Essential Validation Guidelines for GST e-Invoicing

The implementation of e-invoicing under GST presents taxpayers with various challenges during the generation process, as it is a relatively new system.

Recent E-Invoicing Updates

On May 10, 2023, the CBIC announced the sixth phase of e-invoicing, mandating it for businesses with an annual turnover exceeding Rs. 5 crore in any financial year from 2017-18, effective from August 1, 2023.

The GST department postponed the seven-day deadline for reporting older e-invoices to IRP portals by three months on May 6, 2023. A new implementation date is still pending.

According to GST Network advisories from April 12 and 13, 2023, businesses with an annual turnover of Rs. 100 crore or more must submit tax invoices and credit-debit notes to the IRP within seven days of the invoice date, starting May 1, 2023.

This guide briefly outlines common errors taxpayers may encounter during e-invoicing and offers methods to avoid them.

Common E-Invoicing Errors and Their Prevention

Unique Invoice Numbers

Ensuring unique invoice numbers for each financial year is crucial. Each e-invoice requires a distinct number. If corrections are needed for an existing invoice, a new invoice with a fresh, unique number must be issued.

Categorizing B2B Invoices

E-invoicing is exclusively for B2B transactions. Taxpayers must accurately classify invoices as B2B to generate e-invoices. Invoices incorrectly marked as B2C will not be processed, and no Invoice Reference Number (IRN) will be issued.

Invalid Starting Characters

Invoice numbers cannot begin with 0, /, or -. Using these characters will result in rejection of the e-invoice request.

Avoiding Duplicate IRNs

An IRN cannot be generated twice for the same invoice number. Attempts to do so will be rejected. If an IRN is canceled, a new invoice number must be used to generate a fresh IRN.

Validating Recipient's GSTIN

Before preparing an invoice, taxpayers must confirm that the recipient's GSTIN is registered and active on the GST portal on the invoice date.

Matching GSTIN and State Code

It is essential to ensure that the first two digits of the GSTIN align with the state code provided in the supplier or recipient details during invoice upload. For export supplies, the recipient code should be 96.

PIN Code Validation

The e-invoicing system's master database validates PIN codes against corresponding states. If a PIN code is not found directly, the system will verify the first three digits against the postal department's state mapping patterns. An IRN is generated only after successful validation.

SEZ Unit E-Invoice Generation

Special Economic Zone (SEZ) units cannot issue e-invoices themselves. However, an e-invoice can be generated if an SEZ unit is the recipient of the supply.

Reverse Charge Mechanism

For invoices under the reverse charge mechanism, the supplier is responsible for generating the IRN. Reverse charges can be indicated with 'Y' for B2B and SEZ invoices, although the tax liability rests with the recipient.

Document Date Preceding Filing Date

If the invoice document date predates the reporting date to the IRP, and the GSTR-1 for that period has already been filed, the e-invoice will not be included in that period's GSTR-1.

Incorrect Use of Blank Spaces

Blank spaces are recognized as characters within the GST system. For example, entering a state code as '7 ' instead of '7' or '07' during e-invoice generation will prevent accurate auto-population in GSTR-1.

Timely IRP Reporting

Adhering to GST Network advisories from April 12 and 13, 2023, taxpayers with an annual turnover of Rs. 100 crore or more must report tax invoices and credit-debit notes to the IRP within seven days of the invoice date, effective from May 1, 2023.