How to create GST e-invoice : 22-11-2019

The Goods and Service Tax Network (GSTN) recently released a detailed clarification on how the new system of raising invoices will take shape. Starting 1st January 2020, the system will be introduced on a voluntary basis, which is good news for those taxpayers who were apprehensive about the change. Thereafter, it will be rolled-out in phases, likely to be based on turnover limits or for invoices above a certain value.

An E-invoice is an electronically raised invoice, having a common standard which helps machine readability across different software. It allows interoperability across the entire GST ecosystem, which means it will be acceptable and read by different software. Contrary to what was believed until now, an e-invoice will not be generated on a common portal hosted by the government, but will instead continue to be generated on a taxpayer’s own ERP system.

How is an e-invoice created? 

An e-invoice will be created using an enterprise’s current accounting and billing software being used. The procedure to create an e-invoice will be almost identical to the current process of raising an invoice electronically. However, a business enterprise will now need to re-align their software system in order to ensure that the invoice raised follows the standardised format laid down by the GSTN. While the physical copy of the invoice will not look any different from what it did before, the seller’s ERP will have an inbuilt feature to generate each invoice in JSON format, which can then be uploaded onto a central system.

What happens once an e-invoice has been generated?

After an invoice has been generated on a business’ accounting software with its own Invoice Reference Number (IRN), the JSON file will need to be uploaded onto a central system. The central system, known as the Invoice Registration Portal (IRP) of GST will validate the hash (i.e. the IRN) and do a deduplication check with the GST system. After which, the system will generate a unique reference number and digitally sign the invoice. In addition, a QR code containing vital parameters of the invoice will be generated and sent back to the taxpayer who raised the invoice. The signed e-invoice will also be sent by the IRP to the recipient of the document i.e. the buyer, on the email ID provided in the invoice.

How will the system of e-invoicing get integrated with GST returns?

Once the IRP has validated and digitally signed an e-invoice, the data gets sent to the GSTN and NIC systems to auto-populate the GST returns and e-way bills. The data from the invoices will get populated into the GST ANX-1 of the seller and GST ANX-2 of the buyer, which will help determine the tax liability and input tax credit. The e-way bill system will enable the creation of Part-A of the e-way bill, and thereafter only the vehicle number will need to get attached in Part-B of the e-way bill. These digital and automated processes reduce the need for fresh data-entry, as well as eliminates the need for reconciliation with the GST returns.

What is the format of an e-invoice?

An e-invoice will need to conform to certain schema adopted by the GSTN and will contain both mandatory and optional fields. The mandatory fields need to be filled-in irrespective of the type of business being carried out and will ensure standardisation in reporting. The optional parameters solely depend upon the business needs of a supplier.

How will e-invoicing benefit the GST ecosystem in India?

E-invoicing will reduce the reporting time of B2B data, as well as avoid reporting in multiple different formats. Once generated and uploaded, the data will get auto-populated in the e-way bills and GST returns thus eliminating the need for the reconciliation of sales data. However, purchases will have to be closely watched to ensure proper reconciliation for ITC claims. For the government, one of the main objectives is curbing tax evasion due to fake invoices. This way only genuine input tax credit can be claimed by the recipients of supplies.

There will be multiple modes for invoice creation such as web-based, API-based, mobile-app based, etc which taxpayers can make use of based on what suits their business needs best. Enterprises which do not use an ERP software will have an option to use an offline tool to key in invoice data, in order to submit the same.


A few areas of concern that the government needs to address before the full-fledged implementation of e-invoicing is the raising and reporting of B2C invoices, possibly one of the biggest areas still open for malpractice. Another major issue will be to ensure dynamic IT infrastructure in place, something that the current GST system in India seems to be lacking. There also needs to be continuous back-end support provided, where glitches and grievances can be swiftly addressed, without inhibiting trade practices.

The implementation of e-invoicing in India will bring about a radical change in the accounting and reporting mechanisms currently being followed. So far there are over 60 countries who have already adopted the system of e-invoicing and India will be the latest addition to this list. The availability of data in real-time to both, the government as well as the recipients of supplies, will help create the necessary trail to avoid fraud and tax evasion. However, the key lies in its implementation, it should be smooth and easy to apply and not become another compliance roadblock.

Source : PTI

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