Introduction to e-Invoicing and IRN – Invoice Reference Number

The government of India and the GST department of India has issued a new rule where B2B invoices, have to be generated through the GSP(GST Suvidha Provider) portal. 

E-invoicing doesn’t mean that one can generate invoices using the government portal, rather it requires people to be able to upload their already existing invoices on the portal, and generate an IRN number, along with a QR code, that will be generated in real-time on the GSP. 

Refrens provides a state-of-the-art e-invoicing software for users to seamlessly integrate with GSP to generate IRN numbers, and the QR code, and validate their invoices with the GST Suvidha Provider Portal issued by the government of India. 

What is e-invoicing? 

Before we understand what is e-invoicing, it’s important to understand the current state of invoicing to appreciate this new change introduced by the government of India. 

In the early invoicing systems, businesses would submit their GST invoices while filing their GSTR-1 returns. Once the GSTR-1 is filed by the respective suppliers, the invoice information is reflected in form GSTR-2A for the recipients for viewing only.In this current state, if there is a need for an e-way bill, in such cases the transporter, or the business must generate an e-way bill manually, and then go ahead with their process. 

But with e-invoicing coming into the picture, this process of generating B2B invoices(with the GST number of the customer), businesses can pre-validate their GST invoices in real-time with the government portal, and this allows them to save time, and the government has a real-time tracking for all GST invoices, hence reducing the chances of Fraud. 

‘e-Invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices (the invoices where the GST number of the customer is entered to be eligible for GST Credit) are authenticated electronically by GSTN for further use on the common GST portal. 

Under this new electronic invoicing system, a unique 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 where-in all invoice information will be transferred from this portal to both the GST portal and e-way bill portals in real-time, thus eliminating the need for manual data entry while filing GSTR-1 return as well as generation of part-A of the e-way bills.

This process of generating and authenticating e-invoices by the government will reduce data redundancy and make the process of validating GST invoices smoother, thereby reducing the chances of fraud. 

Will e-invoicing benefit businesses, if yes, how? 

E-invoicing has been introduced to not just curb tax evasion, but also smoothen the process of registering GST invoices with the portal to make the process more efficient, thereby reducing compliance troubles, and audits, allowing businesses to focus on their work, and worry a little less about their compliances. 

Earlier the process of registering GST invoices with the government had redundancies and was rather slow, and not so efficient. The visible advantages of the new e-invoicing system are as follows – 

  1. Reducing Mismatch Errors – E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
  2. Minimize manual Data-entry errors – Businesses often use multiple software to create invoices, which need to be manually entered, and this props up the scope for data entry errors. With e-invoicing, the E-invoices created on one software can be read by another, allowing interoperability and helping reduce data entry errors.
  3. Real-time tracking of invoices prepared by the supplier is enabled by e-invoice. Earlier businesses had to wait for the companies to file their GST invoices for it to reflect in their GST 2A ledgers, but with e-invoicing, this would be in real-time.
  4. With real-time invoice tracking, businesses can avail of input tax credits Faster.
  5. Reduction in tax fraud, as the government will now have a real-time track of transactions, and any manipulations will be flagged on the portal, thereby reducing the chances of tax frauds.
  6. Reduction in Data redundancy – Since all the GST data would be available on the portal in real-time, data bits can be auto-populated, and therefore a lot of time and efforts can be saved in generating e-way bills, credit notes, and debit notes.
  7. Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level. This will be a great relief for businesses, as they can now focus more on their business operations rather than on compliances, and audits.