e-Invoicing under GST: a Step towards Reduced GST Compliance
e-Invoicing or Electronic Invoicing under GST is a modernized method of dealing with B2B Invoices using an official and automated portal. e-Invoicing under GST has been implemented by the Government on large enterprises from October 2020. e-Invoicing is considered to be a success as it serves all its purposes well, which is why the government intends to expand e-Invoicing to all businesses by April 2021. This article focuses on the impact of e-Invoicing on overall GST Compliance. Towards the end of the article, you will also discover the best e-Invoicing software for your business/ clients.
e-Invoicing under GST Regime and What it means
e-Invoicing under the GST regime is a new provision given by the Government in October 2020 for large enterprises. e-Invoicing is the process of validating e-Invoices on the official IRP. The businesses that are liable to e-Invoicing must generate the e-Invoice in their ERPs in the SCHEMA Format as specified by the government and must contain the details in the mandatory fields.
Accountants are then required to upload these invoices to the IRP in real-time for validation and the IRP shall validate the e-Invoice for details such as missing mandatory fields, party details, invoice details etc.
Upon successful validation of all the details of the e-Invoice, the IRP uses the hash algorithm and generate unique IRNs and QR Codes for each invoice to ease the identification and mark the authenticity of the document. The IRP then shares these validated e-Invoices with the recipient, the GST Portal and the e-Way Bill Portal.
E-Invoicing as a process is as organized and sophisticated as it looks. It will reduce errors and the chances of frauds from either parties. Additionally easing up the work for business accountants by directly affecting the overall GST compliance. e-Invoicing in gst for now is applicable to businesses having an annual aggregated turnover of INR 500 Crores and above, but will soon apply to all the businesses.
But unlike its name suggests e-Invoicing is not limited to invoices. It majorly applies to B2B invoices, however, the users are also required to report the following documents to the IRP-
- B2B Invoices
- B2G (Business to Government) Invoices
- Export Invoices
- Reverse Charge Invoices
- Credit Notes
- Debit Notes
- QR Code generation for B2C Invoices (Postponed to a later date, possibly December 2020)
Note- Delivery Challans and Bill of Supply remain exempted from e-Invoicing.
The government has also exempted a class of businesses that do have an annual turnover above Rs. 500 Crores and are still do not have to opt for e-Invoicing, these are mentioned below-
- SEZ Units and Developers
- Insurance companies
- Banking Companies
- Financial institutes
- Passenger transportation service, etc.
Phased Manner Implementation of e-Invoicing. What does it imply?
e-Invoicing is being implemented in a Phased manner in India, now what does this mean?
The government played it safe by implementing e-Invoicing on large enterprise first. The large businesses that are liable to e-Invoicing are rich in resources and could adapt to the new feature quicker and smoother.
But with positive response from businesses that has countered all the negative impact anticipations, the government is gradually moving e-Invoicing to all documents and all businesses.
As per the high level Finance Officials of our country, a notice has been released that e-Invoicing will implement on Businesses with an annual aggregated turnover of INR 100 Crores and above from Jan 2020 and on the remaining businesses by April 2021.
This implies that e-Invoicing has been implemented for the better and it is here to stay considered that it is one of the most successful provisions of the entire GST Regime. Businesses need to start realizing the importance of e-Invoicing sooner than later, learn the details and draft out ways to comply with this new provision.
e-Invoicing a curse or a blessing for businesses?
e-Invoicing solution is a success both for businesses and for the Government. It has way more advantages for both the parties involved than it has downsides. However though, just like any other provision e-Invoicing has its set of pro and cons but for businesses the pros and more than the cons, as of now.
e-Invoicing software is playing a very vital role in business accounting and invoicing in general. It has made working more automated, thus accurate and less time consuming for the accountants.
Here is a list of practical and real-time benefits of e-Invoicing that the businesses are experiencing-
1. Less Manual Input Required- e-Invoicing is an additional process in the compliance load but the same as a process does not require too much input to ensure accuracy. Accountants only need to generate and validate the e-Invoice to achieve accuracy in data maintenance.
2. Saves Time- Yes, e-Invoicing is a time saver for businesses. Although businesses tend to think that e-Invoicing is an addition to the compliance burden but in the contrary it will ease the compliance load from other parts of the GST regime. E-Invoicing saves your time in ensuring the data accuracy of the accounting process.
3. Is Electronic and Automated- e-Invoicing is electronic and thus is highly automated. The validation itself is a problem solver for a lot of accounting issues such as missing invoices, duplicate invoices, fake invoices and many more. Apart from this the IRP will also auto populate the e-Way Bills and GST Returns based on the e-Invoice data.
4. Ensures Accuracy- The most salient feature of e-Invoicing is the accuracy that it offers to the user. It eliminates the chances of errors to a high extent as it is automated, the automation ensures accuracy like manual work could never achieve.As the e-Invoice data is used by the other portals to generate e-Way Bills and GST Returns, the accuracy of e-Invoicing ensures the accuracy of the entire process.
5. Enhances Cash flow- The IRP will share the e-Invoices with the recipients in real-time, so the recipient will receive the documents in time on an official platform. This will highly enhance the cash flow of the business.
6. Eases the Work- With all the automation and accuracy GST compliance has eased up with e-Invoicing. The accountants’ work has been eased up with the introduction of e-Invoicing.
7. Transparency with the Government- The one thing that gst e Invoicing solution has changed is the level of transparency between the business and the Government. Earlier businesses were on their own, generating hard copies of the invoices in random formats and then declaring them collectively in the month end. This would raise questions of transparency and authenticity of the declaration. But e-Invoices are reported in real-time and the same data is pulled to file the GST Returns.
Impact of e-Invoicing on overall GST Compliance. A wider look
Now to the real question, what is the impact of e-Invoicing on the rest of the aspects of the GST Regime and the overall GST Compliance Suit? This question has already been answered in the previous sections but here is a detailed breakdown of the same.
e-Invoicing is directly affecting many other aspects of GST including GSTR Filing, e-Way Bills, ITC, Refunds etc. but is this impact an intervention or is it positive and helpful for businesses?
To sum up the answer to these questions in short, e-Invoicing has a positive impact on the other aspects of GST and will tend to help ease and manage the overall GST Compliance.It is making the work not just easier, but more accurate, sophisticated and organized.
Here is a list that will help you figure out the impact of e-Invoicing on the various aspects of GST-
1. Invoicing- e-Invoicing has completely revamped the structure of classic invoicing. It has eliminated the use of paper documents up to a large extent and a lot of the work is done and archived on the Cloud. This eases the storage and access of records. The validation process ensures the accuracy of the invoices whereas the IRN and QR Codes are excellent ways of identifying invoices in an emergency even in a huge pile of data. e-Invoicing has made the invoicing process more accurate and organized.
2. E-Way Bills- The e-Invoice data will be used to generate e-Way Bills as well. The SCHMA Format has a field for the e-Way Bill details. You only need to furnish this field and the IRP will also generate the e-way Bills against the eligible e-Invoices automatically. No need to visit the e-Way Bill Portal to get the e-Way Bills.
3. GST Return Filing-The IRP will share the e-Invoice data with the GST Portal for filing the GST Returns of both the supplier as well as the recipient. This is a huge step as filing accurate GST Returns is still a task for many businesses. The real-time and validated e-Invoice data will ensure that the GST Filing is accurate and no data is missing as there is no manual declaration to make a mistake with.
4. GSTR-2A and other Reconciliations- The e-Invoice data are the basis for most reconciliations under GST and as the invoice data is this authentic and well-organized it will enhance the quality of the reconciliation. The reconciliations will be more thorough, accurate and organized under the e-Invoicing Regime.
5. ITC Claiming- ITC claiming is highly dependent of the GTR-2A Reconciliation, and when the GSTR-2A Reconciliation is accurate due to the authentic e-Invoice data, you will be able to claim the most accurate amount of eligible ITC for your business.
6. GST Audits- e-Invoicing will play the role of a helping hand in eliminating the need for GST Audits altogether. Since all the base data is authentic and the business transaction process is this transparent, there will be fewer chances or requirements of GST Audits. And even if the need of GST Audit arises the authorities will have the full access to the invoice data which they can use to carry out the audit more easily and accurately.
e-Invoicing has more perks to it than cons, but it is an addition in the GST Compliance list for businesses. However, e-Invoicing compliance is of high priority for all businesses that are liable to it irrespective of its impact as it is mandatory.
It can sometimes be a little bit difficult than it seems considering the complex SCHEMA Format, Real-time Validation, Bulk operations and more.
The Government also recommends the use of external solutions such as GSPs to comply better with e-Invoicing, one such GSP is GSTHero which is also the best e-Invoicing Solution in the market currently.
GSTHero makes e-Invoicing simple to understand and operate with its user-friendly features and prominent support.
So why GSTHero?
- Simple integration
- Data Security
- Direct integration with the IRP
- Scalable for high data volume
- Highly Automated- requires minimal human input
- Reduced Errors with automation
- Enhanced productivity of your accounts team
- Compliance in real-time
- Bulk Operations- Generate, cancel, print, validate and edit e-Invoice in bulk within the ERP
- Achieve 100% Compliance with e-Invoicing
About the Author– GSTHero– Making GST 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 Reconciliationand 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
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