Electronic invoice (e-invoice) automates and eliminates manual efforts of creating, sharing, and editing invoices between buyer and seller. This means that the invoice is created, sent, and received in standard electronic format. This saves time and helps buyers or sellers to automate their workings and invoices.

Introduction

Invoice is the first and most crucial step in the bookkeeping process. An invoice establishes an obligation for payment for products and services provided. Most organizations use accounting software for creating invoices and making online payments. Even though this process is done with the accounting software still, human intervention is required for the sharing of invoices.

Most of the organizations still follow conventional ways of paper invoices printing. Some companies share and follow up on invoices via email. Electronic invoicing (E-Invoicing) allows the sharing of invoices between a buyer and a seller in an electronic format. Electronic invoicing (E-Invoicing) automates and eliminates manual intervention in sending and sharing invoices.

Although some companies use E-invoicing as their invoicing methods, most of the companies are still unaware of its benefits.

This article looks into E-Invoicing, its benefits, and explains what the Indian government is doing to promote electronic invoicing (E-Invoicing) use in India.

In December 2019, the Indian tax authority, the Goods and Services Tax Council (GSTC), approved the phased implementation of B2B electronic invoicing through the Goods and Services Tax (GST) System. Following the voluntary adoption period, which began in January 2020, the implementation of the mandatory use of electronic invoices will begin in October 2020.

Companies will be required to adopt the system gradually according to their annual turnover. The first businesses required to adapt to the GST system are those with an annual turnover of rs500 crores or more. Exceptions include Special Economic Zones (SEZ), insurance companies, banks, overland transport agencies, passenger transport companies, and cinemas. The introduction of e-invoicing is yet another step toward the completion of the GST System project initiated by the government in 2017. It represents the most sweeping change made to the economy in the history of the Republic of India. The GST project, whose motto is “One Nation, One Tax, One Market”, is an ambitious plan. The objective is to integrate India into one common marketplace through the harmonization of the tax system.

What is an invoice?

An invoice is a document sent to a buyer that specifies the amount and cost of products or services that have been provided by a seller.

An invoice indicates what must be paid by the buyer according to the payment terms of the seller. Payment terms usually specify the period that a buyer has to send payment to the seller for the goods and/or services that they have purchased.

An invoice provides a detailed account of the products or service and a set of other information that can vary a bit depending on the requirements in the country the invoice is issued and the type of product or service being sold.

What is an E-invoice?

‘e-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. Under the electronic invoicing system, an identification number will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).

The first IRP was launched by the National Informatics Centre at https://einvoice1.gst.gov.in. All invoice information will be transferred from this portal to both the GST portal and e-way bill portal in real-time. Therefore, it will eliminate the need for manual data entry while filing GSTR-1 returns as well as generation of part-A of the e-way bills, as the information is passed directly by the IRP to the GST portal.

Why should businesses incorporate E-Invoicing?

Reduced Manual Work

  • E-Invoicing allows easy creation and sharing of invoices in one standard electronic format.
  • E-Invoicing significantly reduces the time and effort spent in exporting invoices, invoice verification, emailing invoices, manual data entry for bills.

Eliminates data entry errors

  • E-Invoicing eliminates data entry errors made by finance staff.
  • E-Invoicing allows sending invoice data in electronic format, which minimizes erroneous entries.
  • E-Invoicing significantly decreases the time and effort spent in following-up and rectifying errors made in the process.

Save printing expense & go green with a paperless office

  • E-Invoicing allows companies to save money in printing invoices.
  • Send invoices in standard electronic format and eliminate hard-copies.

Faster payment cycle

  • E-Invoicing reduces customer’s and supplier’s inquiries about invoices, which leads to speedy approval and faster payments.
  • E-invoices allow for faster processing as less manual work is required to make an online payment for the invoice.

Improved Customer and Vendor Management

  • Send and receive invoices from any buyer and seller on the internet network.​
  • Negotiate discounts for early payment of invoices

More Efficient Cash Flows

  • E-Invoicing allows real-time visibility of the payment cycles, enabling more efficient cash flow management for your business.
  • Better control of cash flow for forecasting and growth planning

What are the mandatory fields for an e-invoice?  

Source - https://einvoice1.gst.gov.in

E-invoice must primarily adhere to the GST invoicing rules. Apart from this, it should also accommodate the invoicing system or policies followed by each industry or sector in India. Certain information is made mandatory whereas the rest of them is optional for businesses. Many fields are also made optional and users can choose to fill up relevant fields only. It has also described every field along with the sample inputs for the interested users. One can see that certain required fields from the e-way bill format are included now in the e-invoice such as the sub-supply type.

Below is the gist of the contents of the latest e-invoice format as notified on 30th July 2020 via Notification No.60/2020 - Central Tax.

  1. 12 Sections (mandatory + optional) and 6 annexures consisting of a total of 138 fields
  2. Out of the 12 Sections – 5 are Mandatory and 7 are Optional. Two annexures are mandatory.
  3. The 5 Mandatory sections are Basic Details, Supplier Information, Recipient Information, Invoice Item Details, and Document Total. The two mandatory annexures are details of the items and document total.

The following fields must be compulsorily be declared in an e-invoice:

Sl. no.

Name of the field

List of Choices/ Specifications/Sample Inputs

Remarks

1

Document Type Code

Enumerated List such as INV/CRN/DBN

Type of document must be specified

2

Supplier_Legal Name

String Max length: 100 

The legal name of the supplier must be as per the PAN card

3

Supplier_GSTIN

Max length: 15  Must be alphanumeric 

GSTIN of the supplier raising the e-invoice

4

Supplier_Address

Max length: 100 

Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice

5

Supplier_Place

Max length: 50 

Supplier's location such as city/town/village must be mentioned

6

Supplier_State_Code

The enumerated list of states

The state must be selected from the latest list given by GSTN

7

Supplier Pincode

Six digit code

The place (locality/district/state) of the supplier's locality

8

Document Number

Max length: 16 Sample can be “ Sa/1/2019”

For unique identification of the invoice, a sequential number is required within the business context, time-frame, operating systems, and records of the supplier. No identification scheme is to be used

9

Preceeding_Invoice_Reference and date

Max length:16 Sample input is  “ Sa/1/2019” and "16/11/2020"

Detail of original invoice which is being amended by a subsequent document such as a debit and credit note. It is required to keep future expansion of e-versions of credit notes, debit notes, and other documents required under GST

10

Document Date

String (DD/MM/YYYY) as per the technical field specification

The date when the invoice was issued. However, the format under explanatory notes refers to ‘YYYY-MM-DD’. Further clarity will be required. Document period start and end date must also be specified if selected.

11

Recipient_ Legal Name

Max length: 100

The name of the buyer as per the PAN

12

Recipient's GSTIN

Max length: 15

The GSTIN of the buyer to be declared here

13

Recipient's Address

Max length: 100

Building/Flat no., Road/Street, Locality, etc. of the supplier raising the e-invoice

14

Recipient's State Code

Enumerated list

The place of supply state code to be selected here

15

Place_Of_Supply_State_ Code

The enumerated list of states

The state must be selected from the latest list given by GSTN

16

Pincode

Six digit code

The place (locality/district/state) of the buyer on whom the invoice is raised/ billed must be declared here if any

17

Recipient Place

Max length: 100

Recipient's location (City/Town/Village)

18

IRN- Invoice Reference Number

Max length: 64 Sample is ‘a5c12dca8 0e7433217...ba4013 750f2046f229’

At the time of registration request, this field is left empty by the supplier. Later on, a unique number will be generated by GSTN after uploading the e-invoice on the GSTN portal. An acknowledgment will be sent back to the supplier after the successful acceptance of the e-invoice by the portal. IRN should then be displayed on the e-invoice before use.

19

ShippingTo_GSTIN

Max length: 15

GSTIN of the buyer himself or the person to whom the particular item is being delivered to

20

Shipping To_State, Pincode, and State code

Max length: 100 for the state, 6 digit Pincode, and enumerated list for code

State about the place to which the goods and services invoiced were or are delivered

21

Dispatch From_ Name, Address, Place, and Pincode

Max length: 100 each and 6 digit for Pincode

Entity's details (name, and city/town/village) from where goods are dispatched

22

Is_Service

String (Length: 1) by selecting Y/N

Whether or not the supply of service must be mentioned

23

Supply Type Code

The enumerated list of codes Sample values can be either of B2B/B2C/ SEZWP/S EZWOP/E XP WP/EXP WOP/DE XP

Code will be used to identify the type of supply such as business to business, business to consumer, supply to SEZ/Exports with or without payment, and deemed export.

24

Item Description

Max length: 300 The sample value is ‘Mobile’ The schema document refers to this as the ‘identification scheme identifier of the Item classification identifier’

Simply put, the relevant description is generally used for the item in the trade. However, more clarity is needed on how it needs to be described for every two or more items belonging to the same HSN code 

25

HSN Code

Max length: 8

The applicable HSN code for particular goods/service must be entered

26

Item_Price

Decimal (12,3) Sample value is ‘50’

The unit price, exclusive of GST, before subtracting item price discount, can not be negative

27

Assessable Value

Decimal (13,2) Sample value is ‘5000’

The price of an item, exclusive of GST, after subtracting item price discount. Hence, Gross price (-) Discount = Net price item, if any cash discount is provided at the time of sale

28

GST Rate

Decimal (3,2) Sample value is ‘5’

The GST rate represented as a percentage that applies to the item being invoiced

29

IGST Value, CGST Value, and SGST Value Separately

Decimal (11,2) Sample value is ‘650.00’

For each item, IGST, CGST and SGST amounts have to be specified

30

Total Invoice Value

Decimal (11,2)

The total amount of the Invoice with GST. Must be rounded to a maximum of 2 decimals

Why is GimBooks a perfect E-invoicing app for you?

1. Create and share GST Invoices & E-waybills with customers

2. Manage and check your Inventory instantly

3. Manage and Track Purchase, Expenses, and Ledgers

4. Send Gentle Payment Reminders to Customers

5. Keep a live track of various business reports

6. Make your GST Filing simpler and faster

Download the Easy Invoice Manager App by GimBooks today and experience the simple, quick and convenient way of managing all of your accounting needs