After continued deferment and discussions, the Government is finally implementing e-Invoices in India, under GST. e-Invoicing is already a part of the tax regimes of various countries such as Italy.
In India, however, e-Invoicing under GST shall implement for large scale businesses first, from October 1st, 2020.
Businesses will have to make changes to their workflow and many other arenas of their businesses.
In this article, you will discover the most important things to consider to implement e-Invoicing successfully in your business.
Read Also: Input Tax Credit under GST
Understanding e-Invoicing under GST
e-Invoicing under GST is the new sub-rule that swaps the current invoicing method with a more electronically advanced method of invoice generation and management.
There are several myths about e-Invoicing software so far, however, e-Invoicing is, in fact, a boon for both businesses and the Government.
Under this new provision, the users will have to generate their B2B invoices normally, but in a specified SCHEMA format, in their billing systems.
You will then have to upload these invoices on the unified Portal- Invoice Registration Portal, and the portal will validate the invoices.
Upon successful validation, the portal will generate a unique IRN using ‘Hash’ and a QR Code, for the e-Invoice.
From here, the invoices will automatically be shared with the GST Portal and the e-Way Bill Portal by the IRP.
You can then download and print the invoice, and share it with the recipient as well as account for the same in your ERP/ Billing System.
What Businesses and Documents are liable to e-Invoicing
Currently, e-Invoicing will implement only on large enterprises, considering the pandemic and the fact the small and medium enterprises may be overwhelmed with the compliance requirements of the new system.
e-Invoicing is specifically applicable to all businesses having an annual aggregated turnover of Rs. 500 Crores.
And unlike its name suggests e-Invoicing is not limited to invoices. e-Invoicing 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
Note- Delivery Challans and Bill of Supply are exempted from e-Invoicing.
There is also a class of businesses that do have an annual turnover above Rs. 500 Crores and are still exempted for e-Invoicing, these are mentioned below-
- SEZ Units and Developers
- Insurance companies
- Banking Companies
- Financial institutes
- Passenger transportation service, etc.
How Businesses can benefit from e-Invoices?
e-Invoicing, right now, may seem like nothing but an addition to your compliance burden but if you look into the long run and the post-implementation period, you will realize that it is actually, beneficial for your business in more than one context.
e-Invoicing may require some time to settle down in the Indian market and industry, but with the right acceptance rate and efficient implementation, gst e Invoicing software can work wonders for Businesses and the Government.
The Government’s sole purpose of keeping on evolving the GST regime is to make GST compliance simpler while also curbing tax evasion and corrupt practices.
And the efficient implementation of e-Invoicing will serve this purpose well.
As far as businesses are concerned, following are the benefits businesses can exercise after the implementation of e-Invoicing-
1. Electronic Structure- e-Invoicing will eliminate a lot of manual work and the tediousness of handling and managing paper invoices. Electronic record maintenance is not just time-saving but is also highly efficient and more reliable than manual work.
2. Accuracy- Since the invoice error validation takes place at a very initial level, there will be lower risks of errors and mistakes in generating the invoices
3. Automation- The invoice data will be shared with the GST and e-Way Bill Portals, to automatically generate Part-A of the e-Way Bills for the eligible invoices, as well as to auto-populate invoices data in the GST return filing forms. This will reduce your tasks up to a high extent.
4. Better Vendor Communication- As the invoices are generated and electronically shared with the recipients, there will be fewer chances of discrepancies amongst the two parties and the cash flow will enhance.
5. No Audits- Because the government will be involved in the business transactions from such an initial level, there will be less to no chances of GST Audits, and even if such a situation arises, the government will have access to the e-Invoice data.
The saver- e-Invoicing is the ultimate- time, effort, and money saver for businesses in the long run.
7 Key Points to consider to Successfully Implement e-Invoicing in your Business
From Finance and Taxation perspective, e-Invoicing may seem like a simple provision that has been implemented by the GSTN and the businesses are required to comply with the same.
Nevertheless, from the business perspective, who are actually required to be open to the practical implementation, e-Invoicing is a complex entity, demanding deep analysis and decision-making.
Especially because the same is implementing on large scale businesses, e-Invoicing will require deep analysis, comparisons, research, changes in the IT structures-
1. Deep Analysis of all provisions of e-Invoicing- The first Step is to completely analyze e-Invoicing, recommended with the help of a CA or the accountant’s team. This is important, as there are many technicalities and legal aspects that you may miss out and repent later. The following are points that you need to consider while analyzing e-Invoicing-
- e-Invoice generation and cancellation within 24 hours- you can only generate an e-Invoice a day before the date of the invoice, not a back-dated invoice. Meaning, for an invoice dated September 10th, you will have to generate an e-Invoice on 9th September. Also, in the case of cancellation, you must cancel the e-invoice before 11th September.
- e-Invoices and e-Way Bills- To create a fully ready-to-use e-Way Bill, you must enter the invoice details plus the transporter details in the IRP. If you enter the details in any other manner, you may get a partial e-Way Bill only.
- e-Invoices and GST Returns- The IRP will share your invoice data with the GST Portal for simplifying GST return filing, depending on the type of supply the same will auto-populate in your GSTR-1.
- SCHEMA Format- The Government has specified the SCHEMA Format with various mandatory and optional fields, you can comply with the least mandatory fields depending upon the type of supplies and your business but it is recommended to comply fully with the SCHEMA format, by adding the same to your billing system.
- e-Invoices and B2C Invoices- You must generate QR Codes for all your B2C Invoices, you can create these QR Codes by yourself, but you must ensure to include the parameters mentioned by the GSTN including the payment reference link.
- e-Invoices in JSON- You will have to upload invoices in the JSON format and the IRP will also return the same as a JSON File, you will have to keep converting your invoices into JSON and the e-Invoice JSON into PDF by yourself.
- Storing e-Invoices- The e-Invoices will only be stored in the IRP for 24 hours from the time of generation, you must figure out an alternative to store the e-Invoices post-generation.
2. Business Analysis- The second step for businesses would be to analyze their business to identify the requirements. e-Invoicing will demand major changes in various domains of your business but you must identify the most relevant ones depending upon the following- the type of your business, type of supplies, your vendors, market situations, etc.
3. Decision Making, Adopting the original form or API Solutions- After analyzing both the system and your Business, you will get a clearer idea of whether you should go ahead with making the massive changes in your system, or adopt an API Solution. The former option is less user-friendly and requires a lot of work, whereas opting for an API Solution would be much more simpler and efficient. Within the API Solution too, you will have two options, opting for an ASP (Application Suvidha Provider) and GSP (GST Suvidha Provider- authorized by the Government). Ideally, GSPs are better, more efficient and faster than ASPs. GSPs will offer you more features, whilst being safe, secure, advanced and fast.
4. Choosing and Analyzing the right Solution Provider- In an ideal solution, you must look for the following features-
- Simple integration- must not require too many internal changes to the system and external licensing
- Should save time and efforts- e-Invoicing can be tedious and tough for accountants especially in large enterprises. The solution must be able to save time and efforts
- Secure- The invoice details and other transaction-related data of large enterprises can be a goldmine for corrupt practices, and it is thus important to opt for a secure solution.
- Scalable- Large enterprises have high invoice and data volume per day and so, the solution must have scalability and the ability to handle volume seamlessly.
- Direct Integration of IRP and ERP
- Bulk Operations- The solution must provide the bulk operation facility as the IRP is not offering the same as of now.
5. Integration upon Successful Validation- Validate the solution before integration, ensure its authenticity and effectiveness prior. Upon successfully analyzing everything, you can go ahead with the integration process. Usually, such solutions integrate with your ERPs and Billing systems to provide you the expected results.
6. Examine the Test Run- Opted the most suitable solution and integrated it with your system? The work isn’t done yet, you must keenly examine the test run to check if the solution offers what it promised. If not, you can coordinate with the solution provider to get the issues resolved.
7. Review the overall efficiency of the Project- In a few weeks, you should be able to tell the overall efficiency of the entire project. You may have to make changes as e-Invoicing is a new provision for everyone. However, investing in the right solution will save you from all the trouble. GSTHero is an authorized GSP and is stacked with all the features mentioned above such as bulk operations and much more. GSTHero will simplify your work, save the time and efforts of your accountants while being 100% secure, simple to integrate and operate, cost-effective, and scalable.