Introduction of e-Invoicing – A Savior for Businesses
The introduction to the idea of a new Electronic system of Invoicing to be put into place has Taxpayers, Businessmen and the Concerned people wondering what its’ effects shall be like on Businesses.
Especially Businesses with an annual turnover of Rs. 100 Crores and above, as e-Invoicing has been mandated for them. But ironically, e-Invoicing is, in fact, favorable for Businesses in all aspects.
Electronic Invoicing is the System of reporting the already prepared Invoices on a unified portal, Invoice Registration Portal (IRP). Businesses need to generate invoices in their billing systems or ERPs in a specified Schema Format and report them into the IRP.
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The IRP shall then validate the values and mandatory fields, if there are any errors, the IRP shall reject the Invoice and highlight the errors, if not and the validation is successful, the IRP generates an IRN (Invoice Reference Number) and a QR code.
The IRN is a proof of validation of the Invoice and the QR code is for the ease of access to the vital information related to the Invoice.
For now, e Invoicing under GST is applicable to B2B Invoices only, but Businesses having an annual turnover of Rs. 500 Crore and above are also required to generate QR Codes for their B2C Invoices mandatorily.
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Apart from e-Invoicing, Businesses also need to report other documents to the IRP such a B2G Invoices, Credit Notes, Debit Notes, Export Invoices and Reverse Charge Invoices, these are the documents that the Businesses may have to file in their GST Returns.
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1. Intense Reconciliation- The introduction to an Electronic approach to Invoicing, has made the process more systematic and sorted. The transparency shall make the errors in mismatch be visible clearly. The Invoice data from the IRP is sent to both the buyer and supplier for Reconciliation.
2. Transparency- The Invoices uploaded on the IRP are authenticated and no invoice shall be considered valid without an IRN. This makes the process highly transparent, hence no fake invoices and no hiding of Invoices.
3. Real-Time Track- The Invoices are to be reported to the IRP on a real-time basis so that the Taxpayer can file their taxes or claim their Input Tax Credit based on them. This brings the government in the process chain in real-time.
4. Accurate ITC Claiming- With Reconciliation being thorough and detailed, the Taxpayer shall be able to claim accurate and maximum ITC. Since no Invoices can be hidden from the system, there will not be any cases of missing Invoices while claiming ITC.
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5. Auto-Population of data- With the help of the data fed to the IRP while e-Invoicing, all the other systems of GST are benefited. As the e-Invoice data shall be used to auto-populate Part-A of the e-Way Bill, and Anx 1 (Sales data) and Anx 2 (Purchase data) for GST Filing, omitting the manual data entry.
6. Reduced Overall Compliance- For a long time now, Businesses have been struggling with GST compliance, but with e-Invoices, the work for them is reduced. As all the Businesses transactions shall be open for access, e-Way Bill Part-A data shall be auto-populated, data for GST Return Filings shall be auto-populated. This automation of the process has made compliance easier by reducing time, bandwidth, work and errors in filing.
7. Seamless and Steady Cash Inflow- With paper invoices, it is quite tough for Businesses to stabilize the cash inflow. For say, a supplier sends Invoices to a Buyer, now multiple cases can arise due to which the buyer can delay the payment, such as if he loses the invoice, or the invoice goes unnoticed due to crowding of Invoices, he can forget about it, and “N” number of other reasons. But with the Invoices being reported on a unified portal on a real-time basis, the situation can flip on the Buyer for delaying the payment, enhancing the timely cash inflow for Businesses.
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8. Partial Elimination of Paper Invoices- e-Invoicing eliminates the use of paper invoices. Partially, as B2C invoices and businesses with turnover less than Rs. 100 Crores shall continue using paper invoices. However, the elimination of the paper use also eliminates its cost, other related costs, and the trouble of handling and transferring paper invoices.
9. Accuracy and Reduced Human errors- As the process of Invoice data storage and feeding to other branches such as the e-Way Bill system, is automated, the human work is reduced. With reduced human work in the form of data entry shall ultimately reduce the errors that string along. This shall make the overall Process of e-Way Bills, Invoice generation and GST filing accurate and error-free.
10. Ultimate Savior of Working Capital- e-Invoicing shall not just smoothen the cash inflow for Businesses it will also help the businesses in saving their working capital. The Working Capital can be saved by avoiding penalties, scrutinies, audits, paying extra or double taxes and Notices. e-Invoicing enhances Compliance which eventually reduces the risks of Notices, Penalties and Scrutiny. e-Invoicing helps Businesses to avoid audits. And finally, e-Invoicing makes reconciliation firm and ITC claiming simpler and more accurate, hence saving the Businesses from paying more than the actual tax liability.
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11. Inter-readability of Invoices on ERPs- Before the e-Invoicing system, the invoice generated in one ERP was not necessarily readable on other software due to the difference in formatting. But after the introduction e-Invoices that shall be generated in a specified Schema Format, the Invoice can be readable on other softwares as well.
12. Transparency for Tax officials- The data is available and accessible by Tax officials to clear any suspicion they may have. The e-Invoice data can be accessed by them at any point in time
13. Reduced Risk of Audits- Since the data is available for the Tax officials at any time, the need and risks of audits is reduced. Businesses are less likely to receive notices since the record is clear and open and the tax officials have access to all the data that they need with real-time reporting.
14. Data Availability for Multiple uses– The e-Invoice data is available on the IRP for the use of the e-Way Bill and GST system, as well as for any Tax officials who may need it.
15. Use of QR Code and IRN- The IRN and the QR code are the essence of e-Invoicing. The IRN is proof of the authenticity of an Invoice. IRN can be used to access the Invoice information, by inserting the IRP portal. On the other hand, the QR code is used for the quick access of the same Invoice details and information. For say, while receiving goods from a supplier the receiver only needs to scan the QR Code using the QR Code Scanner and he shall be able to see all the essential details of that Invoice in their system.
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The e-Invoicing system, for the long run, is highly useful for Businesses if implemented as planned by the government and accepted willingly by the Businesses.
e-Invoicing is a smart strategy and makes full use of a robust IT infrastructure of the digitally evolving Country and its market. By adopting and complying wisely with the system, Businesses cannot just save money, but also make more money with less trouble.
About the Author– GSTHero- Making Life Simple! GSTHero is the best GST filing, E-Way Bill Generation and E-Invoicing Software in India. GSTHero is a government authorized GST Suvidha Provider. Both Businesses and Tax Practitioners can file GSTR 1, GSTR 3B, GSTR 9 and GSTR 9C with all supporting reports. 1-Click Auto Reconciliation and report-matching feature helps you in claiming up to 100% ITC and finds your GST Defaulting Suppliers. GSTR2A vs GSTR-3B, GSTR-1 vs GSTR-3B, ‘GSTR-1, GSTR-2A and GSTR-3B’ annual report matching is also provided by GSTHero.
GSTHero ERP Plugins provide 1 Click E-Way Bill and E-Invoice, Generation, Operation and Printing from your own ERP like Tally, SAP, Marg, Busy, Microsoft Dynamics, Oracle and others itself with high data security.
Disclaimer: The above post is sponsored by GSTHero. The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon.
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