When e-invoicing becomes mandatory in India this fall, invoices that do not comply to the set requirements will be considered null and void. Exceptions will only be made for certain exempt businesses. Companies must prepare quickly and should take advantage of solutions that facilitate the issuance and receipt of e-invoices.

India will make the switch from voluntary to mandatory e-invoicing on 1 October 2020. All registered businesses with a previous year’s revenue greater than Rs 100 crore (approx. 13 million Euros) will be required to electronically transmit invoices to the Invoice Registration Portal (IRP); invoices that do not have an Invoice Registration Number (IRN) will be considered invalid.

Businesses with annual turnover less that Rs 100 crore, banks, airlines, insurance companies, armed forces and telecom service providers are likely to be exempt from mandatory issuing of e-invoices.

The introduction of mandatory e-invoicing in a phased manner will bring consistency, machine-readability and uniformity, consequently putting an end to data errors and reducing tax evasion in India.

Requirements for submission of e-invoices

According to the new rules, e-invoices must be issued to the IRP in JSON format. The document can include an e-signature but it is not required.
Once the e-document is submitted, the IRP will carry out the validation of the e-invoice in order to provide the supplier with a response message. Validation of the document is based on the following parameters:

  • Completion of data in all mandatory fields;
  • Validity of supplier GSTIN (Goods and Services Tax Identification Number);
  • Validity of buyer GSTIN;
  • Validity of invoice number and financial year;
  • Whether the invoice already exists in the GST system.

If the IRP response is positive, the invoice will be digitally signed and assigned a unique number by the IRP. A QR code will also be generated in order for the supplier and buyer to confirm authenticity of the e-invoice and proof that it has been registered in the GST system. The IRP will then make the document available to both parties in the GST portal.

If the response is negative, an error message will be sent detailing the reason for rejection.

Distribution of e-invoices

After the above steps, the supplier must distribute the e-document to the buyer. Since the distribution between the trading parties is not regulated, the distribution method can be agreed upon between the parties. However, as exempt businesses are not obliged to accept and process JSON e-documents, it is recommended that the supplier be able to either generate PDF invoices or print paper invoices for distribution to such businesses.

Pagero’s solution – How to become and stay compliant

Pagero has an established compliance solution for Indian businesses impacted by the e-invoicing mandate.

Issuance with Pagero

  • After the file is generated in the existing supplier format, Pagero will perform content validation and enrichment as well as convert the file to the mandatory JSON format.
  • Pagero will submit the file to the IRP, the mandated platform for clearance.
  • The IRP will reply to Pagero with a receipt including IRN, QR code and IRP e-signature.
  • Pagero will transmit the document with IRN, QR code and e-signature to the supplier in the supplier format.
  • Documents will be distributed to the buyer in the previously agreed upon format, including but not limited to JSON, PDF or print.
  • Optionally, all relevant documents will be archived by Pagero.

Receiving with Pagero

  • Once received in JSON or any other agreed upon format, Pagero will convert the file into the buyer’s preferred format and perform content validation and enrichment if required.
  • Pagero will transmit the document in both the mandatory and buyer formats.
  • Optionally, all relevant documents will be archived by Pagero.

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