In the Indian GST regime, e-invoicing and e-way bills are two crucial digital mechanisms designed to enhance transparency, streamline operations, and curb tax evasion. While both involve electronic documentation, they serve distinct purposes.

 

E-Invoicing (Electronic Invoicing)

E-invoicing under GST is not about generating an invoice on a computer. It's about reporting a standard GST invoice to the Invoice Registration Portal (IRP) of the GST system. The IRP then validates the invoice, generates a unique Invoice Reference Number (IRN), and digitally signs the invoice along with a QR code. This IRN-enabled invoice is then considered a valid e-invoice.

Purpose: The primary purpose of e-invoicing is to standardize the invoice generation process, ensure authenticity, reduce data entry errors, prevent fake invoices, and facilitate auto-population of GST returns (like GSTR-1) and e-way bills.

Applicability (Current Threshold): As of August 1, 2023, e-invoicing is mandatory for all GST-registered businesses whose aggregate annual turnover (AATO) in any preceding financial year (since 2017-18) exceeds INR 5 crore for B2B (Business to Business) and export invoices.

Upcoming Change (Effective April 1, 2025): From April 1, 2025, businesses with an AATO of INR 10 crore and above will also be required to report their e-invoices (including credit notes and debit notes) to the IRP within 30 days of the invoice date. Failure to do so will render the invoice invalid for ITC claims.

Exemptions from E-invoicing: Certain entities are exempt from e-invoicing regardless of their turnover:

• Banking and Financial Institutions (including NBFCs)

• Insurers

• Goods Transport Agencies (GTA) providing services related to transportation of goods by road in a goods carriage

• Passenger transportation services

• Admission to the exhibition of cinematograph films in multiplexes

• Special Economic Zone (SEZ) units (SEZ developers are not exempt)

• Government departments and local authorities.

E-invoicing Process (Step-by-Step):

1. Invoice Generation by Supplier: The supplier continues to create the GST invoice using their own accounting/ERP software. However, the invoice must conform to the e-invoice schema (INV-01) and include all mandatory fields.

2. IRN Generation (Optional for Supplier): The supplier's ERP/accounting software can generate a unique Invoice Reference Number (IRN) using a standard hash algorithm. This step is optional; if the supplier doesn't generate it, the IRP will.

3. Reporting to IRP: The supplier's software (or a third-party GSP/ASP) sends the invoice data (in JSON format) to any of the Invoice Registration Portals (IRPs).

4. IRP Validation and IRN Generation: The IRP validates the invoice data against the GST system for duplication and other checks. Upon successful validation, the IRP:

   • Generates a unique 64-character Invoice Reference Number (IRN).

   • Digitally signs the e-invoice.

   • Adds a QR Code containing key invoice details.

5. IRP Returns Signed E-invoice: The IRP sends the digitally signed e-invoice (with IRN and QR code) back to the supplier's ERP/software.

6. Issuance to Recipient: The supplier can now issue this IRN-enabled e-invoice (with the QR code) to the recipient.

7. Data Transmission to GST and E-way Bill Systems: The IRP also automatically sends the e-invoice data to the GST system (for GSTR-1 auto-population) and the E-way Bill system (if applicable, for auto-population of Part A of the e-way bill).

Benefits of E-invoicing:

• Reduced Data Entry Errors: Eliminates manual data entry and transcription errors, leading to fewer mismatches and disputes.

• Faster and Accurate ITC: Auto-population of GSTR-1 and GSTR-2B streamlines ITC matching and claims.

• Reduced Reconciliation Efforts: Simplifies reconciliation between books and GST returns.

• Real-time Invoice Tracking: Enables real-time tracking of invoices.

• Reduced Fraud: Helps in curbing fake invoices and fraudulent ITC claims.

• Improved Compliance: Ensures better compliance with GST regulations.

• Efficiency and Cost Savings: Reduces printing, postage, and manual processing costs.

 

E-Way Bill (Electronic Way Bill)

An e-way bill is an electronic document required for the movement of goods from one place to another, if the consignment value exceeds a specified threshold. It ensures that goods are transported in compliance with GST laws.

Purpose: The primary purpose of an e-way bill is to track the movement of goods, prevent tax evasion, and ensure that goods are being transported legally.

Applicability (Thresholds): An e-way bill (Form GST EWB-01) is generally required for the movement of goods:

• Inter-state (between states): When the consignment value exceeds INR 50,000.

• Intra-state (within the same state): The threshold varies from state to state, but generally it's INR 50,000 or INR 1,00,000 for most states. Some states have specific rules for certain goods or intra-city movements.

Who needs to generate an e-way bill?

• Registered Person (Consignor/Consignee): If a registered person causes the movement of goods of a value exceeding the threshold, they must generate the e-way bill.

• Unregistered Person: If an unregistered person supplies goods to a registered person, the recipient (registered person) is responsible for generating the e-way bill.

• Transporter: If neither the consignor nor the consignee generates the e-way bill and the goods are handed over to a transporter, the transporter must generate it.

E-way Bill Generation Process (Online):

1. Registration on E-way Bill Portal: The first step is to register on the official E-way Bill Portal (https://ewaybill.nic.in/). Taxpayers registered under GST can use their GSTIN to register. Unregistered transporters can also register to get a Transporter ID.

2. Login to Portal: Log in using your username and password.

3. Generate New E-way Bill: Click on Generate New under the 'E-way Bill' option.

4. Fill in Details (Form EWB-01): The form is divided into two parts:

   • Part A (Consignment Details):

     • Transaction Type: Outward (Supply, Export, Job Work, etc.) or Inward (Supply, Import, etc.).

     • Sub-type: Specific reason for movement.

     • Document Details: Invoice/Bill of Supply/Delivery Challan number and date.

     • From/To Details: GSTIN of consignor and consignee, along with their addresses and Pincodes.

     • Item Details: HSN Code, Product Name, Description, Quantity, Unit, Taxable Value, CGST, SGST/UTGST, IGST rates, and Cess if applicable.

     • Reason for Transportation: (e.g., Supply, Export, Job Work, SKD/CKD, Recipient not found, etc.).

   • Part B (Vehicle Details):

     • Mode of Transport: Road, Rail, Air, Ship.

     • Vehicle Number: (for road transport).

     • Transporter ID: (if goods are handed over to a registered transporter).

     • Transporter Document No. & Date: (for rail, air, or ship transport).

     • Distance: Approximate distance in kilometers.

5. Generate E-way Bill: After filling in all details, click on "Generate".

6. E-way Bill Number (EBN): A unique 12-digit E-way Bill Number (EBN) will be generated. This EBN along with the QR code needs to be carried by the person in charge of the conveyance.

Validity of E-way Bill: The validity of an e-way bill depends on the distance the goods are to be transported:

• For every 200 km or part thereof, the validity is 1 day.

• For Over Dimensional Cargo, the validity is 1 day for every 20 km.

• The validity period is calculated from the time of generation of the e-way bill.

• The e-way bill can be extended by the transporter before its expiry.

Key Features and Benefits of E-way Bill:

• Elimination of Checkposts: Facilitates faster movement of goods by removing state-wise checkposts, reducing transit time and logistics costs.

• Reduced Paperwork: Electronic generation eliminates the need for extensive physical documentation.

• Transparency: Provides real-time tracking of goods in transit.

• Prevention of Tax Evasion: Helps tax authorities to monitor movement and ensure compliance.

• Simplified Compliance: User-friendly online system for generation, update, and cancellation.

• Consolidated E-way Bill: Transporters can generate a consolidated e-way bill for multiple consignments in a single vehicle.