It hasn’t been a long time since e-invoicing was implemented under GST, and it has been rolling out phase-wise. Lastly, it was implemented for businesses with more than 5 Crore annual turnover from 1st August 2023. Soon, it will be applicable for businesses with more than or equal to 1 crore annual turnover. Since its inception, it has changed the way businesses interact with other businesses; once it is rolled out for micro-enterprises, we will witness its game-changing capabilities.
In this blog, we will discuss how e-invoicing is changing the business landscape of India and its benefits to businesses alongside creating growth opportunities for online invoice software providers. Let’s get started!
Introduction To E-Invoice In Brief
E-invoicing is the reporting of B2B transactions in a standardized format. It is implemented with the intent to prevent tax fraud and maintain the data in a common format so that it can be cross-checked if needed.
Now, let’s understand how this system works.
Create an invoice in any of the best online GST invoice software and upload the details of transactions to the Invoice Registration Portal (IRP); on successful validation, you will receive an Invoice Registration Number (IRN) along with a digitally signed copy of the invoice and a QR code. You can share this e-invoice with your customer.
Benefits Of E-Invoicing To Business
The following are the advantages of implementing an e-invoicing system under GST:
- It makes access to data easier, and readability improves greatly as data is stored in a common format across all the stakeholders.
- Tracking B2B transactions has become easier.
- Computerized matching of input & output tax data to prevent verification glitches while filing GST returns.
- Sales and purchase registers are auto-generated for filing new returns.
- Invoice data can be used to file Part A of the e-way bill generation form. This ensures efficient e-way bill generation with less data entry work.
Benefits Of E-Invoicing To Government
According to a report, the government detected almost 38,000 Cr of tax
fraud in FY 2019-20 alone. This is a huge sum of money. It affects India’s overall economy and budget. As a result, the government will have less money on the table for the development of the nation and the welfare of the common man.
Normally, when the government collects less revenue for expenditure, they increase the tax rate. In this case, it wouldn’t work because it could have motivated businesses to evade taxes even more. This could lead to a vicious cycle.
With the implementation of e-invoices, the government can track and maintain records of B2B transactions. Now, the government can curb tax evasion by detecting fraudulent invoices submitted with the intent to claim tax input.
How E-Invoicing Is Proving To Be A Game-changer In India?
In the following ways, e-invoicing under GST is revolutionizing India’s business landscape:
Revolutionizing Accounts Payable Process
E-invoice simplifies many business processes, mainly accounts payables and receivables. The system is designed in such a way that it enhances order-to-cash cycle efficiency. While registering an e-invoice, invoices, and notes are stored on an electronic system, making it trackable. This system allows the government to catch fake input tax credit claims.
To comply with e-invoicing regulations, enterprises must implement online e-invoicing software with features to cater to their e-invoicing requirements. The software streamlines your accounts payable process and prevents errors otherwise prevailing with manual data entry.
Simplifying GST Reconciliation
When you upload your invoice in IRP, data gets on the portal, which, in turn, minimizes manual work in GST reconciliation. Before the introduction of e-invoicing, GST reconciliation was complicated. The stored data can be imported to a third-party compliance solution provider with just a click of a button.
Since all the transactions are moving to digital platforms, data reconciliation between books and returns is instantaneous. And the best part is, organizations implementing e-invoicing are on the track to saving a large chunk of the cost of compliance in the long run.
On the other hand, taxpayers are becoming more confident about the data reported in returns, preventing them from penalties. Therefore, it is a revolution in India.
Transparency Between Buyers And Sellers
The e-invoicing system enables sound relationships between buyers and sellers, as follow-ups can happen via digital mode. Also, the government validates the e-invoice data, enabling the trust with buyers when the input tax credit is claimed.
Since sellers have the GSTN of buyers, they can ensure that they are dealing with genuine clients, not fraudsters.
New Opportunity For Fintech Companies
The implementation of e-invoicing under the GST system opened a doorway to new opportunities for fintech companies. Many fintech companies have launched online invoice software to ease the process of generating invoices. Apart from the government, these companies have also supported businesses in-line with the implementation of e-invoicing.
The GST invoice software providers are constantly innovating to provide more simplified and dynamic solutions to ease the GST compliance process for businesses and tax consultants. More feature-rich software solutions are being offered at affordable prices, paving the way for widespread GST adoption of e-invoicing.
Thus, online invoice software providers are accelerating this process. As a result, opening opportunities for exponential growth. Also, the new-age e-invoicing software contributes towards faster adoption of e-invoicing regulation, benefiting India’s economy in the long run.
Reasons Why Businesses Should Adopt E-Invoicing Under GST
Following are the reason why businesses should implement e-invoicing in their practice:
Single-time reporting of B2B invoices: After the implementation of E-invoicing under GST, businesses have to register invoices just once and get them authenticated by the Invoice Registration Portal (IRP). It is being validated by the Invoice Registration Portal (IRN), and after authentication, invoice details will be auto-populated for the GSTR-1 return.
E-way bill creation becomes easier: With the implementation of GST, it is mandatory to generate e-way bills if goods are to be transported. If you are generating e-invoice under GST, the part-A of e-way bill gets auto-populated from e-invoice data. This is how e-invoicing fast-tracks the e-way bill generation process.
Decreases data-entry error: After the introduction of GST, e-invoices are uploaded to a common portal. Before being transferred to the e-way bill portal, all e-invoices must be authenticated. The auto-population of e-invoice data in e-way bills prevents the need to update the data manually while filing GST returns.
Over To You
So that’s all about e-invoicing and how it is proving to be a game changer in India’s indirect tax system. We hope that after reading this blog, you have learned about e-invoicing from a new perspective. And if you want to make your business process streamlined and effective, adopt the best invoice software today!
Frequently Asked Questions On E-Invoicing
What if an e-invoice is wrongly generated?
If the e-invoice contains a mistake or data entry error, there are no provisions to edit or correct it. The only option is to cancel that invoice and report a new invoice with a new number.
What is the time limit for generating an e-invoice?
There is no defined time limit for generating e-invoices. You can generate it on or after the invoice date. However, it must be created before the filing of GSTR-1 returns.
Is a digital signature mandatory to generate an e-invoice?
No, a digital signature is one of the optional requirements to generate an e-invoice.
