An Application Programming Interface (API) functions as a software intermediary, enabling distinct applications to communicate and exchange data. The e-invoicing system in India has seen several important updates recently. As of May 10, 2023, the CBIC announced the sixth phase of e-invoicing, making it mandatory for taxpayers with an annual turnover exceeding INR 5 Crore in any financial year since 2017-18 to issue e-invoices from August 1, 2023. On May 6, 2023, the GST Network postponed the rule requiring older e-invoices to be reported on IRP portals within seven days by three months. A new implementation date has not yet been declared by the department. An advisory from the GSTN on April 12-13, 2023, mandated that 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 their issuance, effective May 1, 2023. Effective October 1, 2022, via notification no. 17/2022, the e-Invoicing system for B2B transactions was expanded to include businesses with an annual aggregate turnover ranging from Rs. 10 crore to Rs. 20 crore.

What do APIs Mean and Who Can Use Them?

In the context of the e-invoicing framework, APIs enable taxpayers, or GST Suvidha Providers (GSPs), to communicate and exchange data with the e-invoice system. To facilitate GST services for taxpayers, the government designed a platform where distinct software components interact according to API specifications. The e-invoice system utilizes RESTful web services to offer various taxpayer functions, including return filing, registration, ledger viewing, and online payment processing.

Users of E-Invoice APIs

Both taxpayers and GSPs can leverage APIs for various GST compliance activities. The following categories of taxpayers are eligible to utilize APIs for generating e-invoices:

*The mentioned turnover applies to any financial year from 2017-18 to 2021-22. Exemptions from e-invoicing and QR code generation are provided to specific sectors, including insurance and banking, financial institutions, NBFCs, Goods Transport Agencies (GTAs), passenger transportation services, and movie ticket providers.

Purpose of Using APIs Under GST

Taxpayer convenience is paramount for the successful adoption of GST. Taxpayers can utilize various third-party applications with desktop, laptop, and mobile interfaces to establish connections with the GST filing system. These applications communicate with the GST filing system through GST APIs, significantly improving user convenience. For e-invoicing, taxpayers create e-invoices within their Enterprise Resource Planning (ERP) software and submit them to the Invoice Registration Portal (IRP). The IRP facilitates the e-invoice process through an API-driven mechanism, allowing GSPs and taxpayers to integrate these APIs into their current ERP systems and generate e-invoices directly from their platforms.

Available API Types

Currently, the following eleven distinct APIs are available:

• Authentication
• Generate Invoice Reference Number (IRN)
• Cancel IRN
• Get IRN details
• Generate e-way bill by IRN
• Get GSTIN details
• Cancel e-way bill
• Sync GSTIN details from CP (Common Portal)
• Get e-way bill details by IRN
• Get IRN details by document details
• Health API

How APIs Assist in E-Invoice Generation

APIs are crucial for generating e-invoices. A taxpayer first enters invoice particulars into their accounting system. This data is subsequently transmitted via the API to the Invoice Registration Portal (IRP). The IRP registers the invoice, generates an Invoice Reference Number (IRN), and then returns the digitally signed e-invoice and QR Code to the taxpayer. The taxpayer's system then prepares the invoice for printing, incorporating both the IRN and the QR Code.

Advantages of Using APIs

Utilizing APIs offers several advantages:

• APIs ensure seamless integration between a taxpayer’s ERP or accounting system and the e-invoice system.
• Since outward supply invoices are initially entered into the taxpayer's ERP and then forwarded to the e-invoice system, APIs prevent redundant data entry for invoices or IRNs.
• APIs help in minimizing data entry inaccuracies within e-invoices.
• They allow taxpayers to input data once into their ERP, after which APIs automatically transfer this data to the e-way bill and GST portals.

Prerequisites for E-Invoice API Usage

To utilize e-invoicing APIs, certain prerequisites must be met:

• Taxpayers and GSPs are required to automate their invoice generation processes.
• GSPs and taxpayers must ensure that all traffic originating from their systems to the e-invoice system is free from viruses, malware, intrusions, and bots. The National Informatics Centre (NIC) may suspend services if malicious traffic is detected.
• Compliance with all IT Security standards and regulatory requirements set by the Government of India is mandatory for GSPs and taxpayers.
• GSPs and taxpayers must satisfy the security criteria specified by CERT-In for both application and infrastructure.
• Adherence to the Information Technology Act 2000 (including Section 43A) and its subsequent amendments is essential for GSPs and taxpayers.
• Taxpayers and GSPs need to provide at least four Indian Static IP addresses to gain access to the production environment.
• A pre-production system for testing various activities and services is a mandatory requirement.
• GSPs and taxpayers must thoroughly test their modified systems on the e-invoice pre-production site for all types of activities and services.

Third-Party Applications vs. In-House Setup for E-Invoicing

When utilizing Application Service Providers (ASPs) for IRN generation, a three-level interaction occurs. The ASP extracts invoice data from the client’s accounting or billing system, formats it appropriately, and then transmits it to the IRP. This communication is facilitated through APIs. This model often appeals to many taxpayers due to its cost-effectiveness. Conversely, if a taxpayer possesses an in-house ERP system capable of interacting with the IRP via APIs, it can directly communicate with the IRP to generate IRNs. However, establishing such a proprietary setup typically entails higher costs.