follows:
- In the case of goods, an invoice is issued at the time of the supply of goods or before or after the delivery.
- In the case of services, an invoice is issued within 30 days of the supply.
Type of Invoices
Bill of Supply
A bill of supply is a tax-free invoice. A GST registered person can issue such an invoice if he/she is selling services or goods that are exempted from GST. In such cases, the seller has no right to charge GST to the purchaser.
Invoice-cum-bill of supply
This type of invoice can be issued if a GST registered person is selling both exempt and taxable goods or services.
If the seller is not registered with GST and the net amount of various invoices is less than INR 200, then the seller can issue such an invoice.
Manner of Issuing Invoice
The Indian sales tax Law demands businesses to keep copies of all of their invoices and all these details should be retained for six years.
Invoices for Supply of Goods
For the supply of goods, three copies of invoices need to be issued:
- Original Copy for the recipient
- Duplicate Copy for the Transporter
- Triplicate Copy for the supplier
Invoices for Supply of Services
For the supply of services, two copies of invoices need to be issued:
- Original Copy for the recipient
- Duplicate Copy for the supplier
E-invoicing in India
E-invoicing in India becomes mandatory on October 1, 2020. Up until then, registered businesses have had to voluntarily choose to submit their invoices electronically. With the changes expected, businesses have no option but to adjust to the requirements of electronic invoicing.
India’s Goods and Services Tax Council (GSTC) elected against switching to the Peppol-model of e-invoicing that is used as the international standard. Taxpayers are instead asked to create e-invoices using individual accounting systems.
Requirements of e-invoicing in India
The e-invoicing system comes with new requirements and processes, which means that companies need to familiarize themselves with e-invoice solutions moving forward.
- The e-invoice must be in JSON format.
- The document must be submitted to the Invoice Registration Portal (IRP) for validation.
- Each invoice must have a unique Invoice Reference Number (IRN).
NOTE: invoices that do not have an IRN number will be invalid.
Businesses can add an e-signature to the invoice, although this is not a mandatory requirement.
Validation of e-invoices
Taxpayers submit their invoices electronically to the IRP system. The e-document is subjected to an automated check for validation. Here is what the e-document must have to be assigned the unique IRN:
- Mandatory fields duly filled with the correct data
- The supplier’s Goods and Services Tax Identification Number (GSTIN) must be valid
- The buyer’s GSTIN must be valid
- A valid invoice number
- The correct financial year
Additionally, the invoice should not be a duplicate of what is available in the GST system.
Once validated, the invoice is digitally signed with the IRP system allocating each unique invoice a number. The taxpayer gets the IRN and the customer an approved invoice.
The portal also generates a QR code and sends it to the taxpayer and their customer. The QR code captures details of the invoice and parties can use it to authenticate the e-invoice.
Both the supplier and the buyer can then access the e-invoice from the GST portal.
Where the invoice is deemed invalid, the system generates an error message that is sent to the supplier detailing the areas or reasons for such a response.
It takes about 24 hours for the IRP system to relay the e-signed invoice to the GST Network. The same e-document is uploaded to the e-waybill system for access by relevant parties.
Advantages of Electronic Invoicing in India
- Reduced costs of doing business
- Reduces cases of fraud and errors during generation of invoices
- Real-time tracking of invoices makes verification of sales taxes easier.
- Reduces the time the clients take to pay due to the real-time reception of invoices.
Frequently Asked Questions – E-Invoicing in India
What do you need to issue an e-Invoice?
For one to issue an e-invoice they must be registered on the GST portal and have an e-invoice or e-way bill account. One must also have a valid GSTIN identifier. Finally, one must configure their systems to ensure they are to communicate with the government digital platform.
Can one cancel an e-invoice?
Yes, you can cancel a generated invoice. However, you can only cancel wholly, instead of partially. You can report a canceled invoice remotely to the IRN, within a 24-hour period. However, after 24 hours, you can only cancel e-invoice using the GST portal manually.
Who is exempted from issuing e-invoices?
As per the GST notification No. 13/2020 – Central Tax that published on March 21, 2020, the following persons, or organizations are exempted from issuing e-invoices.
- Insurance companies
- Financial Institutions
- Insurance companies
- Non-Banking Financial Companies
- Providers of Passenger transportation services
- Goods Transporting Agencies
- Special Economic Zone (SEZ) units
What are the documents required when reporting e-invoices into the IRP?
Taxpayers when reporting e-invoices into the IRP system require the following documents:
- Supplier’s invoices
- Credit and Debit Notes
- Any other documents as required by GST law
What are the supported modes of getting e-invoice in the IRP?
When creating an e-invoice one can use the following supported modes:
- Using an offline tool for bulk generation
- Using a mobile app
- SMS based integration
- Using GST Suvidha Provider (GSP based)
- API based integration
Does the IRP support generation of multiple or bulk invoices?
Yes, the IRP supports bulky generation of e-invoices. That is you can upload multiple invoices at once. However, to generate the invoice softcopies, you need to use a spreadsheet tool. Such a tool can help you to get invoice data from the customer’s ERP software.
You can then convert the invoices to a JSON format before you upload them to IRP for authentication and generation of IRN.
What is the difference between Invoice number and Invoice Reference Number (IRN)?
An invoice number is a unique sequential number, assigned to an invoice by the supplier of goods and services. The IRN is assigned by the IRP, upon successful submission of an invoice.