B2B & B2G e-invoicing GST reporting in India, starting 1st April 2020

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New mandatory e-Invoice reporting system in India

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updateThe Indian government is rolling out a new mandatory e-invoice reporting system becoming effective on 1st of April 2020. It is based on the new Invoice Reporting Portal (IRP) for the registration of domestic B2B and B2G invoice transactions and export invoices.

Goods and Services Tax Network (GSTN) and the Invoice Reporting Portal (IRP)

In order to fight tax evasion and to speed-up the reporting process from taxpayers to the tax authorities, the Goods and Services Tax Network (GSTN) is introducing an electronic standard format JSON (JavaScript Object Notation) for invoice reporting. It affects invoices issued in India to Indian private and public sector buyers (Accounts Receivables ‘AR’ invoices), as well as export invoices.

These invoices must be reported via the newly launched Invoice Reporting Portal (IRP) in India. The new IRP is a system of continuous controls on invoice transmissions in real-time that extends the systems, which have existed since 2017 alongside the introduction of the Goods and Services Tax (GST) in 2017. The new IRP is managed by the GSTN and is designed to be closely aligned with the existing e-way bill system and its functionality.

Deadlines and Compliance Requirements

Any Indian business (tax payer) with at least 500 crore (crore equals 10 million) Indian Rupees (INR) turnover that issues invoices to buyers belonging to the private and public sector is due to report invoice data in JSON format to the IRP: The deadline is the 1st of October 2020. Almost in last minute with just 2 and a half weeks before the mandatory e-invoice reporting was due the Indian Ministry of Finance has decided to postpone the mandate for six months from 1 April 2020 to 1 October 2020. For the time being certain taxpayers from finance, insurance and transportation industries are exempted from e-invoicing and QR code requirements.

In case of non-compliance THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 states a liability to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded in section 122. Also, an invoice which is not created in a tax compliance way raises all sorts of accounting compliance questions.

Since 1st of January 2020, the reporting of e-invoices has been possible on a trial basis – at least in theory, since the test APIs and relevant technical documentation were only made available after this date. It is worth checking the official websites closely for updates in the coming months.

Important to note is that this mandate is even going to impact tax payers with turnovers of less than 100 crore INR, when the GST Council will gradually reduce the turnover limit. Regardless, there is no time to loose.

Time lines for Goods and Services Tax Network (GSTN) and the Invoice Reporting Portal (IRP)
Time lines for Goods and Services Tax Network (GSTN) and the Invoice Reporting Portal (IRP)

How does automated invoice reporting work in detail?

The invoice issuers or taxpayers create the e-invoice in their own accounting system and report it to the IRP – either directly via the B2B API connection or indirectly through a GST Suvidha Provider (GSP).

For medium and high volume taxpayers, the B2B API connection is possible, but complex. This is because a direct B2B API connection requires security auditing through a certified agency and the usage of a whitelisted Indian static IP address. Therefore, the connection through a GSP is more common.

A GSP is an organization authorized by the Goods and Services Tax Network (GSTN) to facilitate interactions with the GST Systems from registration to uploading invoice details or filing returns across India.

Regardless of which way the invoice data reaches the IRP (either via the B2B API or through a GSP), the IRP validates the invoice data, checks for a duplicate invoice against the GST system, issues a unique Invoice Reference Number (IRN), signs the invoice digitally and adds a Quick Response (QR) code. The IRN number is generated in real-time and is also visible for buyers in real-time.

The invoice issuer receives the signed JSON of the invoice including the Invoice Reference Number (IRN) and the QR code. This enables the invoice data to be updated in the own ERP system and the invoice to be sent to the invoice recipient, e.g. in PDF format via email. The IRN must be generated prior to the filing GST returns, as uploading GST returns requires IRNs.

Automated Invoice Reporting in India
Automated Invoice Reporting in India

Summary for Automated Invoice Reporting in India 2020

India’s new mandate starts the countdown for many businesses who are now looking to execute a compliant solution with top priority. Implementing and operating compliant solutions for e-invoicing and continuous real-time tax reporting for all the different global mandates increases with India even further – and it is not the end of the global journey of new e-invoicing mandates, it is a journey that is accelerating worldwide.

The challenge comes not only by fulfilling the one mandate in one country but by:

  1. having to individually manage and monitor many different local providers of all involved countries
  2. being able to meet all the requirements in all involved countries of handling electronic inbound and outbound invoices and other data formats and communication channels
  3. providing an easy and reliable connection to the respective ERP systems at the same time

The SEEBURGER E-Invoicing Solution provides control of the processing of inbound and outbound invoices as well as extensions for deep process integration with any ERP system. SEEBURGER is an experienced cloud partner who understands and meets the various requirements of different countries in the EU and elsewhere with a single-source solution.

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Gerrit Onken

About the Author:

Gerrit Onken has been working as Product Manager at SEEBURGER AG since 2010 for software applications and services for electronic business data exchange. His focus is on solutions for SAP, electronic invoicing (E-Invoicing) and innovations for the digitalization of professional and technical business processes for internationally operating customers. Gerrit Onken is a bank merchant and a graduate in business administration with an emphasis on industrial management and business informatics. After working in the financial sector, he worked as a manager and project manager from 2004 to 2010 for one of the top five corporate consultations with international BPOs in the banking and automotive industry.