India: Electronic Invoicing. How Does the GST e-Invoice System Work?

From January 2021 all taxpayers in India with an aggregate turnover of more than Rs 100 Cr. during the last fiscal year need to implement e-invoicing.

The GST e-Invoice System requires issuers to report e-invoices to the government for validation before they are delivered to the customer. For that purpose, the government has developed a series of Invoice Registration Portals (IRP). E-invoice issuers must report their invoices to the IRP. The IRP electronically signs the invoice and applies a unique code called an Invoice Reference Number (IRN), as well as a unique QR code.

Invoice issuers must have a valid GSTIN code and be registered in the GST portal and either the electronic invoicing or e-way bill portal. At the same time, they should have their platform connected to the government platform according to all specifications issued by the Indian authorities.

In India, electronic invoices are called GST Invoices.

GST Invoices must be generated in JSON format following the GST INV – 1 schema. The schema is based on the PEPPOL/Universal Business Language and is adapted to the Indian market.

All invoices should contain the IRN number.  The IRN is a numeric, 64-digit code generated by the IRP for each electronic invoice. Only invoices containing the IRN are considered valid.

The benefits of this e-invoicing system should soon come into play. This system will improve efficiency as everything becomes paper-free and the payment cycle is improved. At the same time, it reduces tax evasion and fiscal fraud while facilitating tax compliance.