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5 things you should know about e-Invoicing under GST

As per the recent Union Budget announced by Mrs Nirmala Sitharaman, e-invoicing will be introduced in 2020 and there will be no need to generate a separate e-way bill. In this article we will discuss e-invoicing under GST in brief:

Why e-way bill was introduced?

The e-way bill was introduced by the Government of India with the motive to create an effective tool for tracking movement of goods and ensure various benefits to the industry.

Other benefits of the e-way bill are:

  1. Abolition of check-posts commonly known as toll-naakkas
  2. Smooth movement of goods across different state borders or within a state.
  3. Lesser traffic on major transportation routes or national highways.
  4. Boost to the logistics industry by reducing the cost of transportation and lead time by replacing physical check posts with mobile squads.

However, it shall be noted that the e-way bill needs to be generated for those consignments where the value exceeds 50K INR mark.

What is e-invoicing model?

According to the new proposed model of e-invoicing, the taxpayer will be able to prepare, issue and distribute invoices directly through GST Network.

Currently, the businesses are generating and issuing invoices using their accounting or billing software. And at the time of generating an e-way bill or creating invoices, they have to upload these invoices details on the GST Portal or e-way bill portal.

Whereas as per the new proposed system, the taxpayer would be able to generate invoices or e-way bill directly through the GST Network.

Moreover, in the current system, the GST authorities can review the e-way bill and invoices at the time of inspection & audit only. However, through e-invoicing, the concerned authorities will have greater control over these allowing them to restrain tax avoidance.

Will all the businesses have to follow e-invoicing provisions under GST?

As per previous implementations under GST such as an e-way bill, e-invoicing may also be rolled out in different phases for businesses above specified threshold limit. So, slowly and eventually all the business will fall under the umbrella of e-invoicing under GST.

Applicability of e-way bill after e-invoicing

As per the statement of our Finance Minister there will be no separate e-way bill from 2020. However, if we analyze the previous trends of the GST authorities, e-invoicing will be introduced in the GST eco-system, not before Q3 or Q4 of 2020. And as we have stated earlier that e-invoices will for business having a certain turnover limit. So, we can conclude that the e-way bill will still be applicable to most of the businesses even after e-invoicing.

How e-invoices will help in filing GST returns?

Once the e-invoicing gets implemented the taxpayer will get a unique number for every generated invoice that he/she has to mention at the time of filing GST returns.

The Bottom line

E-invoicing will have a greater impact on the taxpayers as it will simplify the compliance procedure and will also bring down the compliance expenses. Moreover, there will be less scope of human error as e-invoicing will include auto transmission of data. Adding to this, the GST authorities will be able to track all the transactions of a taxpayer.