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E-invoices replace GST Invoices: E-Invoicing Benefits, Implementation and How does it works?


October 24, 2019

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E-invoicing is considered to be more of a business restructuring than a tax restructuring. In the initial phases, the new practice is applied only to certain taxpayers having invoice value or turnover denominations exceeding certain specified limits. Slowly and steadily, rest of the taxpayers will also fall under the scrutiny of E-invoicing in a subsequent fashion. The implementation of GST is going to eradicate to a large extend the occurrence of errors which directly results in hassle-free returns. 

Here is a brief description of everything that you need to know about E-invoicing…

When will E-Invoicing Come into Effect?

The 37th GST council on September 20, 2019 has sanctioned the incorporation of E-invoicing (Electronic-invoicing) in the B2B transaction system starting from January 1, 2020.

What Modifications will E-invoicing initiate?

After putting into practice the new system of E-invoicing, all the sales and purchase invoices shall be replaced. These invoices will assume the new ‘electronic’ format through the government screened E-invoice PAN- India.

How will E-Invoicing Control Tax Evasion?

The GST council and the Government of India believe that this can bottleneck tax evasion since there is real-time record of every GST returns with the E-invoice details. There will be less possibility for tax avoidance as invoices get generated prior to transaction. Since all invoices are generated through GST portal, only those input tax credit that are genuine can be claimed. This implies that GSTN can track every fake tax credit claims.

How Does E-invoicing Work?

In this new method of E-invoicing, there will be standard template of GST invoice. The GST network will generate a unique invoice number, also called unique Invoice Reference Number (IRN). The IRN is calculated based on an organization’s GSTIN i.e. GST registration number.

In order to smoothly execute further E-invoicing activities, the government has nominated registrars to preside the same. The registrars will be responsible for issuing the E-invoice for the taxpayer who will either be a seller or a buyer. Any registered taxpayer can raise the request to the registrar through online, API, SMS, mobile app or even offline tool. This will hence be a proof to the registrar regarding the area coverage of the registered tax person.

By the introduction of online method like E-invoicing, the India Government believes that there will be an enhancement in digital payments through QR codes. The government mandates the use of a QR code generated in the E-invoice registration portal. This QR code can be digitally validated and signed by the appointed registrar, which will generate another QR code. This QR code can be printed by the registrar and taken as proof by the taxpayer to be sent as an invoice number.

Who will be Liable to Do E-Invoicing?

While not every business need to come under GST E-invoicing, this factor is subjected to specified turnover limits of companies. If the turnover of companies goes beyond a set limit, then there arises the necessity of registering and implementing the GST E-invoicing for that particular business.

What are the benefits of E-invoicing?

• Invoicing in the electronic format reduces the probability of error as against manually entering the details
• There is ease of reconciliation between invoices and returns
• Facilitate real-time tracking of invoices of supplier and hence speedy input tax credit
• Automation through digital mode of tax filing procedures
• Tax authorities can inspect the data in real-time thus reducing any misrepresentations from the side of the taxpayers

The induction of E-invoicing in the system eases the task of everyone with routes of everyone and everything being part of the system. E-invoicing is sure to be a game-changer when it comes to future GST practices of the country!

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