Updated e Invoice FAQs v6
Updated e Invoice FAQs v6
Updated e Invoice FAQs v6
The GST Council has approved introduction of ‘E-invoicing’ or ‘electronic invoicing’ in a phased
manner for reporting of business to business (B2B) invoices to GST System, starting from 1st
January 2020 on voluntary basis. Since there was no standard for e-invoice existing in the country,
standard for the same has been finalized after consultation with trade/industry bodies as well as
ICAI after keeping the draft in public place. Having a standard is a must to ensure complete inter-
operability of e-invoices across the entire GST eco-system so that e-invoices generated by one
software can be read by any other software, thereby eliminating the need of fresh data entry –
which is a norm and standard expectation today. The machine readability and uniform
interpretation is the key objective. This is also important for reporting the details to GST System
as part of Return. Apart from the GST System, adoption of a standard will also ensure that an e-
invoice shared by a seller with his buyer or bank or agent or any other player in the whole business
eco-system can be read by machines and obviate and hence eliminate data entry errors.
The GST Council approved the standard of e-invoice in its 37th meeting held on 20th Sept 2019
and the same along with schema has been published on GST portal. Standards are generally
abstruse and thus an explanation document is required to present the same in common man’s
language. Also, there are lot of myth or misconception about e-Invoice. The present document is
an attempt to explain the concept of e-invoice, how it operates and basics of standards. It also
contains FAQs which answer the questions raised by people who responded to the draft e-invoice
standard used for public consultation. It is expected that the document will also be useful for the
taxpayers, tax consultants and the software companies to adopt the designed standard.
A. What is e-invoice?
If an invoice is generated by a software on the computer or Point of Sales (PoS) machine then does
it become an e-invoice? Is e-invoice as a system where taxpayers can generate the invoices
centrally? Many such questions are raised when e-invoice gets discussed.
E-invoice does not mean generation of invoices from a central portal of tax department, as any
such centralization will bring unnecessary restriction on the way trade is conducted. In fact,
taxpayers have different requirements and expectation, which can’t be met from one software
generating e-invoices from a portal for the whole country. Invoice generated by each software
may look more or less same, however, they can’t be understood by another computer system even
though business users understand them fully. For example, an Invoice generated by SAP system
cannot be read by a machine which is using ‘Tally’ system. Likewise there are hundreds of
accounting/billing software which generate invoices but they all use their own formats to store
information electronically and data on such invoices can’t be understood by the GST System if
reported in their respective formats. Hence a need was felt to standardize the format in which
electronic data of an Invoice will be shared with others to ensure there is interoperability of the
data. The adoption of standards will in no way impact the way user would see the physical (printed)
invoice or electronic (ex pdf version) invoice. All these software would adopt the new e-Invoice
standard wherein they would re-align their data access and retrieval in the standard format.
However, users of the software would not find any change since they would continue to see the
physical or electronic (PDF/Excel) output of the invoices in the same manner as it existed before
incorporation of e-Invoice standard in the software. Thus the taxpayer would continue to use his
accounting system/ERP or excel based tools or any such tool for creating the electronic invoice as
s/he is using today.
To help small taxpayers adopt e-invoice system, GSTN has empaneled eight accounting & billing
software which provide basic accounting and billing system free of cost to small taxpayers. Those
small taxpayers who do not have accounting software today, can use one of the empaneled software
products, which come in both flavors, online (cloud based) as well as offline (installed on the
computer system of the user).
GST Council has given the responsibility to design the standard of e-invoice and update the same
from time to time to GSTN which is the custodian of Returns and invoices contained in the same.
Adoption of e-invoice by GST System is not only part of Tax reform but also a Business reform
as it make the e-invoices completely inter-operable eliminating transcription and other errors.
Objectives Outcome
Efficiency in
tax • Elimination of fake invoices
administration
Generation of e-invoice will be the responsibility of the taxpayer who will be required to report
the same to Invoice Registration Portal (IRP) of GST, which in turn will generate a unique Invoice
Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The QR
Code will contain vital parameters of the e-invoice and return the same to the taxpayer who
generated the document in first place. The IRP will also send the signed e-invoice to the recipient
of the document on the email provided in the e-invoice.
Note: To begin with, there will be only one IRP, but more IRPs will be added to provide higher
availability, redundancy, speed and a diversified and distributed service to tax payers with a
choice.
i. Invoice by Supplier
ii. Credit Note by Supplier
iii. Debit Note by Supplier
iv. Any other document as required by law to be reported by the creator of the
document (as notified by the Government from time to time).
Note:
1. Seller should have a utility that will output invoice data in JSON format, either from his
accounting or billing software or his ERP or excel/word document or even a mobile app.
Those who do not use any accounting software or IT tool to generate the invoice, will be
provided an offline tool to key-in data of invoice and then submit the same.
2. The small and medium size taxpayers (having annual turnover below Rs 1.5 Crores) can
avail accounting and billing system being offered by GSTN free of cost.
Step 2 and 3: is to upload and push the JSON of the e-invoice to the IRP by the seller. The JSON
may be uploaded directly on the IRP or through GSPs or through third party provided Apps.
Step-4: The IRP will generate the hash based on seller’s GSTIN, Document Type, Document
Number and Financial Year and check the hash from the Central Registry of GST System to ensure
that the same document (invoice etc.) from the same supplier pertaining to same Fin Year is not
being uploaded again. On receipt of confirmation from Central Registry, IRP will add its signature
on the Invoice Data as well as a QR code to the JSON. The QR code will contain GSTIN of seller
and buyer, Invoice number, invoice date, number of line items, HSN of major commodity
contained in the invoice as per value, hash etc. The hash computed by IRP will become the IRN
(Invoice Reference Number) of the e-invoice. This shall be unique to each invoice and hence be
the unique identity for each invoice for the entire financial year in the entire GST System for a
taxpayer. [GST Systems will create a central registry where hash sent by all IRPs will be kept to
ensure uniqueness of the same].
In case the same document has been uploaded earlier, the IRP will send an error code back to the
seller, when he tries to upload a duplicate e-invoice.
Step 5 will involve returning the digitally signed JSON with IRN back to the seller along with a
QR code.
Step 6 will involve sharing the uploaded data of accepted document (invoice etc.) with GST and
e-way bill system. More details are given in Part-B below.
Part B: Flow from IRP to GST System/E-Way Bill System & Buyer
The following diagram shows how e-Invoice data would be consumed by GST System for
generation of e-way bill or populating relevant parts GST Returns, stated in Step-6 above.
Step 6 (a) will be to send the signed and authenticated e-invoice data along with IRN (same as that
has been returned by the IRP to the seller) to the GST System as well as to E-Way Bill System.
Step 6 (b) The GST System will update the ANX-1 of the seller and ANX-2 of the buyer, which
in turn will determine liability and ITC.
Step 6 (c). The e-invoice schema includes parameters e.g. ‘Transporter Id’ and ‘Vehicle Number’
that are required for creating and generating e-way bills. Provision has also been made to enter
transporter code and vehicle number, if available with seller at the time of generation of e-invoice.
In that case, e-way bill can be prepared fully. The E-Way bill system will accordingly create e-
way bill using this data.
Note 1: The e-invoice standardized schema has mandatory and optional items. The e-invoice shall
not be accepted in the GST System unless all the mandatory items are present. The optional items
are to be used by the seller and buyer as per their business need to enforce their business
obligations or relationships.
Note 2: Seller may send his e-invoice for registration to more than one registrar. But the GST
system and IRP will perform a de-duplication check with central registry to ensure that the IRN
that is generated is unique for each invoice. Therefore, the IRP shall return ONLY ONE registered
IRN for each invoice to the seller. In case of multiple registrars (more than one IRPs) only one
IRP will return a valid IRN to the seller. Except one, all other IRPs will reject the request of
registration.
Note 3: The QR code will enable quick view, validation and access of the invoices from the GST
system from hand held devices.
Small taxpayers, whenever so mandated, can use one of the eight free accounting/billing software
currently listed by GSTN. Also, GSTN will provide Offline Tools where data of an invoice,
generated on paper can be entered which in turn will create JSON file for uploading on the IRP.
This upload to the IRP will also happen through APIs. Taxpayers may also use one of the many
commercially available accounting/billing software for this purpose. All accounting and billing
software companies are being separately asked to adopt the e-invoice standard so that their users
can generate the JSON from the software and upload the same on the IRP.
The unique IRN will be based on the computation of hash of GSTIN of generator of document
(invoice or credit note or debit note), Financial Year, Document Type and Document number like
invoice number. This hash will be as published in the e-invoice standard and unique for this
combination. This way hash will always be the same irrespective of the registrar who processes it.
To ensure deduplication, the registrar will be required to send the hash to Central Registry of GST
System to confirm whether the same has been reported already. In case it has been reported by
another registrar (as and when more registrars – IRPs – are added) and the Central Registry already
has the same IRN, then the registrar will reject the registration and inform the sender by sending
appropriate error code. Only unique invoices from a taxpayer will be accepted and registered by
the registrar.
Digital Signing by e-Invoice Registration Portal: The invoice data will be uploaded on the IRP
(Invoice Registration Portal), which will also generate the hash (as the IRN) and then digitally sign
it with the private key of the IRP. The IRP will sign the complete e-invoice JSON payload (that
includes the IRN/hash). Thereafter, this e-invoice signed by the IRP will be a valid e-invoice for
the seller and can be used by the seller for his business transactions. The IRP will also push this
signed e-invoice to the GST and the E-Way bill systems.
QR Code: The IRP will also generate a QR code containing the unique IRN (hash) along with
some important parameters of invoice and digital signature so that it can be verified on the central
portal as well as by an Offline App. This will be helpful for tax officers checking the invoice on
the roadside where Internet may not be available all the time. The seller will be returned a signed
JSON with all details including a QR code. The QR code will consist of the following e-invoice
parameters:
a. GSTIN of supplier
b. GSTIN of Recipient
c. Invoice number as given by Supplier
d. Date of generation of invoice
e. Invoice value (taxable value and gross tax)
f. Number of line items.
g. HSN Code of main item (the line item having highest taxable value)
h. Unique Invoice Reference Number (hash)
Note: It is the signed QR code which will be easily verifiable by taxpayers as well as Tax
Officers to validate whether the e-invoice has been reported to the IRP and accepted by it,
as it will contain both the IRN as well as the Digital Signature of IRP as proof of having
received and registered the e-invoice. If the signed JSON is tampered then e-invoice will
become invalid and the digital signature will fail.
An offline app will be provided for anyone to download to authenticate the QR code of the e-
invoice offline and its basic details. The facility to view the e-invoice will be provided to buyers
or tax officers, on the GST System / E-way bill system.
Note: The facility of e-invoice verification will be made available only through the GST System
and not the IRP. This is because the IRP will not have the mandate to store invoices for more than
24 hours. In order to achieve speed and efficiency, the IRP will be a lean and focused portal for
providing invoice registration and verification service, IRN and the QR codes. Hence, storing of
the invoices will not be a feature of the IRP.
Multiple Registrar for IRN System: Multiple registrars (IRPs) will be put in place to ensure
24X7 operations without any break. To start with, NIC will be the first Registrar. GST System will
also provide IRP services in due course of time. Based on experience, more registrars (IRPs) will
be added.
Standardization of e-Invoice: A technical group constituted by the GST Council Secretariat has
drafted standards for e-invoice after having industry consultation. The e-invoice schema and
template, as approved by the GST Council, are available at https://www.gstn.org/e-invoice/. The
same has been notified by the Govt of India vide Notification No. 02/2020 dated 01 st Jan 2020.
H. CREATION OF e-INVOICE
Modes for getting invoice registered: Multiple modes will be made available so that taxpayer
can use the best mode based on his/her need. The modes given below are envisaged at this stage
under the proposed system for e-invoice, through the IRP (Invoice Registration Portal):
a. Web based,
b. API based,
c. mobile app based,
d. offline tool based and
e. GSP based.
API mode: Using API mode, the applicable tax payers and their ERP/internal IT
services/accounting software providers can interface their systems and get the signed e-invoice
from IRP - after passing the relevant invoice information in JSON format. API request will handle
one invoice request at time to generate the IRN. This mode can also be used for multiple invoices
(user can pass the request one after the other and get the IRN response within fraction of second)
as well. The e-way bill system provides the same methodology.
Printing of Invoice
The businesses will receive a signed JSON from the IRP. This payload can be received,
converted to readable format and populated into a PDF file. The taxpayer can then print his paper
invoice as he is doing today placing their logo and other information, as per business need. E-
invoice schema only mandates what will be reported in electronic format to IRP and to receive
the corresponding signed e-invoices from the IRP.
Cancellation of e-invoice
The seller can upload the IRN of the e-invoice already reported, if that invoice has been
cancelled by him/her. The cancellation of an invoice will be done as per procedure given under
accounting standards.
The cancellation of e-invoice will be done by using the ‘Cancel IRN’ API (published on the
e-invoice portal). The API will be a POST API and will required the IRN that is to be
cancelled as the key parameter of the payload.
Rollout Timeline
On trial basis for taxpayers having aggregate turnover above Rs
from 1st Jan 2020
500 Crores in previous Fin Year.
Note: Aggregate turnover is as defined under GST Law, which is at the PAN level and not at
GSTIN level.
Amendment/cancellation of e-invoice
1. Whether e-invoices generated through GST system can be partially/fully cancelled?
a. E-Invoice can’t be partially cancelled. It has to be fully cancelled. Cancellation
has to be done as per process defined under Accounting Standards.
b. The e-invoice mechanism enables invoices to be cancelled. This will have to be
triggered through the IRP, if done within 24 hours. After 24 hours, the same
will need to be done on the GST System.
2. How would amendments be allowed in e-invoice?
a. Amendments to the e-invoice will be allowed on GST portal as per provisions
of GST law. All amendments to the e-invoice will be done on GST portal only.
Relationship with e-way bill
1. With the introduction of e-invoices, what are the documents need to be carried during
transit of goods?
a. For transportation of goods, the e-way bill will continue to be mandatory, based
on invoice value guidelines, as hitherto fore.
b. Any changes in this aspect will be notified by the Government.
Export/Import
1. Please clarify whether exports would require e-invoice compliance.
a. Yes.
b. The e-invoice schema also caters to the export invoices as well. The e-invoice
schema is based on most common standard, this will help buyer’s system to
read the e-invoice.
c. In this case, GSTIN of buyer located in another country will not be there.
2. Does the e-invoice allow the declaration of export invoices/ zero rated supplies?
a. Yes.
b. It allows the declaration of export invoices / zero rated supplies.
Others
1. What will be the workflow of the end to end e-invoice mechanism?
a. The end to end workflow is described in the write-up and concept above.
2. Will the industry be provided sufficient time for preparation?
a. Yes.
b. The e-invoice mechanism has been rolled out in phases from 01st Jan 2020 on
voluntary basis.
c. Initially, the e-invoice mechanism will be allowed for tax payers above a
certain turnover, as given above.
d. Subsequently, it will be enabled for all tax payers in a phased step-wise
manner.
e. Details of these will be published subsequently.
If no, is GSP the right party to The APIs will be available over internet.
integrate against? What are GSP’s GSPs are not the only entities who will be provided
responsibilities and liabilities in such the API access. It will be widely made available to
setup towards the private service businesses of their software service providers.
provider?
ASP We saw a term “Application Service ASPs are software service providers who route their
Provider”. What is the definition of this and GST traffic through GSPs. Any software provider of
how can one become ASP? financial services in the indirect tax domain can push
data to GST system through GSPs.
As far as IRP is concerned, access will be provided
over internet. No such category of GSP/ASP will be
created for access to IRP.
IRP - Bulk Is batch (bulk) submission of e-invoices to APIs will permit upload of JSON payloads. The
e-invoice IRP allowed? We saw that this will be invoices shall be accepted one at a time, though you
enabled in API based mode. may push invoices sequentially.
The system shall be designed so as to scale and
respond to API requests so as to enable the
acceptance of millions of invoices per day, to start
with.
IRP What indicates for the supplier (and The IRP will respond with a signed IRN to the seller.
respectively) buyer that IRP has approved IRP will also return a QR code, with digital signatures
the e-invoice? of the IRP. The QR code content is detailed in the
description above. It has also been published in the
FAQs on our website (www.gstn.org/e-invoice).
The fact that QR code was assigned Yes. As described above and in the FAQs.
and IRN signature added?
Or will there be another artefact No.
returned?
Or the only way to ensure the No. As described above.
validity of e-invoice is by manually
logging into GSTN portal and
manually / visually reviewing
invoices available in the portal?
IRP Can IRP reject the submitted invoice? IRP will validate for GSTIN existence (of seller and
Validation buyer) and de-duplication of the invoice. If non-
s existent GSTIN and/or a duplicate invoice is found,
the invoice will be returned with relevant error
codes, without registering it.
If yes, what will be returned to the Error codes.
supplier?
What validations will IRP be IRP will validate for correctness and whether invoice
performing? already exists in the GST system.
(This validation of existence in GST system will be
based on the GSTIN-InvoiceNumber-
typeofdocument-FY combination, which also are
used for the IRN generation)
Certain other validations, if needed, will be notified
from time to time.
Signing of Is the supplier required to sign JSON before The e-invoice schema contains the place holder for
JSON by submitting it to the IRP? digital signature of the seller.
seller
IRP Will the IRP return both signed JSON and IRP will return the signed JSON. No PDF will be
signed PDF? Or just JSON? returned.
Whose digital certificate will be used The signature will be of IRP.
to sign the invoice- taxpayer’s and or
third parties along with the IRP’s,
total of 1 or 2 signatures?
How can the digital certificate be The digital certificate is not required (this is kept
uploaded into IRP? with the user). The signed (optional) JSON will be
received at the IRP.
What are other technical No other technical requirements are there. The
requirements to e-signature? seller can sign the JSON and upload it with the
signature placed in the optional placeholder for the
signature.
Mailing by Will IRP be email distributing to the buyer- No mailing of the e-invoice will be done by IRP.
IRP JSON or PDF? Or both?
What happens if the email bounces As above.
(does not reach the recipient)?
Business Is the supplier allowed to distribute the e- Yes.
query invoice to the buyer?
If yes, what must alt. is allowed to be As deemed fit by the seller.
distributed- the JSON, the PDF or However, in order to make use of the e-invoice
both? schema, it should be shared in the JSON format so
that it can be read by the ERP of the buyer and
straight away visible in the buyer’s relevant books.
Also, the seller can generate a PDF from the received
signed JSON and share it with buyer over mail etc.
Is the supplier allowed to create and The e-invoice schema has mandatory and optional
distribute business invoice, i.e. file parameters. The optional parameters can also be
that contains other elements in sent by the seller to the buyer as per the published
excess of what is required for e-invoice schema and needed by business need.
clearance with IRP?
Are there any requirements to how The invoice having no tax component is generally
non-Tax invoice must be marked up? known as bill of supply.
Thus, challan and bill of supply are not required to
obtain IRN.
Changes There are inconsistencies between content These are being addressed by relevant notifications
in law / requirements of the published invoice and rule changes from time to time.
Rules template and the GST law. When and how
will this be addressed?
IRN As IRN can be created by the supplier / No
supplier’s vendor directly:
Where can we find detailed IRN will be generated by IRP only. It is not required
specifications for this? to be generated by the business. Just for
information, SHA256 is the algorithm that is to be
used to generate the IRN using 3 parameters viz:
GSTIN of seller, invoice number of seller, financial
year.
Who has to apply for this, the As answered above.
supplier or the technology provider?
Changes In the current legislation it is required to
in law / issue invoice triplicate [two documents
Rules marked accordingly] for sale of goods and
invoice duplicate [two documents marked
accordingly] for sale of services.
Will this requirement be abolished The rules are proposed to be changed so as to
for all taxpayers? address these issues.
Will this requirement be abolished As above.
only for those taxpayers issuing
invoices via the IRP system? In other
words, will there be two parallel
invoicing processes?
The sub rules mandate signing of Signing of invoice is also based on the business need
invoice by seller. Will this be and relationship between buyer and seller. This
amended? need shall continue as per existing rules and also the
business flow between seller/buyer. Signing of the
json payload to IRP has already been answered to be
optional (see response above).
Invoice Invoice legibility:
PDF Under the current regulations, invoice QR code will provide the requisite and relevant
legibility must be ensured and use of PDF is information about the invoice.
strongly recommended. PDF will not be returned by IRP.
PDF can be generated by the seller using the signed
QR code that will be returned by the IRP.
How does this requirement look under the The machine readability will eliminate the need for
new regulations? printing. Moreover, the QR code will enable to
validate the important contents of the invoice as
registered by the IRP.
Other Which documents are exactly included in
Document the scope of the mandate?
s What are the requirements for other ISD invoice and ISD credit note are the documents
document types, such as credit/ debit note, issued by input service distributor ; therefore, IRN
ISD invoice, Bill of supply, Delivery challan, will also be required on these documents as per
Receipt voucher, advance receipt, Payment provisions of the law.
voucher, Self-invoice?
What applies to export transactions / Exporter has also to issue tax invoice which is
invoices? required to be reported like any other transaction. It
is applicable in export invoices.
Is the physical copy of invoice needed for Relevant changes will be notified by the
movement of goods? The current law Government.
provision mandates this. How will it be
treated with e-invoice?
Is it possible to have more than one QR code Yes, the seller is free to use his business
on the invoice? flow/process as he is currently doing, by using the e-
invoice schema. The IRP’s QR code has to be in the
e-invoice, as it validates the invoice. If seller wishes
to place more than 1 QR code, then he needs to
properly annotate them to clarify which is which.