The e-Invoice Generation Guide for Your Business

Introduction

After a long wait, the e-Invoice implementation is finally all set to roll out in October 2020 for B2B Invoices.

Initially, e-Invoicing will apply to large-scale businesses only, however, as per sources the Government is planning on extending the same to all taxpayers, soon.

e-Invoicing or Electronic Invoicing is a big change even for large-scale businesses, requiring- more IT input, staff training, the revamping of working of transactions, etc.

Taxpayers & Businesses need to know the essentials of e-Invoicing software in order to comply with it better.

Non-compliance with GST at such an initial stage of business transactions can lead to catastrophic outcomes. 

The e-Invoicing System under GST

As per the New Sub-rule (4) added under Rule 48 of CGST Rules, a specified class of taxpayers shall have to issue B2B invoices in a standardized format & get it authenticated before initiating any business transaction.

Here is a vivid explanation of the same-

As per the rule, all businesses that have an annual turnover of more than Rs. 500 Crores, will have to generate B2B e-invoices in the standard SCHEMA Format & upload it to the unified portal for authentication before sharing the same with the buyer or recipient of Goods.

Here, the invoices are to be created within your IRP but in the format specified by the GSTN.

You will then have to upload it to the Invoice Registration Portal, & the portal will authenticate the invoice for the party details, invoice details & the mandatory fields of the format.

Upon successful authentication, the IRP will generate IRN & QR Code for the invoice, these will be unique for each invoice.   

Also Read- Know all the Updates GST Due Dates in One Post

Role of IRP, IRN & QR codes in e-Invoicing

The IRP, IRN & QR Codes play significant roles in GST e-Invoicing software, other than the fact that these are mandatory steps in the process, as specified by the Government.

Mentioned below are the roles of IRP, IRN & QR Codes, in brief-

The IRP- The unified Portal is significant as invoices cannot go forward without authentication & the same can only be authenticated on the IRP.

The IRP checks the invoices for errors ensuring accuracy. The IRP validates the e-Invoices for party details, like GSTIN of the recipient, invoice details such as invoice total, & the mandatory fields of the SCHEMA Format.

The IRN- The Invoice Reference Number is meant to ease up the invoice management by two means, first you can identify e-Invoices using the IRN. Second, the IRN also contains the major e-Invoice details, meaning you can know most details of the transaction just by looking up the IRN.

The QR Code- The QR Code is a quick way for the recipients & the suppliers to access the e-Invoices details, simply scan the QR Code with a QR Code reader & you can access the invoice details without having to look up for the same in your data & billing system.  

Highlights of e-Invoicing for Businesses

e-Invoicing can have a mixed effect on the Indian industry, although, it has more perks than cons for businesses.

We have listed down a few reasons why e-Invoicing can be a boon for businesses-

  1. Standardization of Invoices- All invoices will be issued in a single specified formal irrespective of the type of transaction & business. This will make invoice reading standard & easier.
  2. Better authenticity- All invoices will be authenticated before initiating the transaction making the transaction & the invoice more authentic.
  3. Fewer Errors- With the IRP validating the invoice for errors in detail & SCHEMA format, there will be more accuracy in the process.
  4. Automated Process- The authentication process is automatic & electronic, all you must do is upload the e-Invoice & the system will validate it form the backend without requiring any further inputs.
  5. Auto-population for GST Filing- The e-Invoice data will auto-populate in the GSTR-1 of the supplier for filing GST returns more accurately.
  6. Auto-population for e-Way Bill generation- The Government has recently enabled the option of adding transporter details in the e-Invoices as well, to generate both the part of the e-Way Bills.
  7. Enhanced Cashflow- With the e-Invoices being shared with the recipients in real-time via the official portal, the cashflow will become smooth.
  8. Clear & clean reputation- With authentication & the entire e-Invoicing process taxpayers will always stay in the clear on the tax transaction front.
  9. Fewer Audit requirements- Because all the transactions will be authentic in real-time, with the involvement of the Government & with the officials having access to the e-Invoice data, there will be fewer chances of audits. 

Also Read:- GSTR 9 and 9C- Things you need to know before filing

Anticipated Drawbacks of e-Invoicing for you Business

Like it is already mentioned above, e-Invoicing will have a mixed impact on the Businesses, especially at the initial stage, there will be some friction.

Considering that e-Invoicing will require many changes & compliance measures from the businesses.

Following are the anticipated issues businesses will address while implementing e-Invoicing-

  1. Changes to the Billing System/ IT structure- You may have to make changes to your billing system to comply better with the new provision of e-Invoicing.
  2. Staff Training- You will have to train the staff to comply with the requirements of e-Invoicing such as the SCHEMA & the rea-time process.
  3. Change in work-flow- The work-flow of your business is likely to change as per the requirements of the e-Invoicing process.
  4. Too much Compliance burden- Taxpayers will initially feel the heat of additional compliance burden with the implementation of e-Invoices, requiring changes in the billing system, staff knowledge, real-time invoice authentication, etc.
  5. Issues arising with the rising data volume- With a higher volume of data it can be difficult for accountants to authenticate Invoices in realtime without any discrepancies. 
  6. Compliance with real-time authentication- In the beginning, it can be difficult for the accountants to authenticate invoices in real-time, it may not be a smooth process to authenticate, generate & account for e-Invoices especially considering the high volume. 
  7. Prolonged Work- e-Invoicing requires too much manual work as the accountants will have to constantly juggle with data & JSON files between the IRP & the ERPs. 
  8. Storage Issue- The e-Invoices will only be available for 24 hours from the time of generation on the IRP.
  9. Amending & Canceling e-Invoices- You can only cancel an invoice within 24 hours from the time of generation. If you exceed the time limit you will have to generate a Credit Note against that e-Invoice. Also, you cannot amend an e-Invoice you can only cancel within 24 hours.

e-Invoicing under GST- The Generation Process

By now, you know enough about e-Invoicing here is how the e-Invoice generation process will work-

Step 1- Invoice Generation

You are required to create invoices in your billing or accounting system, but to meet the criteria of electronic verification these invoices are required to be made in the specified SCHEMA Format.

You must keep the mandatory & optional fields in mind while creating these invoices. In case incorrect details are filled under the wrong header or missing mandatory fields, the IRP will reject the invoices. 

The supplier must also ensure that their billing systems are capable of generating JSON Files of the invoices created in the SCHEMA format. Additionally, JSON can also be generated using the following-

  1. Offline tools
  2. Utility or Mobile apps

Step 2- Generating the IRN

Suppliers can generate their own IRNs using the standard hash generation algorithm. 

Whereas, for the invoices that don’t have an IRN already, the IRP will assign a system-generated IRN. 

Step 3- Uploading Invoices to IRP

Now, you will have to upload the JSON files of the invoices to the IRP. 

Note- as of now, there is no option of bulk generation in the IRP, hence you will have to upload the invoices one at a time.

You can upload the invoices to the IRP through the following-

  1. Directly uploading on the IRP
  2. Through GST Suvidha Providers or GSPs such as GSTHero
  3. Through third-party application providers (APIs)

Step 4- Authentication, IRN generation, Signing

The IRP will validate your uploaded invoice, and check for errors in the schema, missing field, incorrect GSTINs, generated hash (IRN), etc.

For invoices without an IRN, the IRP will issue an IRN.

Upon successful validation, the IRP will digitally sign the e-Invoice and add a QR Code & the IRN to it.

The QR code & IRN will be unique for the e-Invoice & could be used to identify the invoices for the entire financial year.

Note- The IRP will share an error file in case of a rejected invoice. You can rectify those errors & try re-uploading the invoices to the IRP.

Step 5- The Backend process & downloading the e-Invoice

The successfully created e-Invoices will be shared with the e-Way Bill Portal, the buyer (if, e-mail id is available), and the GST Portal. The e-invoices will be available on the IRP for the next 24 hours & you can download the JSON of the same within this period. 

Note- You will have to account for these invoices in your billing system. For this, you will have to download the e-Invoice JSON convert it to PDF or word & account the same in your Billing System.

Note- e-Invoice data will always be available & accessible to the tax authorities if required for audit or scrutiny.  

Conclusion

e-Invoicing can be overwhelming considering the increased number of steps in the generation process, especially when the volume is high.

In such cases, it is recommended to opt for a solution such as an ASP or a GSP or both like GSTHero is an authorized GSP that provides application services to make GST simple for you.

GSTHero’s e-Invoicing solution is highly efficient & perfect for large scale businesses liable to e-Invoices.

The solution is reliable, secure & scalable bearing the capacity to handle high volumes seamlessly while requiring no changes to your billing system.

Here is why GSTHero is the best e-Invoicing solution-

  1.  Simple integration
  2. Data Security
  3. Direct integration with the IRP
  4. Scalable for high data volume
  5. Highly Automated- requires minimal human input
  6. Reduced Errors with automation
  7. Enhanced productivity of your accounts team
  8. Compliance in real-time 
  9. Bulk Operations- Generate, cancel, print, validate & edit e-Invoice in bulk within the ERP  
  10. Achieve 100% Compliance with e-Invoicing
  11. Cost-effective 

Compiled by- GSTHero– Making GST Simple! GSTHero is the best GST filing, e-Way Bill Generation & E-Invoicing Software in India. GSTHero is a government authorized GST Suvidha Provider.

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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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