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Author's profile photo Sanil Bhandari

Insights into India e Invoicing Implementation

The India e Invoicing will be a dramatic change which will introduce a transparency on GST Tax Collection and also stream line revenue process. E Invoicing as a process is being introduced in many countries and India is a follower in this regard. With the opening of the economy lot of Multinationals operate in India and implementation of e Invoicing is a challenge for many organizations, since they have homogeneous global processes, which need to be adapted for local compliance in India. I have tried to answer some of the common questions related to based on project experience:

Q1) How will the e Invoicing model in India work?

A: Under the e Invoicing model for India, all B2B Customers would have to generate an invoice as was done in the past. An electronic file in JSON format, with the required schema would have to be sent to the IRP Portal. Once the file is sent via an asynchronous call, the IRP will generated an unique reference number (IRN Number) and digitally sign the e Invoice. It will also generate a QR Code, which will contain the vital details of the e Invoice and the same would be returned to the Tax Payer.

Q2) What are the types of documents, which are valid for e Invoicing?

A: The following type of Invoices will be covered under e Invoicing

  • Invoices by Supplier
  • Credit Note by Supplier
  • Debit notes by recipient

Q3) In the SAP System, how to determine a customer, if it is valid for e Invoicing?

A: The e Invoicing is currently valid for B2B Customers. If your customer has a registered GSTIN Number, the standard solution determines the customer to be valid for e Invoicing

Q4) What are the various parties involved in an e Invoicing process?

A: The e Invoicing solution in SAP is built around e Document framework. Depending on the solution scope if you are using DCS or other ASP Solution, e Invoicing can be used. You need to have a tie up with a GSP. In my customer’s case, the solution was built around DCS and e Invoicing solution based on e Document. In addition an authorized GSP, one would also need the invoice outputs to be signed digitally. A digital signature of an authorized natural person in the organization is recommended. There are authorized service providers who provide Digital Signature facilities through API. The invoice meta data needs to be transferred by API Call to Cloud or an On Premise System on the network. This needs to be worked with the service provider based on volumes.

Q5) What will change in invoice outputs after e Invoicing is mandatory?

A: There would be potential changes in invoice output, once e Invoicing is mandatory. The invoice issued after e Invoicing should contain some of the key fields like:

  • Invoice Type
  • Invoice Type Code
  • Invoice No
  • Details of Receiver (GSTIN, State Code, Place, Pin Code)
  • Details of Consignee (Ship to GSTIN, Shipping to Address, Supply Type)\
  • Unique Identification Number (IRN)
  • QR Code generated by IRP Portal
  • Line Item Details for each HSN/SAC Code containing the item description, Qty, Rate, HSN/SAC Code, Tax Break up (Base Value and Tax Values like IGST, CGST & SGST) based on nature of transaction

These are some of the mandatory fields. However, the supplier also may include additional details as required for the business like payment terms, SEZ Declaration etc to name a few

The output should ideally be issued only when the IRN has been generated and received in the e Document cockpit in case you are using the standard e Invoicing solution from SAP

Q6) Till what time, the invoice cancellations can be done after e invoicing is implemented? What should be the criterion to consider for cancellation of invoice under e Invoicing?

A: The invoice can be cancelled only within 24 Hours from issuance on IRP Portal. Since the JSON file in e invoicing is issued only after the accounting document has been posted in the system, the recommended way is to consider the posting date of the accounting document for calculation of 24 hours. It is also possible to cancel invoices on GST Portal in 1 month. However, it is best to discourage the same and have the billing associates generate a debit note for such a case, rather than the user cancelling the invoice on the GST Portal. This will ensure, a system control for the business data

Q7) The same document type is used for generation of FI postings for both customers and vendors. In such a case and since the process is global in nature, how can we ensure that the right data is picked up for e Invoicing for Indian entities?

A: It is a common issue that lot of Global Companies who also have business in India, have stringent processes, where it is difficult to change and need enhancements or workarounds to meet the local requirements. In one of the cases, the same accounting document type was used for GL, Customer and Vendor postings. There is an BADI available where such a custom logic can be written. In this case, the document type for e Invoicing was ascertained based on a combination of company code, Posting key and accounting type to determine if an accounting document type is relevant for e invoicing or not.

Q8) The full suite of SAP Solution for e Invoicing and GSTR Reporting (DCS) is used. How to control, that the e invoicing is generated and approved first before it can be considered for GSTR reporting (GSTR 1)?

A: E Documents for both e Invoicing and GSTR reporting are generated as soon as the document is posted. However, there might be a delay in generation and approval of e Invoice. Ideally to better control the process, that invoice data which has not been approved by IRP Portal should not be reported for GSTR1, a BADI implementation would be involved to ensure that the GSTR 1 reporting related e Document is submitted only when the e Invoicing for the customer invoice is approved. This would reduce manual effort as well as reconcilliation effort

Q9)_How does e Invoicing impact the invoices from Vendors? Is any change required on the incoming invoices posting as well when the e Invoicing becomes mandatory?

A: E Invoicing would be mandatory for any one who has a turn over of INR 500 Crore ( INR 5 Billion). The supplier falling in this category need to make sure that they provide an invoice containing mandatory details such as:

  • IRN No
  • QR Code

All other details as were required prior to e Invoicing. However, the posting process for supplier invoices (Incoming AP Invoices) will not change. Customers who are using solutions like VIM etc, will have the invoices posted as earlier and the e Document will be generated for GSTR 2 as soon as the document is posted. However, these e documents will be sent to the DCS Cockpit and no change is expected in the process within the system. However, from a process point of view, controls would need to be built in to ensure that the essential details are available in the invoice before it is captured in SAP System to reduce reconcilliation efforts, since it is the responsibility of the supplier and the buyer to correct any incorrect data or data which has not been reported to GSTIN.

These are just some of the queries which are important from a project perspective for India e Invoicing.

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      26 Comments
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      Author's profile photo Neha Bhasin
      Neha Bhasin

      Hi Sanil Bhandari

      You have answered lot of queries that I had on India GST and e invoicing. The information shared is very concise and I am sure useful to lot of people like me.

      Thanks a lot for sharing.

      Regards

      Neha

      Author's profile photo Kabir Saha
      Kabir Saha

      Hello Sanil Bhandari

      Thanks for sharing the info. It would be extremely useful for the ongoing project of my team

      Regards

      Kabir

      Author's profile photo Vinayak Deshpande
      Vinayak Deshpande

      Hi Sanil Bhandari

      Thanks for sharing

      Regards

      Vinayak

      Author's profile photo Nityanand Menon
      Nityanand Menon

      Thanks for sharing the information Sanil Bhandari

      Author's profile photo Disha Oberoi
      Disha Oberoi

      Thanks for sharing

      Author's profile photo vinayaga swaminathan
      vinayaga swaminathan

      This is really great, thanks for sharing information,

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Thanks a lot vinayaga swaminathan for the feedback

      Regards

      Sanil

      Author's profile photo Kirit Sommaya
      Kirit Sommaya

      Thanks a lot for sharing info Sanil Bhandari

      Author's profile photo Nidhi Goyal
      Nidhi Goyal

      Great Blog Sanil Bhandari!

      One quick clarification on Digital Signature, Is there any requirement from SAP for digital signature in the JSON/XML before sending it to IRP?

      Is there a concept or requirement for a digital signature to be embedded in the JSON file to authenticate with IRP portal?  Are there digital signature or certificates that we should be using to authentical with IRP portal?

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Hello Nidhi Goyal

      Please referthe feedback i provided to Satyadev Dutta  for the same question. That should help answer your question.

      Regards

      Sanil Bhandari

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Thanks a lot Satyadev Dutta  for the feedback.

      The digital signature by DSC is an optional information in the file to be uploaded on IRN Portal. So unless there is a change in law by GSTN, this is not required. The approved e Invoice file which you will receive from IRP Portal will have an digital sign by IRP and would have the IRN and QR Code in encrypted form. You may refer to the below FAQ:

      https://cleartax.in/s/gst-e-invoice-digital-signature

      I would suggest you to check with your tax colleague on the legal requirement since the information from GSTN is also flaccid and subject to change.

      If you are issuing an PDF output after the invoice is approved, you can sign it digitally by an authorized natural person as i have already mentioned in my blog.

      Regards

      Sanil Bhandari

      Author's profile photo Mohammad Moin Khan
      Mohammad Moin Khan

      Not surprised, no one would have put such precise information... Thank you so very much Sanil Bhandari

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Thanks a lot Mohammad Moin Khan

      Regards

      Sanil Bhandari

      Author's profile photo Akshay Tiwari
      Akshay Tiwari

      Hi Sanil Bhandari

      I had similar questions for my current project on India e invoicing and the blogs helps a lot since it is prominent in Google. I joined SAP community for the precise reason as well

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Thanks a lot

      Author's profile photo Marava Ekambaram
      Marava Ekambaram

      Dear Sanil,

      First of all thank you for sharing valuable information. My client want to generate einvoice for Vendor related transactions using document type KR, but edocument is not generating. We maintained document type KR in einvoice configuration too.

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Hello Marava Ekambaram

      The system behavior is correct since there is no legal requirement to generate e invoice for Vendor Invoices. The vendor invoice is valid only for GSTR 2 and e document for the same should be generated if you are using DCS for GSTR 2 reporting.

      Thanks & Regards

      Sanil Bhandari

      PS - If you have a technical issue, please post it under Q&A in SAP Community forum and not as a response to a blog.

      Author's profile photo Anil Talnikar
      Anil Talnikar

      Hi Sir,

      In SAP Vendor Master which field to be used to identify or tag Vendors above 500 crore turnover.

      Please suggest.

      With Best Regards,

      Shekhar Gaikwad

      Author's profile photo Sanil Bhandari
      Sanil Bhandari
      Blog Post Author

      Hello Anil Talnikar

      As far as i am aware you need to track it manually. You can find a field in the vendor or BP which is not being used and use it to update it as one time activity based on discussion with the vendor. In one of my projects, we have used Industry field to capture the information, since we do not use this field for any other purpose

      Thanks & regards

      Sanil Bhandari

      Author's profile photo Amit Yadav
      Amit Yadav

      Thanks a lot for the insights Sanil Bhandari

      Author's profile photo Malay Shenoy
      Malay Shenoy

      Very useful information Sanil Bhandari

      Author's profile photo Priyank Agarwal
      Priyank Agarwal

      I registered on SAP community looking for the same information. Found the blog very useful Sanil Bhandari

      Author's profile photo Gauri Abhyankar
      Gauri Abhyankar

      Thanks a lot for the info.

      Author's profile photo tanisha kulkarni
      tanisha kulkarni

      Thanks for the infomation on e-invoicing mandate in India I can across the article which explained how to use the generated e-invoice and QR Code which was also every helpful  . But i apprecitates the efforts for articulating the article in faq format.

      Author's profile photo Shiv Tomar
      Shiv Tomar

      Thanks a lot for sharing the information.

      Author's profile photo Nidhi Ratna
      Nidhi Ratna

      Hi Sanil,

      I am working on eInvoice solution for my client. IRN field is tehre in MIRO and FB60. I am facing following issues -

      1. IRN number is not getting captured for the parked and posted documents in BSEG.
      2. The client is using the upload program for entering vendor invoices. Adding the IRN field here might disrupt other processes. In that case, how can we upload the IRN number?
      3. For posted FI documents, we need to update IRN. But we are unable to add this field in FB02 nor we are able to add this in FM FI_Document_MAss_ Change.

      Please suggest.

       

      Regards,

      Nidhi