Electronic Invoicing or e-Invoicing under GST is the authentication of the prepared B2B invoices on a standard portal, the Invoice Registration Portal. E-Invoicing shall be mandatory for Businesses with an aggregated annual turnover of more than 100 Cr. from October 1st, 2024.
For businesses having an aggregate annual turnover of more than 500 Cr. it is mandatory to have a QR Code for all B2C Invoices, from the same date.
10 Ways E-Invoicing will immensely boost your Business
The new E-Invoice is a result of the technological advancement of taxation and industries. This makes the process smoother, simpler, and automated. The E-Invoices shall contain an IRN or Invoice Reference Number and a QR Code, both of which are supposed to make detail access easy for the GSTN & Businesses, respectively.
The transparency that the E-Invoicing System enables in the GST System is remarkable.
Transparency between Businesses & the GSTN leads to rigorous reconciliation, compliance & reduces audit-related issues for the Business, whereas it gives real-time track of the transactions to the GSTN.
Although the evolution of the process from the traditional invoicing to E-Invoicing makes no significant difference in the generation process, it has a huge impact on the working of businesses.
Invoicing- The traditional process
There is no notable change in the generation process since the implementation of E-Invoicing other than the fact that additionally, the Invoice needs to be presented in the IRP & must contain the mandatory fields as mentioned in the Schema.
Even this slight shift in the track has brought big differences in the working of Invoicing and GST in general.
If we look back at the traditional method, it is easy to note that the process was needlessly lengthy & required too much manual effort. And manual efforts lead to manual errors which are pretty common & can still affect the business adversely. Further, manual efforts are time-consuming and monotonous.
Here are a few features and issues with the traditional Invoicing System-
- Weak format- The E-Invoice had no particular format. The taxpayers generated them as per their format, neglecting the receiver’s format which made it difficult for the receiver to view and store the invoice.
- Manual Reconciliation- The invoices prepared were stored for the monthly & yearly filing of GSTR1, GSTR3B, and GSTR 9, by the taxpayer. Misplacing of invoices was natural in such scenarios for which, further the taxpayer could not claim any ITC.
- Cash Inflow- The old Paper invoices were nasty to deal with, maintaining and sending paper invoices is not just pricy for no reason, but also inefficient in meeting the punctuality factor in the business. A supplier’s invoice may get buried under a pile of other documents or may not even get to the receiver on time, which will subsequently affect the cash inflow of the supplier
- Manual Process- The former process was fully manual, & manual processing is time-taking and may contain errors and mismatches, as was the case in the process earlier. Manual data entry makes the process lengthier than it already is, and increases the possibilities of errors.
- Error Rectification & Modifications- Manual entries give rise to errors, which is quite common in invoice generation. The errors in such invoices cannot be rectified or revised, as per the earlier model of invoicing. The invoices need to be canceled and a new invoice needs to be generated even for the slightest mistakes, by the creator.
- Compliance- Due to all the issues and complications in the generation storage and distribution of Invoices, compliance became a tough job for the taxpayers. The delay in the reporting of Invoices attracted trouble like ITC loss, leading to difficulties in complying with the existing system.
- Audits- The errors, delays, and losses of information on invoices lead to problems in audits of the business.
Introduction to E-Invoice- A relief for Businesses
There are basically 2 main motives of E-Invoicing under GST,
- To bring transparency in business transactions which induces better Compliance & Reconciliation
- And to have a firm check on Tax evasion using the transparency factor.
The idea behind E-Invoicing is that it is supposed to be beneficial for both Businesses and the GST Network since both of its objectives are interconnected.
E-Invoicing is the up-gradation of the weary traditional Invoicing process, into a much simpler, user-friendly and automated version.
It tackles all the hurdles that arose from the former method and delivers more benefits to the business.
Mentioned are the Principal Benefits of E-Invoicing-
- Auto-population of Anx-1 & Anx-2 – As per the upcoming changes in the GST Return filing, Anx-1 (Sales report) & Anx-2 (Purchase report) shall be auto-populated based on E-Invoices that are reported in the IRP only. This eliminates manual data preparation for further procedures.
- Reconciliation- The reconciliation of transactional data has never been easier since the E-Invoices uploaded on IRP shall be sent to both the supplier and the buyer. The transparency will make the rectification of errors, matches & mismatches come into the light.
- Compliance- The automation of the invoicing has helped the business comply with GST in 2 major ways, first, by making the process quick & less time-taking. This eliminates the chances of Notices or late fees & penalties levied on the Taxpayers on delay in filing their Returns. Second, by reducing the chances of errors occurring from the manual data preparation.
- Audit- E-Invoicing has made the audit data preparation seamless since the errors & mismatches are checked and the Reconciliation is thorough. The overall correctness in the factors affecting Audits is present, so the final yearly Auditing becomes accurate and precise.
- ITC- Thorough Reconciliation rectifies the flaws, errors & mismatches and makes it easier & clearer for the Taxpayer to claim Input Tax Credits.
- No manual process- The manual efforts are reduced to a large extent due to the introduction of the automated process. E-Invoicing is quicker & more accurate process than the one in use currently.
- Real-time tracking – In the current system invoices are prone not to be stored specifically. But with E-Invoicing, the Invoices are being tracked in Real-time by the GSTN through the IRP & can be accessed by the Taxpayer any time. This builds transparency between Government & Businesses & reduces the errors of invoice reporting.
- Multiple uses- When the taxpayer uploads and E-Invoice on the IRP they make the information available for the various Departments to use or access, for e.g., GST Portal, E-Way Bill Portal, Tax authorities for notices & Audits, etc.
- IRN & QR Code- The E-Invoice essentially contains unique IRN and QR code, these can be used to identify the E-Invoice. The buyer can simply scan the QR code or use the IRN to fetch the details of a particular E-Invoice and that invoice shall be available to them to access & store.
E-Invoicing as a process- Problems & Solutions
E-invoicing majorly, only has benefits for businesses and makes the GST related processes easier, yet E-Invoicing itself as a process is notably complex & lengthy.
It involves various steps and exchange of JSON & Excel Files.
Brief steps to bulk generate E-Invoice are mentioned-
- Generate E-Invoices as per the SCHEMA, normally from the ERP.
- Enter the details of these invoices in the Invoice Excel sheet (Government format) and make sure to fill the mandatory fields. Then upload the file to the Offline utility portal.
- Validate the Invoice details.
- The File will be converted to a JSON File.
- Using ‘bulk upload’ option, choose the file & upload it into the IRP. Note- Make sure that the size of the file is not more than 2MB.
- IRN will be generated for the E-Invoices mentioned in the file if the Invoices are error-free.
- Download in the Excel Format.
- Copy-paste the IRNs and make entries in the ERP.
This process is relatively lengthy and may consume too much of the user’s time. But the Government itself has provided the most relevant solutions to this issue.
The above-mentioned process can be shortened with the help of APIs and GSPs (GST Suvidha Provider). The integration of APIs with the user’s ERP will help make the processes compact & quick. One such API Solution Provider is GSTHero.
GSTHero is a Government authorized GSP & API Solution Provider that offers a range of robust and relevant solutions for all the GST related complications and has the caliber to match the constantly changing trends in the GST System.
Currently, E-Invoicing is a top trending change in GST and GSTHero offers a precise & user-friendly solution for the E-Invoicing related issues, through integration with the user’s ERPs and bringing the solutions right to their finger-tips.
Through Plug-ins
GSTHero has prepared ready to use Plug-in or connectors for Tally, SAP, Oracle, and Microsoft ERPs. Integration of the ERPs with the Plug-in will connect the IRP with the ERP directly and the user would be able to generate IRN & QR Code, edit, update, cancel, print upload the E-Invoice to IRP, & perform other E-Invoice operations within the ERP itself, in a lot fewer & easier steps, without the hustle of going back & forth the ERP and complying with the formats.
Through APIs
GSTHero also provides customized API solutions for custom ERPs. It is a reliable source of enhanced Authorized APIs, that presents the most righteous & convenient E-Invoicing solutions for E-Invoice & other GST compliance within the ease of the ERP.
The integration is simple and does not require any heavy changes to the existing billing System.
The API solutions enable the user to perform the major operations from a single point, in fewer steps and in bulk quantities.
Features of the Plug-ins / Connectors & API Solutions
- Seamless Integration with the ERP System
- Bulk E-Invoice Operations within the ERP
- Edit, Generate IRN-QR Code, Print, Report to IRP, in a single click from the ERP itself.
- GSP Authorized by Government of India
- Technological ability to handle the volume, variant trends & security
- Auto data fill into GSTR filings & E-Way Bills
- Auto-accounting of purchase invoices in the system
- Easy to use- Highly convenient & User-friendly tool
- Dedicated aftersales Training & Support
E- Invoicing is indeed a big change for businesses, and its success is directly proportional to its quick adaptability by the business. Adapting to such big changes is not easy & possible for all businesses, though compensations & initiatives are expected from the Government to ease up the process.
About the Author- GSTHero- Making Life Simple! GSTHero is the best GST filing, E-Way Bill Generation & 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 & 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 & GSTR-3B’ annual report matching is also provided by GSTHero.
GSTHero ERP Plugins provide 1 Click E-Way Bill & E-Invoice, Generation, Operation & Printing from your own ERP like Tally, SAP, Marg, Busy, Microsoft Dynamics, Oracle & others itself with high data security.
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