e-Invoicing
Basics and applicability of
e-Invoicing
Get a basic overview to educate your team
WHITE PAPER
Table of contents
What is e-Invoicing?............................................................................................................................................................... 3
Applicability of e-Invoicing ................................................................................................................................................... 4
Benefits of e-Invoicing ........................................................................................................................................................... 5
e-Invoice format and schema explained ............................................................................................................................ 6
Purpose of standard e-Invoice format ......................................................................................................................... 6
Introduction of the e-Invoice format ............................................................................................................................ 6
Overview of the Contents of e-Invoice Schema ........................................................................................................ 7
IRN is mandatory in e-Invoice ....................................................................................................................................... 7
Mandatory and Optional Fields in an e-Invoice schema ............................................................................................... 8
Summary of CBIC notifications ........................................................................................................................................... 9
ClearTax's e-Invoicing solution for a smooth transition ..............................................................................................11
Annexure ................................................................................................................................................................................12
Basics and applicability of e-Invoicing
2
What is e-Invoicing?
‘E-Invoicing’ or ‘electronic invoicing’ is a system where B2B invoices are authenticated electronically by
the Goods and Services Tax Network (GSTN), for further use on the common GST portal. It is a new
reform introduced to bring about standardisation and uniformity in invoicing formats.
At present, businesses generate their invoices through different accounting and billing software, and
then manually upload this data on the GST portal. E-invoicing will enable the automatic transmission of
invoices across the GSTN, allow e-way bills to be generated simultaneously, and facilitate the universal
readability and interoperability of data.
Under the new system, invoices will continue to be issued on the taxpayer’s own accounting or ERP
system. Once the invoice is generated, the JSON file of the invoice will need to be uploaded onto the
Invoice Registration Portal (IRP). The IRP will then generate an Invoice Reference Number (IRN), and
return the digitally-signed e-invoice, along with a Quick Response (QR) Code, back to the taxpayer. The
taxpayer can then send this e-invoice to the buyer. On the other hand, the invoice data will be transferred
from the IRP to both the GST portal and the e-way bill portal in real-time.
Basics and applicability of e-Invoicing
3
Applicability of e-Invoicing?
The Central Board of Indirect Taxes and Customs (CBIC) notified that e-invoicing will be applicable
to all businesses with a turnover exceeding Rs. 500 crore, from 1st October 2020. The government has
now planned to extend the applicability to businesses with a turnover exceeding Rs.100 crore from 1st
January 2021.
However, there are certain exemptions. E-Invoicing will not be applicable to the following categories of
registered persons:
•
An insurance or banking company or financial institution, including an NBFC
•
A Goods Transport Agency (GTA)
•
A registered person supplying passenger transportation services
•
A registered person supplying services by way of admission to an exhibition of
cinematographic films in multiplex services
•
An SEZ unit (excluded via N/no. 61/2020)
Basics and applicability of e-Invoicing
4
Benefits of e-Invoicing
Eases the data reconciliation process
Enables interoperability and readability of invoices
Reduces data entry errors on the GSTN
Simultaneously generates e-way bills
Automates the tax return filing process
Enhances business compliance
Faster availability of input tax credit
Facilitates real-time tracking of invoices
Curbs tax evasion
Minimizes the need for audits/surveys
Basics and applicability of e-Invoicing
5
e-Invoice format and schema explained
Purpose of standard e-Invoice format
The purpose of notifying the e-Invoice schema or template was to ensure the standardisation of the
contents and format of any invoice issued under the GST Act. All the notified GST taxpayers must ensure
that their respective accounting or billing software supports the mandatory and other relevant fields of
the latest notified format.
Introduction of the e-Invoice format
The draft format of e-invoice was first issued in August 2019. The GSTN had put together a
comprehensive template for e-invoices based on the recommendations of the Institute of Chartered
Accountants of India (ICAI).
After taking feedback from various industries, the e-invoice template or schema was first notified as form
GST INV-01 on 1st January 2020 vide Central Tax notification no. 02/2020. The format has last been
revised on 30th July 2020 vide Central Tax notification no. 60/2020.
The format of an e-invoice generated by the IRP is given in the annexure to the whitepaper.
Basics and applicability of e-Invoicing
6
Overview of the Contents of e-Invoice Schema
T he e-Invoice schema is comprehensive and accommodates the invoice reporting requirements of
various sectors and industries. T here are a total of 138 fields that are divided into twelve sections and six
annexures.
Five sections and two annexures must mandatorily be reported while raising the tax invoice. T hey may,
in turn, have optional fields as well.
Mandatory sections
Mandatory annexures
Basic details
Item details
Supplier information
Recipient information
Invoice item details
Document total details
Document total
IRN is mandatory in e-Invoice
An e-invoice will be called so, only if the IRN, as generated by the IRP, is printed on it along with the QR
code, and is digitally signed by the GSTN. Hence, the IRN field is mandatory while issuing an e-invoice to
the recipient. It is unique for each invoice and contains 64 characters of alphanumerics. T he supplier
leaves this field empty while uploading onto the IRP and obtains a signed e-invoice with the IRN and QR
code as an end-result.
Basics and applicability of e-Invoicing
7
Mandatory and Optional Fields in an e-Invoice Schema
T he e-invoice schema consists of both mandatory and optional fields. T he mandatory fields must
compulsorily be declared in an invoice. T he optional fields refer to those that may or may not be declared
by the individual businesses depending on their policy or needs.
T he mandatory sections can also have some optional fields that can be skipped. Likewise, optional
sections may have few fields to be mandatorily reported, if that section is chosen. Based on the
cardinality, let’s take a count of the fields that are mandatory and optional separately.
Type of section/annexure
Cardinality classification
Mandatory Sections
0..1 (Optional )
13
1..1 (Mandatory)
20
0..1 (Optional )
37
Optional Sections
Count of fields
1..1 (Mandatory)
Mandatory annexures
Optional Annexures
6
0..1 (Optional )
33
1..1 (Mandatory)
10
0..1 (Optional )
1..1 (Mandatory)
Total number of fields
8
11
138
Click here given to get a summarised picture of the 30 mandatory fields under the mandatory sections
and annexures.
For the detailed schema of an e-invoice along with the optional fields and conditional mandatory fields,
refer to the Central Tax notification 60/2020 dated 30th July 2020 here.
Basics and applicability of e-Invoicing
8
Summary of CBIC notifications
There are no sections inserted or amended in the Central Goods and Services Tax (CGST) Act, 2017 for
implementation of e-invoicing. However, the department inserted new sub-rules under rule 48 of the
CGST rules, 2017 to implement e-invoicing in Form GST INV-01. Rule 48 of the CGST Rules, 2017
consists of detailed procedure in “Manner of issuing invoice”. The new sub-rules (4), (5) and (6) under
rule 48 consists of procedure and applicability of e-invoicing.
The government made few changes to the initial implementation plan of GST e-invoicing such as
postponement of the effective date, increase in the threshold limit for applicability, modifications to the
e-invoice format. The CBIC issued notifications at every stage of implementation of the e-invoicing
system. Here is the list of CBIC notifications issued, which helps to get an idea about all the changes
made with regards to e-invoicing under GST.
Basics and applicability of e-Invoicing
9
Date
Purpose of notification
Link to notification
1
30.07.2020
The threshold limit for applicability
of e-invoicing has been increased to
₹500 crore from ₹100 crore.
Also, Special Economic Zones (SEZ)
units shall be exempted from issuing
e-invoices.
Notification no.
61/2020 – Central Tax
2
30.07.2020
A new refined format of e-invoice has
been notified by CBIC adding 20 new
fields and removing 13 fields. Certain
fields have changed character length
as well.
Notification no.
60/2020 – Central Tax
3
23.03.2020
Deferred the implementation of the
e-Invoicing system to 1st October
2020. Also, sectors such as banking,
insurance, passenger transportation,
GTA etc. are exempted from
e-Invoicing.
Notification no.
13/2020 – Central Tax
4
01.01.2020
Revised the form GST INV-01, i.e.,
invoice format to accommodate the
e-Invoicing schema.
Notification no.
02/2020 – Central Tax
5
13.12.2019
Notified that a registered person
whose turnover exceeds ₹500 crore
must place a Dynamic QR code while
raising a B2C e-invoice.
Notification no.
72/2019 – Central Tax
6
13.12.2019
Notified that the date of applicability of
e-invoicing provision is 1st April 2020.
Notification no.
71/2019 – Central Tax
7
13.12.2019
Notified that all registered persons
whose aggregate turnover in a
financial year exceeds ₹100 crore shall
prepare e-invoice.
Notification no.
70/2019 – Central Tax
8
13.12.2019
Notified ten common portals for
preparation of an e-invoice.
Notification no.
69/2019 – Central Tax
9
13.12.2019
Inserted sub-rules (4), (5) and (6)
under rule 48 of the CGST Rules, 2017
for implementation of e-invoicing.
Notification no.
68/2019 – Central Tax
Basics and applicability of e-Invoicing
10
e-Invoicing
Easy to Connect, Easier to Scale
ClearTax helps you sail through the e-invoicing transition
easily with its promising features:
•
Seamless integration with any ERP or System of Record, to obtain your e-invoice in the ERP itself.
•
End-to-end reconciliation of e-invoicing data with your books and e-way bill data.
•
Most secure GSP which comes with advanced encryptions on the most secure cloud (AWS).
•
Provides comprehensive access control and audit trails.
•
24*7, stable & scalable solution to take care of your business needs round the clock.
•
Responsive ClearTax internal teams for support in case of any issues.
Request a demo
Basics and applicability of e-Invoicing
11
Annexure
The format of an e-invoice generated by the IRP
Basics and applicability of e-Invoicing
12