GST e-Invoicing: Key Features
e-Invoicing, or electronic invoicing, is a system in which GSTN authenticates B2B invoices digitally and returns them to the supplier for further processing. The most significant advantage of this setup (uploading invoices on the common portal) is that it automates multi-way reporting by requiring only a single data entry.
At the 35th GST Council Meeting, the GST council implemented electronic invoicing to make B2B invoice reporting easier for companies with annual revenues of 100 crore or more. As of today, businesses with annual turnover of more than 50 Cr (with a few exceptions) are required to adopt e-invoicing.
In this blog, we will talk about GST e-Invoicing’s key features.
Key features of e-invoicing aiding GST
The GST Council has introduced electronic invoicing to help businesses submit B2B invoices more efficiently by reducing the manual process. This solution will standardize invoice style and make it more accessible. After being validated by the Invoice Registration Portal (IRP), invoices now have a unique Invoice Reference Number (IRN) allocated to them. The IRP also allots a QR code, signs the e-invoice, and delivers it to the vendor after this authentication.
Let us try to see the main features of an e-invoice.
1- Invoice Reference Number (IRN)
The IRN is a unique number issued by the Invoice Registration Portal (IRP) for invoices under the new e-invoicing process, and it is formed using a hash technique (a method for converting an alphanumeric data string into a series of numbers while keeping the original information encrypted). The IRN ensures that the provider does not submit the same document twice during the fiscal year.
In addition, the IRN must be included on every invoice sent by a vendor to their consumer. Through the central portal and an offline application, tax authorities can review the transaction’s legitimacy by entering the invoice reference number.
IRN is generated by implementing a hash generation algorithm with the help of three variables:
- GSTIN of the vendor
- The document number assigned to the supplier
- The fiscal year
2- Digital Signature (DSC)
A digital signature is a way of digitally signing documents to verify that the authorized supplier has sent them. The reference guidelines outlined in the IT Act of 2000 should be followed when creating DSC. Also, the seller can use the signed e-invoice as documentation of their commercial transactions.
Before implementing the new e-invoicing system, all invoices must be physically signed by the authorized individual allotting the document. Alternatively, they could also use their digital signature if they meet the requirements set down in the Information Technology Act of 2000.
3- Quick Response Code (QRC)
A QR code is a two-dimensional code that can be affixed to goods and scanned by machines. When tax officials use an offline program to check invoices, this is useful.
The following parameters will be used as inputs to make QR codes:
- Supplier’s GSTIN
- Receiver’s GSTIN
- Supplier’s invoice number
- Invoice generation date
- Value of a bill
- Line-item count
- Unique IRN
Businesses must print the QR code according to the GST Council’s e-invoice structure. As a result, QR codes will be required for all invoices generated by B2B taxpayers.
Benefits of e-invoicing system under GST
The new GST scheme has made the entire process of invoicing for B2B reporting more efficient. Businesses may now generate bills with ease.
The other benefits also associated with the latest change are:
The invoice will be uploaded to a shared site as part of the e-invoicing system, allowing smooth multifunctional reporting. All invoices will be uploaded to the GST portals instantaneously once they are validated. This automatic uploading will reduce data entry errors by removing manual processing when filing GST returns.
2- Prevents tax evasion
Because invoices will be prepared before a trade, legitimate access to data will reduce the scope of invoice fraud. e-Invoicing will restrain the number of false GST invoices even more, and only authentic ITC will be claimed. Also, it will expedite the process for tax officials to track fraudulent input credits because the entry tax credit and exit tax details are easily obtainable.
3- Allows interoperability
Since e-invoices are designed in a standardized form, invoices generated by one software can be viewed by other applications. Interoperability is possible as a result of this.
4- Buyer’s helping hand
Once the e-invoice has been uploaded to the GST site for verification, it will be sent to the buyer’s e-mail address listed on the e-invoice. It will allow the buyer to match their purchase order to the e-invoice.
5- Accurate ITC claim
No invoices will be ignored or disguised using the e-invoicing system. The reconciliation will be precise and comprehensive, allowing taxpayers to claim the optimum ITC.
Any organization can benefit significantly from adopting e-invoicing. It assists in the digitalization of the economy and simplifies the GST filing process.
SkyscendPay, a SaaS invoicing and early payment service, aid buyers/sellers in this regard and allow them to optimize their accounts payable (AP), minimize manual invoice processing, and accelerate invoice approval. SkyscendPay employs artificial intelligence, optical character recognition, and blockchain to provide transparency, efficiency, and quality throughout the procure-to-pay lifecycle.