E invoice: Looking at future

The Read about E invoicing / E invoice in Hindi/हिन्दी

1) Introducing E-Invoicing (E Invoice)?

With the improvement of technology it becomes important that benefit for such advancement could be taken to improve every sector of economy and governance. Here we are talking about governance and better regulation for the tax collection system of India. The Government has launched the E invoicing system for certain classed of registered taxpayers. It is basically a process of uploading an invoice in the GSTN (Goods and Service Tax Network)and automating various activities related to GSTN like the tracking and generation of E way bill, filling in of GST returns, transfer of Input Tax Credit from supplier to receiver, etc. The process will get clearer as you go through the post and learn the concept in detail.

 

2) Relevant Provisions for E invoice System.

                The process of generation of invoice is done as per Rule 48 of Central Goods and Service Tax Rules, 2017. Certain modification (amendment) has been done to this rule to incorporate the concept of E invoicing. Notification 68/2019 CT to 72/2019 CT dated 13/12/2019 are the relevant notification. We will learn about the provisions and all the changes made in the CGST Rules (Central Goods and Service Tax Rules, 2017) with the effect of the above notifications in the coming topics. For now let us learn the basic steps in E-Invoicing.

3) Process for generating E Invoice.

Step 1

Generation of invoice: The invoice should be generated following the general rules for generating the invoice in PEPPOL (Pan European Public procurement online) standard. An ERP software may be used which is also able to generate the invoices in JSON format.

Step2

Uploading the invoices in IRP (Invoice Registering Portal ):  The invoices generated in JSON format should be uploaded to the IRP i.e. Invoice Registering Portal. Three methods can be used to upload the JSON to the IRP – API based, Web based and SMS based.

Step 3

Validation of the invoice details: The IRP (Invoice Registering Portal) will validate the details on the invoice and further check of any duplication based on four parameters –Seller GSTIN, Invoice Number, Financial Year and Document Type(Invoice/Credit Note/ Debit Note).

Step 4

Generation of Invoice Reference Number/QR code/ Email : After validation the IRP generates the Invoice Reference Number for reference. The IRP digitally signs the invoices and produces QR code for invoices in JSON format. The system then sends a email to the supplier informing him the generation of E- Invoicing.

Step 5

Automation of GST returns and E way bill portal: The IRP sends the information of the invoices to GST portal for filling up the details of GST returns and to the E way bill portal for filling up of E way bill details.  Now if we try to generate the E waybill for the invoice Part A will be prefilled as a result of this automation.

4) Who should generate E invoice?

E Invoicing is made applicable for the taxpayers whose annual turnover (across all GSTINs across India connected to a single PAN (Permanent Account Number)) is more than Rs.100 crores. At present it is for invoices in B2B (Business to Business) transactions only and for the supply from one registered person to other registered person.

5) Software Preparedness for generating E invoice :

The businesses who have to use E Invoicing systems must equip themselves with the compatible software. These requirements may be discussed under the following points.

First:

The ERP Software like SAP/Tally/etc that are used for generating Invoices should follow the PEPPOL (Pan European Public procurement online) standard. This is the most commonly used standard for businesses across the world. The standard required the UBL (Universal Business Language) version of E-XML (Electronic XML)

Second:

The ERP software should be able to generate all the invoices in JSON format as the IRP can process the data in JSON format.

Third:

The user should have interacting software/ system to interact with the IRP (Invoice Registering Portal). The same can be reached through web based, API based, SMS based, Offline tool based, Mobile app based, etc. The government has notified a list of links that can be used to access the IRP.

Fourth:

The supplier may have a QR reader to access the QR code generated by the IRP.

6) Advantages of E Invoicing system (E Invoice)

As we are moving to the next level of generating invoices let us first understand the advantages of using it.

First:

The automation brought by this system is one obvious thing that cannot be missed. Presently the returns have to be filled manually and filling of details in the E way bill also require manual effort of your accounting persons. Now both to a certain extent are populated automatically.

Second:

With this the matching of ITC (Input Tax Credit) has simplified to a certain extent. In the present system the invoices generated by the supplier has to be entered into the GSTR 1 and the same ITC is available to the receiver in GSTR 2A. Many a times it happens that the supplier misses few invoices and consequently the receiver does not get the available ITC. Now with E invoice the IRP (Invoice Registering Portal) sends the data to the GSTR-1 and E way bill simultaneously. So the system never misses any invoice for which E way bill is generated .

Third:

This system reduces manual error in uploading details of the invoices to a great extent.

Fourth

It will be easier for the department to identify any mismatch in invoice in a way better than the present system. This will improve their efficiency. Further the cases of fake invoicing could be easily identified and timely actions could be taken.

7) Common myths debunked regarding E invoice :

First:

The most common myth is that it is applicable to all the taxpayers. However at present only B2B invoices of companies with turnover of Rs.100 crores or more has to generate E invoice as per notification 70/2019 CT dated 13/12/2019. The receiver of supply is also a registered person.

Second:

This is the most common misconception. Most people think that from now on the invoices will be generated through GSTN portal. However as we have seen that the invoices would be generated through ERP software and the details have to be uploaded in IRP system to generate the Invoice Reference Number.

8)Way ahead

The government has taken a great step to automate the invoicing system. This evolution in the taxation with the aid of technology is most welcome for the advantages it will bring with it in terms taxpayer convenience and better governance in taxation. There may be technical or implementation difficulties in the beginning but the industry and the government will surely overcome it with mutual cooperation and trust. It is just a matter of time when the system will be extended to other classes of taxpayers and the fruit of such advancement could be reaped by everyone.