The first phase of e-invoice concept was introduced & implemented on 1st October 2020 for the taxpayers with the annual turnover exceeding Rs. 500 crores. From 1st January 2020, e-invoicing was extended for businesses with an annual turnover of more than Rs. 100 crores. Third phase was implemented on 1st April, 2021 which mandated e-invoice for all the B2B businesses with an annual turnover of more than Rs. 50 crores.

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What is e-invoice?

In Layman Language, e-invoicing is a system through which B2B (Business to Business) transactions are electronically authenticated by Invoice Registration Portal (IRP) for further use on the common GST Portal.

After creating an e-invoice for the customer, you need to upload it in Invoice Registration Portal (IRP) where the validation will be done. A unique Invoice Reference Number (IRN) and QR code will be issued for the invoice that you uploaded.

The e-invoice system requires you to upload in the portal and get the invoice authenticated IRP system then only an e-invoice remains valid.

Without further ado, let's understand

How does the GST e-invoice system work?

For us to understand the workflow of the e-invoice system, we will categorise it in two parts.

First, Interaction between Business (supplier) and the Invoice registration Portal (IRP).

Second, Interaction between Invoice registration portal (IRP) and the GST/E way Bill Systems and the Buyer.

  1. The supplier generates the invoice in the prescribed format/schema. The invoice is uploaded to Invoice Registration Portal (IRP). If the ERP software is integrated with IRP then the system will directly send the details to the IRP automatically.
  2. IRP verifies the invoice and generates a unique Invoice Reference Number (IRN) and the QR code is also added to the invoice which contains all the details of the invoice.
  3. The digitally signed e-invoice will be sent to the e-way bill system and to the GST System.
  4. Using the invoice received from IRP, the e-invoice system will auto-populate the Part A of e-way. Similarly, GST system will auto-populate the details in GSTR-1
  5. Buyer will get the real time visibility in GSTR-2A for confirming the invoice uploaded by the supplier.

The system improves efficiency as everything becomes paper-free and payment cycle improves

It is necessary for a business to have an ERP software which will help them in seamless generation of e-invoice without impacting other operations of businesses.

Know more about Invoices in GST

  1. How to create e-invoice under GST?
  2. What is GST Return? Who should file, its due date and how to file GST Return online?
  3. Impact of e-invoicing in GST Return Filing.