E-Invoicing A Business Mandate
Posted: Dec 26, 2022
In simple terms, e-invoicing is electronic billing. In the time of computerization e-invoicing is one of the most acceptable formats of billing in India, and all over the World. All the benefits apart, electronic documentation is eco-friendly as it reduces the need for paperwork.
The development of electronic billing started with the information age as the computerized infrastructure increased in the 20th Century. Simultaneously the application development process also enhanced to form a cohesive unit of applications that could electronically print documents. The reason behind the increased popularity of electronic invoicing or billing was the arrival of internet banking and messaging systems.
The GST Mandate
- Though a large number of standards prevail all over the World, most of them are not interoperable.
- Benefits of Electronic Invoicing
- Single reporting of B2B invoices.
- Most of the data in form GSTR-1 can be kept ready for filing.
- E-way bills can also be generated easily using e-Invoice data.
- Minimal need for data reconciliation.
- Real-time tracking of invoices.
- Less input tax credit verification efforts.
- Sound management and automation of the tax compliance process.
- Reduction in the number of frauds by the tax authorities.
- Elimination of fake GST invoices.
Mandatory Compliance History - GST
The e-invoicing system came into focus when GST implemented its use in the year 2020 on 1st October. It was to be implemented by a business having a turnover of Rs.500 crore. Then in the year 2021 on 1st January, the yearly turnover was reduced, and it was to be implemented by firms with an annual turnover of Rs. 100 crore. In April 2021 the mandate was down to Rs.50 crore.
There was a swift decline in the mandate levels, and it stands at Rs. 10 crores as of 1st October 2022. By 2023 on the 1st of January, the mandate will be brought down to Rs.5 crore. The applicability considers all GSTNs under a single pan number hence the cumulative turnover is taken into the account. The rule applicable for generating e-invoicing is under the aegis of CGST Rule 48. The electronic format billing should be done after the invoice date and should be presented before filing the GST return. The threshold would be considered after the prescribed turnover has been achieved in the previous year.
How Does E-Invoicing Work?
The eligible businesses with continue to work under regular invoices but the format will be specified to comply with computer readability.
The E-Invoice Structure as Per GSTIN.
- Schema: Includes the technical field, name, and description.
- Masters: Inputs include fields like UQC, State Code, invoice type, supply type, etc.
- Template: It is as per the GST rules. The mandatory fields are in green and the optional fields are in yellow.
GSTN stands for Goods & Service Tax Network it is an NGO with Government holding shares.
The important steps are:
Interaction between the business/supplier and IRP. The supplier generates the JSON file invoice format for the IRP or invoice registration portal. The IRP validates the invoice and generates an IRN and QR code. IRP also digitally signs the invoice and sends it back to the supplier.
Then the interaction between the IRP and the GST/E-Way Bill systems takes place. The e-invoice data gets sent to the GST system, where the GSTR-1 return gets auto-populated. The e-invoice data is also delivered to the e-way bill system, where Part A of the e-way bill gets generated, and if transporter details are provided, then Part B gets generated as well. Part B can be generated if transporter details are not available.
How to create an e-invoice?
The invoice could be generated using different means.
- Offline tool
- Using ClearIRP.com
- Using GST Suvidha Provider (Tally for example)
- Through Direct Integration with IRP
- Via API integration with GSTIN
- Using E-way Bill API credentials
Tally Prime for e-invoicing
By enabling e-invoicing in Tally Prime businesses can generate e-invoices without much hassle. Besides the application software smoothly integrates with MIS, and works in a highly secure environment.
A group of writers at Above the Fold Digital Marketing and Web Development Company in Mumbai India