With the Goods and Services Tax (GST) having been introduced several years ago, businesses are still adapting to the various changes and regulations associated with this taxation system. One such regulation is the introduction of e-invoicing for businesses with an annual turnover exceeding Rs 5 crore.
This article will guide you through the steps of generating an e-invoice under the GST system, but first, let's understand what e-invoicing is and why it is important.
What is E-invoicing?
E-invoicing, or electronic invoicing, is a system where B2B invoices are authenticated electronically by GSTN for use on the common GST portal. Traditionally, the invoice generated by each software was different. Now, a standard invoice software needs to be used by all businesses.
Why E-invoicing?
E-invoicing in GST is a structure to alleviate the reconciliation problems for businesses. Through the validation of B2B invoices, this system ensures the invoices created by different software can be read by machines, eliminating data entry errors.
Now, let's move on to the steps to generate an e-invoice under the GST system.
Step 1: Prepare your GST Invoices
The first step to generating an e-invoice under GST is to create your GST invoices on your accounting/billing/ERP software in the prescribed format of the e-invoice schema. This schema is a standard format for creating invoices that contains what is mandatory and what is optional.
Step 2: Ensure your Software Supports JSON File Format
Next, ensure that your software supports the JSON file format. This is necessary to create the invoice in that format.
Step 3: Upload the JSON file on the Invoice Registration Portal (IRP)
The third step involves uploading the JSON file for every invoice on the IRP. For every invoice uploaded, a 64-character Invoice Registration Number (IRN), also known as the hash, is generated.
Step 4: Validation by IRP
The IRP validates the invoices and cross-checks the central registry of GST in case of any duplicity of information. After validating the JSON files, the IRP generates the IRN or hash for each invoice file and also digitally signs the file.
Step 5: Generation of QR Code
The IRP then generates a QR code for invoices, which includes details like your and the buyer's or recipient's GSTINs, all invoice-related information, and the invoice value.
Step 6: GSTR-1 form and GSTR-2A Update
Lastly, the digitally signed e-invoices with IRN and QR code on them are sent to you and also shared with the GST system and e-way bill. In the GST system, GSTR-1 form of the supplier and GSTR-2A of the buyer or recipient will be updated. Also, Part A of the e-way bill will be auto-populated.
With the new threshold, businesses that have turnover between Rs 5 crore and Rs 10 crore are brought under the ambit of e-invoicing. As of now, micro enterprises (turnover less than Rs 5 crore as per the new MSME definition) remain outside the e-invoice
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