e Invoicing in GST is the new face of the GST structure in India. It is a positive step taken by the government to curb menace like fake invoices.
Small & medium businesses shouldn’t look towards e-Invoicing as an additional headache, but taxpayers should take it positively as this will benefit the businesses on many fronts.
The government has been reducing the aggregate turnover limit for e-Invoicing to be enabled. Hence, the government’s intention is clear that it will soon enable the e-Invoicing structure for all the businesses irrespective of the annual aggregate turnover. Accordingly, small & medium enterprises should soon anticipate this amendment and get their businesses ready for e Invoicing under GST.
This short article will show you how your business can benefit from e-Invoicing enabled for your business.
e-Invoicing in GST applicability
The Annual Aggregate Turnover of a business decides whether a business is eligible for e-Invoicing or not.
w.e.f April 1st 2021, the businesses whose annual aggregate turnover exceeds Rs 50 Crore in any one of the three previous financial years are eligible for e-Invoicing under GST.
It is important to note that; e-Invoicing is valid ONLY for B2B transactions.
Certain businesses are EXEMPTED from e-Invoice generation irrespective of their annual aggregate turnover.
The following categories of businesses are exempted from e-Invoicing under GST:
- Special Economic Zones (SEZ) Units
- Goods Transportation Agency
- Insurance company
- Banking company
- Non-Banking Financial Companies
We will now point out some of the prominent benefits of e Invoicing under GST in the later section.
#1 Authenticate B2B invoices from the government
‘e-Invoicing is a creation of a new invoice’ is a common myth amongst the taxpayers that need to be rectified.
e-Invoicing under GST does not mean creating a new invoice; e-Invoicing includes ‘Reporting’ & ‘Authentication’ of the existing invoice (B2B) from the government portal.
e-Invoicing enables the businesses to report all their already crated invoices for all their B2B transaction to the government portal. The Invoice Registration Portal (IRP) then authenticates the uploaded invoice by assigning a unique Invoice Reference Number (IRN) and QR code containing the basic information about the invoice.
#2 Auto-population of e-Invoice data into GSTR-1
The government has enabled the auto-population of your e-Invoice data directly to your GSTR-1 form. This shall reduce the efforts of the taxpayers to upload the same data multiple times during e-Invoice creation and the GSTR-1 return filing.
Following are the fields that get auto-populated based on the data furnished in your e-Invoice:
- On successful IRN generation for an invoice, the details of such invoices will be auto-fetched in the respective tables of the GSTR-1 form.
- Following table gives complete details about this auto-fetched data:
|Type of Supply||Auto-populated in GSTR-1|
|Outward taxable supply made to any registered persons (other than registered under RCM)||B2B 4A – Supplies except (i) attracting reverse charge and (ii) supplies made via e-commerce platforms|
|Taxable outward supplies made to registered persons attracting reverse charge||B2B 4B – Supplies attracting tax on reverse charge basis|
|Export supplies||EXP 6A – Exports|
|Credit/Debit notes issued to registered persons||CDNR 9B – Credit/Debit Notes (Registered) –|
|Credit or debit notes issued to unregistered persons||CDNUR 9B – Credit or debit notes (Unregistered) – with UR type as Exports with payment and without tax payment|
This saves the time of the taxpayers that goes into entering the same data multiple times while filing the GSTR-1 returns.
#3 Paperless invoice management with e-Invoicing under GST
e-Invoicing under GST will help the businesses to maintain a paperless trail of all their past invoices, which will help the businesses to organize their documents in a completely paperless way properly!
The IRP portal only holds your e-Invoices for 24 hours from the time of generation of the e-Invoice.
But if businesses uses an automated e-Invoicing software like GSTHero, they can store their e-Invoices in paperless format for as long as they want.
This paperless trail will also help the tax authorities to identify the tax frauds done by any of your suppliers. Hence, e-Invoicing will also help the businesses verify that their suppliers’ invoices are genuine and there is not any tampering done to the invoice.
#4 It helps identify fake invoices; Keeps you away from tax frauds!
To generate an e-Invoice from the IRP portal, the businesses must furnish all the invoice details on the IRP portal. The portal then verifies the data and creates the unique IRN number for that e-Invoice.
Recently, there were many stories in the news about the fake invoice racket exposed in the national capital of India. Hence, it is evident that the problem of counterfeit invoices and claiming ineligible ITC (Input Tax Credit) based on these fake invoices is a serious one.
This authentication mechanism helps the government as well as businesses to identify fake invoices and prevent tax fraud. This mechanism will help businesses to identify defaulting suppliers at an early stage and thus will help in preventing any legal complications.
#5 Claiming accurate Input Tax Credit under GST
As discussed in the earlier section, we have the idea that the data furnished during the e-Invoice generation will be auto-fetched when the taxpayer files his GSTR-1 returns.
Hence, the suppliers need to generate a flawless e-Invoice for all their B2B transactions. This will affect their GSTR-1 return data, directly affecting the recipient’s eligible Input Tax Credit under GST.
Hence, this cascading effect of e-Invoicing data on the ITC of the recipient of the business (supplier) should be taken seriously, and furnishing of only the accurate data should be done during e-Invoice generation.
When bulk invoices are uploaded to the IRP portal, a human error may be introduced in the uploading process. And this may affect the ITC chain, as discussed above.
Hence, tax experts suggest using some automated solution that allows you to generate e-Invoice right from your ERP without visiting the IRP portal.
GSTHero’s e-Invoicing connector allows e invoicing in tally.
So you can generate e-Invoices in bulk right from your ERP and that too without visiting the IRP portal even once!
#6 e-Invoicing is interlinked with E-way Bills
E-way Bill and e-Invoicing are interlinked. Therefore, when an e-Invoice is generated on the IRP portal, the unique IRN number generated can further be used to generate the E-way Bill corresponding to the same invoice.
This interlinking has helped businesses reduce the time gap between the e-Invoice generation and the movement of goods for which the E-way Bill is required.
Suppose the taxpayer furnishes the transportation data while generating the e-Invoice. In that case, the E-way Bill portal can easily fetch this data from the IRP portal and generate an E-way Bill corresponding to the invoice at the taxpayer’s request.
Thus, e-Invoicing also initiates the Eway Bill generation activity, which helps businesses save time and effort.
#7 Reduce errors & improve transparency
e-Invoicing under GST has helped businesses to reduce errors by a considerable rate. Businesses are now using the automated e-Invoicing solution to generate e-Invoices with minuscule or zero error.
The data to be furnished for e-Invoicing is now being verified by the businesses first and then is uploaded for an e-Invoice generation. This has made the taxpayers cautiously scrutinize the data and put only the valid data on the IRP portal.
However, there is always a chance that human errors may be introduced in the data furnishing process. Hence, tax experts suggest that businesses choose automated e-Invoicing software to eliminate clerical mistakes.
The invoice data will be available with the government, which will help maintain transparency between the government and the businesses eligible for e-Invoicing. In addition, this monitoring by the government will help the business stay away from tax frauds and create a transparent atmosphere between the suppliers and the recipients.
It is evident from the government’s actions that all the businesses, irrespective of the annual aggregate turnover, will be brought under the e-Invoicing umbrella. Therefore, the small & medium businesses currently eligible for e-Invoicing should have a proper IT infrastructure and a robust e-Invoicing solution to execute e-Invoice generation under GST smoothly.
Stay updated; stay ahead!
Until the next time…..