Electronic Invoice (e-invoice) Under GST - Everything You Need to Know

Electronic invoicing, also known as e-invoicing, is a system of generating invoices electronically and transmitting them directly to the receiver’s computer. Electronic invoicing is seen as an essential part of the digital transformation process in the GST regime in India. In this article, we will discuss everything you need to know about Electronic invoice (e-invoice) under GST.

What is an Electronic Invoice (e-invoice)?

An Electronic Invoice (e-invoice) is a digital invoice generated and validated by the GST system, which is directly transmitted to the recipient without any manual intervention. Electronic invoice under GST is a tool that can transform the way businesses generate and manage invoices. The system allows the generation of invoices directly from the ERP (Enterprise Resource Planning) system and makes the invoice generation process more efficient and streamlined.

Why is Electronic Invoice (e-invoice) needed?

The implementation of the e-invoice system under GST has been initiated to bring in transparency in the invoicing process and eliminate cases of tax fraud. The e-invoice system is aimed at reducing the compliance burden for businesses by automating the invoicing process. It will also make the invoice generation process faster and more efficient.

Who is required to generate Electronic Invoice (e-invoice)?

Currently, the e-invoicing system is mandatory for businesses with an annual turnover of more than INR 500 crore. However, the government plans to extend the e-invoice system to all businesses in a phased manner.

What are the benefits of Electronic Invoice (e-invoice)?

The benefits of Electronic Invoice (e-invoice) are as follows:

Efficient and streamlined invoice generation
Reduced compliance burden for businesses
Elimination of tax fraud
Automated data entry, reducing errors and inconsistencies
Real-time tracking and monitoring of invoices
Improved efficiency in the supply chain

What is the process for generating an Electronic Invoice (e-invoice)?

The process for generating an Electronic Invoice (e-invoice) is as follows:

The e-invoice is generated by the supplier directly from the ERP system.
The invoice is authenticated by the GST system and assigned a unique Invoice Reference Number (IRN).
The e-invoice is then transmitted to the recipient through the GST system.
The recipient can view the invoice on the GST portal and can download it in a PDF format.

What are the mandatory fields in an Electronic Invoice (e-invoice)?

The mandatory fields in an Electronic Invoice (e-invoice) are:

Supplier name and GST identification number (GSTIN)
Invoice number and date
Recipient name and GST identification number
Item name, description, and quantity
HSN code (for goods) or SAC code (for services)
Invoice value and tax details (CGST, SGST, IGST, and Cess)

What are the consequences of non-compliance with Electronic Invoice (e-invoice)?

Non-compliance with the e-invoicing system can lead to penalties and fines under the GST regime. The following are the penalties for non-compliance:

A fine of INR 10,000 or the tax amount involved, whichever is higher, for each invoice not generated in accordance with the e-invoicing system.
A fine of INR 100 per day for each invoice that is not reported to the GST system.

Conclusion

The e-invoicing system under GST is a significant step towards digitizing the invoicing process in India. The implementation of the e-invoice system will help reduce compliance burdens for businesses and eliminate cases of tax fraud. The system will make the invoice generation process more efficient and streamlined, improving the efficiency of the entire supply chain.