E-Invoicing Under GST: Part 9 – Features of e-invoice system you need to know

Latest update: The government introduced a new GST e-invoice scheme under which businesses with turnover of Rs 500 crore and above will generate all invoices on a centralised government portal starting October 1, 2020. Earlier, the turnover threshold for businesses was set at Rs 100 crore.

E-invoicing as a feature has now been made available by the Government of India in a bid to establish an efficient GST processing system. Although it is currently not a mandatory requirement and can be adapted on a voluntary basis, taxpayers have a lot of questions about the features of the e-invoicing system. This article outlines the features of an e-invoicing system and clarifies questions around important terms like IRN, Digital signatures etc, under the new e-invoicing system.

Unique Invoice Reference Number (IRN):

Once a taxpayer uploads their software generated invoice to the Invoice Registration Portal, a unique invoice reference number is generated by the system. This unique IRN will be based on the computation of the hash of the GSTIN mentioned on the document (invoice or credit note etc.), the year and the document/invoice number. This hash will be as published in the e-invoice standard and unique for this combination. This way the hash will always be the same irrespective of the registrar who processes it. The hash could also be generated by the taxpayers based on the above algorithm. The providers of the accounting and billing software have been requested to incorporate this feature into their software product.  One can pre-generate and print it on the invoice book, however, the same will not make the invoice valid unless it is registered on the portal along with invoice details.

Note: The hash algorithm that is to be used by the taxpayers has been specified in the e-invoice standard that is published.  The hash will be the IRN.

To ensure deduplication, the registrar will be required to send the hash to the Central Registry of the GST System. The purpose of this exercise is 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. 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 to the Invoice Registration Portal, which will also generate the hash in order to verify it and then digitally sign it with the private key of the IRP. In case the taxpayer submits hash also along with invoice data, the same will be validated by IRN system. The IRP will sign the e-invoice along with hash and the e-invoice signed by the IRP will be a valid e-invoice and used by GST/E-Way bill system.  

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 web user will get a printable form with all details including QR code.  The QR code will consist of the following e-invoice parameters:

• GSTIN of supplier
• GSTIN of Recipient
• Invoice number as given by Supplier
• Date of generation of invoice
• Invoice value (taxable value and gross tax)
• Number of line items.
• HSN Code of main item (the line item having highest taxable value)
• Unique Invoice Reference Number (hash)

The offline app will be provided on the IRP for anyone to download to authenticate the QR code of the invoice offline and its basic details. However, to see the whole invoice, one will have to connect to the portal and verify and see the details online. The facility to download entire invoice will be provided to tax officers, the way it is currently available under E-way bill system.

Note:  The facility of QR code 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. Based on experience of the trial more registrars will be added.

Standardization of 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 on GSTN portal.

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Follow our E-invoicing under GST Series on the links below:

1. E-Invoicing Under GST: Part 1 - What is an e-invoice?
2. E-Invoicing Under GST: Part 2 - E-invoicing and the Tax Department
3. E-Invoicing Under GST: Part 3 - Benefits of e-invoicing
4. E-Invoicing Under GST: Part 4 - Documents to be reported under e-invoicing
5. E-Invoicing Under GST: Part 5 - How does e-invoicing work?
6. E-Invoicing Under GST: Part 6 – E-Invoicing Workflow from Supplier to Invoice Registration Portal
7. E-Invoicing Under GST: Part 7 - Workflow from IRP to Buyer and GSTN or E-Way Bill System
8. E-Invoicing Under GST: Part 8 - Everything you need to know about Invoice Registration Portal
9. E-Invoicing Under GST: Part 9 – Features of e-invoice system you need to know
10. E-Invoicing Under GST: Part 10 – How to register your e-invoice
11. E-Invoicing Under GST: Part 11 - Myths around e-invoicing
12. E-Invoicing Under GST: Part 12 – Frequently asked questions on e-invoicing