The e-invoicing system has been implemented by the Government w.e.f. October 1. Read more about the system, benefits, steps to generate e-invoice, and the difference between the existing and the current procedure.
Around 69.5 lakh Invoice Reference Numbers (IRN)s have been generated by 71,000 users in the first week of implementation of the goods and services tax (GST) e-invoicing system.
As per Finance Secretary, Ajay Bhushan Pandey, the new system will benefit both the businesses and tax administration. This system will provide the buyers and sellers with real-time information on the invoices.
Key Highlights:
1- The mandatory invoicing system came into effect for business-to-business (B2B) transactions from October 1 for businesses with an annual turnover of more than Rs 500 crore.
2- On the first day of the e-invoicing system (October 1), around 8.40 lakh IRNs were generated by 8,453 users. A week later on October 7, around 13.69 lakh IRNs were generated by 14,100 users.
3- This system will be available by the next year (January 1, 2021) to taxpayers having a turnover of more than Rs. 100 Crore per year.
4- From April 1, 2021, the e-invoicing system will available to all the taxpayers of the country.
5- This system will replace the existing physical invoice and e-way bill system.
6- The insurance, banking, financial institutions, NBFCs and passenger transport services are exempted from this system.
7- It will also dispense the existing system of filing GST returns for smaller business and MSMEs as the returns will be automatically generated for all supplies for which e-invoice have been issued.
8- It will also boost the invoice based lending to the MSMEs.
What is GST e-invoice system?
It is the digital invoice for goods and services by businesses, usually generated on the government regulated (Invoice Registration Portal) IRP. It is introduced to avoid tax evasion. The businesses generating the e-invoice will get a unique identification number by the IRP portal that will directly be managed by the GST Network (GSTN).
How will it work?
In this system, an e-invoice will be generated with the help of government-approved GST software and will be uploaded on the Invoice Registration Portal (IRP).
Steps to generate an e-invoice:
1- The current method of generating the invoices is similar to the existing method except for the reporting part which will now be done digitally.
2- Once the invoice is generated, the software creates its JSON format and upload on the IRP.
3- After the invoice is uploaded on the portal, it is verified for the parameters like GSTIN, document number, document type, and the fiscal year with the central repository to check for duplicates.
4- Now, a digital signature and QR code will be added to the e-invoice and a unique Invoice Reference Number will be generated, provided the invoice is cleared.
Benefits of e-invoicing
1- With the introduction of the new system, transparency will be enhanced and the data entry errors will be nullified.
2- Less faulty data will help in the genuine input tax credit and faster invoice rolls out.
3- The e-invoices can be traced easily and are time efficient.
Difference between the current and the existing process
The difference between the two processes is as follows:
In the existing system, the businesses generate invoices from the software which were later uploaded in the GSTR-1 and were reflected as GSTR-2, which only the recipients can view.
On the other hand, in the latest system introduced by the government, the cosigners or transporters can send the invoice again by importing them in an excel or JSON format.
Also, the e-invoice can be submitted directly through the GST Suvidha Provider (GSP).
