e-Invoicing under GST has been implemented on all businesses having an annual aggregated turnover of INR 500 Crores & above from October 2020.
Businesses have been enjoying the benefits of e-Invoicing ever since.
The government is also making constant changes to this new provision to improve it & make it more advantageous for the taxpayers.
So far, e-Invoicing has proven that it is more profitable for a business than it is troublesome. Despite being an additional step in the compliance process, e-Invoicing will reduce the overall GST Compliance for businesses even further.
Introduction of e-Invoicing under GST
e-Invoicing under GST or electronic invoicing is the process of making electronic & authentic invoices for carrying out business to business transactions in all the major & large enterprises.
e-Invoicing was implemented on large enterprises having an annual aggregated turnover of INR 500 Crores & more from October 2020.
Businesses are required to generate invoices in their ERPs & upload them to the e-Invoice portal.
The portal validates the e-Invoice & generates IRN & QR code for them.
Businesses can then share these e-Invoices with the recipient & carry out the transaction further.
e-Invoicing also covers the following documents-
- Credit Notes
- Debit Notes
- Reverse Charge Invoices
- Export Invoices
- Deemed Export Invoices
- Business to Government Invoices
The Government has predefined the SCHEMA in which the Invoices are to be generated & businesses are required to make Invoices in the given format only.
Implementation of e-Invoicing on businesses
For now, e-Invoicing under GST is only implemented on large enterprises that have an annual aggregated turnover of INR 500 crores & above.
Although, that is not what the government has planned. As per the finance ministry, e-Invoicing is a game changer & will change the face of GST in the coming future.
The Government has planned to extend e-Invoicing to businesses with an annual aggregated turnover of INR 100 Crores & above by January 2021.
Additionally, by April 2021, e-Invoicing under GST will be mandatorily applicable to all businesses.
Also Read- Some FAQs for Quarterly Return and Monthly Payment Scheme Launched by CBIC
When this happens e-Invoicing will phase out e-Way Bills & GST Filling up to a large extent.
The requirement of e-Way Bills will be over & the GST returns i.e. GSTR-1 & GSTR-3B will be auto-furnished, calculated & filled.
Taxpayers will only have to verify & tally the same once & simply release the tax liabilities like usual.
This is a huge change & a big step towards easing GST compliance, though plans like this require a lot of time for proper execution, the government has certainly initiated the same.
The e-Invoicing solution is a success & has helped the government with tax evasion problems, whilst helping the taxpayers & businesses improve & ease their tax accounting.
That being said, the day is not far when e-Invoicing will replace e-Way Bills & GSTR fillings very soon.
How does e-Invoicing under GST works?
The working of e-Invoicing is simple; here are a few steps you need to follow to generate an e-Invoice-
- Generate the invoice in your ERP or using APIs following the SCHEMA Format.
- Upload the Invoices to the IRP.
- The IRP will validate the e-Invoice for duplications & errors such as the GSTIN, taxable values, tax values, etc.
- Upon successful validation, the IRP will generate a unique IRN using the Hash algorithm & a QR Code that will contain the e-Invoice details such as the IRN, Supplier GSTIN, Tax amount, Taxable values, etc.
- The Invoice will be shared to the GST & e-Way Bill Portal for the record & for auto-population of the e-Invoice data wherever required.
- Additionally, in case the recipient’s mail ID is provided the IRP will also share the e-Invoices with the recipient.
- If not, the supplier can share the validated & IRN containing e-Invoice with the recipient & carry out business as per usual
Note 1- In the process above there is a change of format of the e-Invoice files because the IRP only accepts data in JSON format you will have to upload the JSON or Excel file of the e-Invoice in the IRP.
Note 2- The IRP will share back the data in JSON, PDF or excel of the validated e-Invoice, you can convert the files in the desired format & upload the same in your billing systems.
Note 3- The e-Invoice does not have the option to customize invoices with your logo, T&C etc. for this you can take the help from e-Invoicing software APIs, GSPs & ASPs, that offer a wider range of customization in the e-Invoice. Try GSTHERO- GSP, one of the best & most trusted e-Invoice & GST compliance software.
e-Invoicing & Impact on Businesses for GST Compliance
e-Invoicing has impacted the entire GST Compliance up to a large extent.
Although e-Invoicing is an additional step to the compliance suit but this additional step has eliminated some of the older steps in other areas of GST.
e-Invoicing is like taking a few new steps to eliminate a lot of the previous ones, in other words, e-Invoicing is an addition to the compliance to reduce the overall compliance & is a win for all move.
Invoicing has eased up various domains of GST starting from tax accounting, e-Way Bills, GST Filing, Input Tax Credit calculation, data reconciliation, etc.
Also, the government has recently announced that after e-Invoicing has been implemented on all businesses, it will eliminate the e-Way Bills completely & will fully automate GST Filing.
In this, the taxpayers will only have to verify & make changes to the returns as per their books rather than calculating & filing the returns manually.
Also Read- The Step by Step e-invoice generation guide for your business.
The only thing the businesses will have to do next would be to release the tax liabilities.
Here are a few benefits of e-Invoicing & its impact on overall GST Compliance-
- Auto-population in the Returns- e-Invoice data will auto-populate in the returns & taxpayers only need to verify & make changes if required.
- E-Way Bills- for now, the e-Invoice data will auto-populate the e-Way Bills, but in the future, the requirement of e-Way Bills may end due to e-Invoicing
- Reconciliation- With data population in the GST returns the GSTR-1 Filing will be accurate which will lead to accurate GSTR-2A generation. With accurate GSTR-2A, the requirement of reconciliation may not be there & even if there is the reconciliation will become seamless
- ITC calculation- With accurate & simple reconciliation, the ITC calculation will also be precise & controlled.
- Standard Format- The standard for all SCHEMA formats will ensure uniformity in the format which means the Invoice from one ERP will also be readable in the other. Businesses will not have to use random formats for their Invoices
- It’s near Real-time- e-Invoices are uploaded to the IRP in or near real-time which makes invoicing & accounting more efficient.
- Better Cashflow- with the data being shared with the recipient in real-time, & accurate GST filings, the flow of cash will improve to a large extent.
e-Invoicing compliance is of high priority for all businesses that are liable to it irrespective of its impact as it is a mandatory rule under the CGST Act 2017.
Compliance with this single provision will help businesses comply with GST as a whole, considering that e-invoices do reduce the compliance load.
So complying well with e-Invoicing alone will help businesses with the entire GST Compliance.
The compliance can sometimes be a little more difficult than it seems considering the complex SCHEMA Format, Real-time Validations, Bulk operations, Archiving, 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 ERP integration
- High Data Security
- Storage- e-Invoice Archiving for 8 years!
- Direct integration of ERP with the IRP
- Scalable for high data volume
- Super Automated- requires minimal human input
- Reduced Errors with automation
- Saves time and delivers prompt results
- 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
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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.
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