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Published on:
February 20, 2023
By
Paramita

All about e-Invoice and other such instruments in GST

The Goods and Services Tax (GST) introduced in India in 2017, is an indirect tax levied on the supply of goods and services. It replaced multiple indirect taxes like excise duty, VAT, and service tax. With the introduction of GST, the government has made it mandatory for businesses to comply with various new regulations. One of the major changes is the introduction of e-invoicing, which is an electronic format of GST invoices. In this article, we will discuss everything about e-invoicing and other such instruments in GST.

What is e-invoicing?

E-invoicing is an electronic format of an invoice that is generated by the supplier and uploaded to the GST portal. It contains details like the supplier's and the recipient's name and address, invoice number, date of issue, HSN code, and the amount of tax payable. E-invoicing makes it easier for businesses to comply with GST regulations and reduces the chances of errors in the invoicing process. It also helps in tracking and reconciling invoices, which is crucial for businesses to claim input tax credit (ITC).

How does e-invoicing work?

The e-invoicing system works in the following way:

  1. The supplier generates an invoice in their accounting or billing software.
  2. The invoice is uploaded to the Invoice Registration Portal (IRP) in a specified format.
  3. The IRP validates the invoice and generates a unique Invoice Reference Number (IRN) for the invoice.
  4. The IRP signs the invoice digitally and sends it back to the supplier.
  5. The supplier then sends the digitally signed invoice to the recipient along with the IRN.

What are the benefits of e-invoicing?

The benefits of e-invoicing are as follows:

  • Reduces errors and discrepancies in invoicing
  • Improves compliance with GST regulations
  • Reduces the chances of tax evasion
  • Streamlines the invoicing and accounting process
  • Enables efficient tracking and reconciliation of invoices
  • Facilitates quick processing of invoices by the government

What are the other instruments in GST?

Along with e-invoicing, there are other instruments in GST that businesses need to comply with. These are:

E-way bill

E-way bill is a document that is required to be generated for the movement of goods worth more than INR 50,000. It contains details like the name and address of the supplier and the recipient, the GST Identification Number (GSTIN), the invoice number, the date of issue, the HSN code, and the quantity and value of the goods being transported. E-way bill helps the government track the movement of goods and ensure that tax is paid on them.

GSTR-1

GSTR-1 is a monthly or quarterly return that businesses need to file to report their outward supplies of goods and services. It contains details like the name and address of the supplier and the recipient, the GSTIN, the invoice number, the date of issue, the HSN code, and the value of the goods or services supplied. GSTR-1 helps the government in reconciling the inward and outward supplies of businesses and determining the tax liability.

GSTR-3B

GSTR-3B is a monthly return that businesses need to file to report their tax liability and input tax credit (ITC). It contains details of the outward and inward supplies of goods and services, the tax payable, and the ITC claimed. GSTR-3B helps businesses in claiming ITC and paying their tax liability in a timely and accurate manner.

Conclusion

The introduction of e-invoicing and other such instruments in GST is a step towards simplifying the invoicing and accounting process for businesses. It helps in improving compliance with GST regulations and reducing the chances of errors and discrepancies in invoicing. Businesses need to ensure that they comply with these instruments to avoid penalties and legal issues.

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Updated on:
March 16, 2024