The Indian government has introduced e-invoicing with an idea to automate the invoicing generation procedure in India.
However, the implementation of the same will be voluntary from 1st January 2020.
1. What is e-Invoicing?
'E-invoicing' or 'electronic invoicing' is a system where B2B invoices are authenticated electronically by IRP. This is done by giving/approving an identification number (IRN) and QR code against every invoice for further use by different Government portals like GSTN or e-Way Bill portal
This will eventually eliminate the need for manual data entry at the time of filing GST returns as well generation of e-way bills. This in turn will ease and make the compliance process simpler. Moreover, e-invoicing permits inter-operability and readability with other systems that will help in claiming ITC easily.
2. What is the effect of the current system of generating invoices?
All businesses small or big creates invoices through different bookkeeping/ERP software or even through the manual process. This information is then recorded in the GSTR-1A which further gets reflected in GSTR-2A
for the view of recipients.
However, with the implementation of e-Invoicing the invoice can only be used once it is authenticated by the IRP. And to generate such e-Invoice the company needs to adhere the the government prescribed e-invoice format.
Hence, the current bookkeeping or ERP system needs to be changed or integrated with suitable software like Masters India e-invoicing software which is based on the government prescribed e-invoice schema.
3. What are the significant elements of e-invoicing?
GSTN had released the draft version of the e-invoice format in an excel template giving the different pieces of information/field requirements. Some of these fields are obligatory and some ore optional.
The GSTN's e-invoice will contain the accompanying parts:
(i) E-invoice schema:
It comprises of the technical field name, description of each field, whether it is obligatory or not, and has a few sample values alongside explanatory notes.
Masters will specify the set of contributions for certain fields, that are pre-defined by GSTN itself. It includes fields like UQC, State Code, invoice type, flexibly type, etc.
(iii) E-invoice template:
The template is as per the GST rules and enables the reader to correlate the terms used in other sheets. The obligatory fields are marked in green and optional fields are marked in yellow.
4. How to implement an e-invoicing system?
Let's understand the different steps involved in creating an e-invoice.
(i) Assess and evaluate and configure your current system to cater to all the compulsory and discretionary fields requirement as per e-invoice schema.
(ii) The current use of generating an invoice should pass on necessary data and seamlessly integrate with the e-invoicing solution for generating JSON file, IRN, and QR code.
(iii) The e-Invoicing solution will get the invoice authenticated and validated through IRN and QR Code by the IRP.
It shall be noted that the IRN code is generated based on the seller's GSTIN id
, invoice number, Financial year (YYYY-YY).
(iv) The IRP authenticated invoice of the supplier will likewise get intimated to him/her on the registered email ID.
(v) The seller can likewise send the e-invoice to the recipient in JSON format
or PDF format or via email with the logo, IRN, QR code alongside different payment terms and conditions.
5. How e-Invoicing will help the government?
It will help in controlling, observing, and checking tax avoidance in the accompanying ways:
(i) Since all the business exchanges happen in real-time, the chances of fake invoice generation will be less.
(ii) The government can permit claims on genuine Input tax credit based on the e-invoice data.
(iii) This will improve the worldwide rating of India on "Ease of doing business."
6. How to implement an e-invoicing solution?
At Masters India, we provide solutions to different companies in the areas of legal compliance, and tax assessment & filing.
As the leading GSP, we have been providing GST and e-Way Bill solutions
to different companies since the implementation of GST and e-Way Bill in India.
Our tax specialists can help in giving assessment and evaluation of your current system and appropriately advise on the different changes that need to be adopted in your current bookkeeping/ERP/SAP system.
We will introduce and configure and implement GST e-Invoicing system utilizing our proven methodologies to seamlessly connect with your current system.