The GST Council has approved B2B E-invoicing in a phased manner from Jan 2020. From 1st April 2020, this is mandatory for companies with a turnover exceeding Rs 100 Crore and optional for those below Rs 100 Crore.
We have been writing about this since 2016 (on www.sawindia.com/blog) where we mentioned that with GST the transaction will be the return. This could soon be a reality.
The journey continues and now we are on the threshold of another major step – E-Invoicing . We throw light on this in an FAQ format for easy reading.
Why is E-Invoicing a a game changer ?
While E-Invoicing seems to be another step in the GST journey, we see it more as an important technology related milestone. EDI – Electronic Data Interchange , a term used since the 70’s is the electronic interchange of business information using a standardised format. It is a process where one company can send information to another electronically rather than with paper. More importantly, this information can be used by the receiving company to save time and effort on re-entry of this information into its own systems. Eg. A Sales Invoice with 100’s of items needs to be re-entered by the buyer into their own software as a Purchase Bill. The GSTN has created a standard structure, where the E-invoices created by one software can be read by another software , eliminating re-entry of data. In our opinion this step has huge implications and will lead to the start of EDI being used on a mass scale in India for this first time. It will also kickstart a process where businesses will see the benefits of technology in enhancing productivity by interchange of data
What are the productivity benefits of E-Invoicing ?
GST Reporting will become a by-product of E-Invoicing
To understand the benefits of e-Invoicing lets look at how we currently operate and how this will change . Currently, after Invoicing, there is duplication of effort with data required to be uploaded again in different formats for EWay bill generation and GSTR 1 Return filing.
|Activity||Pre E-Invoicing||Post E-Invoicing|
|Create E-way bill||Required||Eliminated|
|File GTR 1 – Upload Invoice to GST
Portal / ANX-1
|Data re-input by Buyer as a
GRN / Purchase Bill
As we see above, E-Invoicing will eliminate additional efforts of re-input & upload of data into the GST Portal and the E-Way Bill portal. Soon enough, different software applications will read and re-use data, saving time and reducing errors.
Are there any benefits of E-Invoicing for the buyer ?
Buyers will have an inbox to view all valid invoices and will immediately see valid invoices on their ANX 2 Return enabling them to be assured of Input Tax Credit (ITC). Additionally , the data would be available for re-use in preparation of the Good Receipt Note, Matching with PO and adding to inventory when the goods arrive. This will result in considerable time saving for the Buyer too.
How will the E-Invoice be generated ?
The E-Invoice will continue to be generated on your own billing / accounting software / ERP. Your software will then send this data to an Invoice Registration Portal (IRP), which will generate a unique Invoice Registration Number (IRN), digitally sign the e-invoice and also generate a QR code. Without an IRN, an invoice will not be a valid document.
The e-invoice can be registered on the GST portal thru multiple ways such as :
- Web based,
- b. API based,
- c. mobile app based,
- d. offline tool based and
- e. GSP based
How can one know whether an Invoice is valid ?
Once an e-invoice is generated, The GST Returns ANX 1 (the sellers sales) and ANX 2 (the buyers purchases for calculating ITC) will be updated. Hence a buyer will be able to see his valid purchases in the ANX 2 .
Additionally, the digitally signed e-invoice can be emailed to the buyer . The QR code on any invoice can also validated with an offline mobile app . The QR code will have the following info :
- GSTIN of supplier
- GSTIN of Recipient
- Invoice number as given by Supplier
- Date of generation of invoice
- Invoice value (taxable value and gross tax)
- Number of line items.
- HSN Code of main item (the line item having highest taxable value)
- Unique Invoice Reference Number (hash)
Can an E-Invoice has its own format and for viewing and printing ?
Yes each business will be able to have their own / existing formats for viewing and printing e-invoices as long as the mandatory fields are present. It must be noted that the Invoice Registration Number (IRN) will be a new data field and will need to be retained in the systems of both seller and buyer.
Can an E-Invoice be partially or fully cancelled ?
An E-Invoice can’t be partially cancelled. It has to be fully cancelled. Cancellation has to be done as per process defined under Accounting Standards.
The e-invoice mechanism enables invoices to be cancelled. This will have to be triggered through the IRP, if done within 24 hours. After 24 hours, the same will need to be done on the GST System.
Amendments to the e-invoice will be allowed on GST portal as per provisions of GST law. All amendments to the e-invoice will be done on GST portal only.
My business has a turnover of less than 100 Crores and so is there a need to prepare now ?
For business having less than Rs 100 Crore (PAN level) , e-invoicing is optional from 1st April 2020 . Though this is the date for an optional start, it is advisable to start with this date since it will enable your Customers to view your Invoice in their ANX 2 . This will assure them if their ITC claims and will give you a better rating for being GST compliant. Even if you are a quarterly filer, you can upload your invoice as soon as its generated so that there is no delay in your customer being able to see it on their portal.
With the new GST Return system from April 2020, the process of uploading Invoices onto the GSTN Portal and its reconciliation by the Buyer would be an ongoing activity.
Need more into on E-Invoicing ? Check our the FAQ shared by the GSTN : https://www.gstn.org/e-invoice/doc/Updated-e-invoice-FAQs-v6.pdf
[email protected] offers simple and affordable GST solutions for Small, Medium and Large businesses using leading solutions like Tally.ERP 9 and ClearTax . Connect with us for a Demo on [email protected] or call 02248934040 . Check our our Webinars & Workshops on https://www.sawindia.com/events
Check out the video intro on E-Invoicing released by GSTN