Why E-invoicing is important in business today?

Every business around the globe is aligning with digital transformations and adapting to technological trends to grow in a competitive market. The use of electronic invoices or e-invoices has also drastically increased throughout the business areas. To get a better understanding of e-invoices, let’s look into some vital information below.

What is E-invoicing?

The term "e-invoicing" as used in the GST law is referring to electronic invoicing. The process of electronic invoicing or e-invoicing is sending invoices generated by the current ERP or billing system to one of the approved Invoice Registration Portals. Every invoice receives an identification number under the e-invoicing system from the Invoice Registration Portal. GST-registered businesses are required to produce an electronic invoice for B2B transactions and also an e-way bill is utilized when moving products from one location to another.

Who must Generate E-invoicing?

According to the GST law, some enterprises must begin generating e-invoices by October 1, 2022. All enterprises that are GST-registered and had yearly sales of more than Rs. 10 crores in a prior fiscal year between FY 2017–18 and FY 2021–22 are covered.

Businesses that generate e-invoices for all taxable Business-to-Business, Business-to-Government, export transactions, and reverse charge transactions under Section 9(3) of the CGST Act are currently those having a turnover of more than Rs. 20 crores. The rest of the documents are out of the scope of the system, which primarily includes tax invoices, debit notes, and credit notes.

There are several ways to generate electronic invoices. The most common ones are GST e-invoice preparing and printing (GePP), an offline and momentarily practical solution on IRP, and API integration, a long-term, scalable, and automated method. Others include SMS-based mobile e-invoicing and integration using ASP-GSP. If applicable firms fail to provide their GST-registered customers e-invoices on or after October 1, 2022, they are required to pay a penalty that is greater than the tax amount or Rs. 10,000 for each invoice.

The e-invoice is checked for accuracy and legitimacy by the official invoice registration portals, which also confirm and authenticate it. The signed QR code and invoice reference number are returned on the electronic invoice. It is an incomplete and inaccurate invoice if they raise one without the IRN and signed QR code. A penalty of up to Rs. 25,000 per such invoice would be applied.

Process of Invoicing

The steps involved in creating or raising an e-invoice are as follows:

• The taxpayers are required to use the modified ERP system in accordance with PEPPOL regulations. They can work with the software service provider to implement the e-invoice schema or standards, and at the very least be notified by the CBIC about the mandatory parameters.
  
  
• Generally, taxpayers have two possibilities for IRN generation:
  
  

1. On the e-invoice portal, the IP address of the computer system can be whitelisted for direct API integration or integration using a GST Suvidha Provider.
2. To upload invoices in masses, it is better to use a bulk-generating programme.
   
   

• After then, the taxpayer is required to provide a regular invoice for that programme. He must include all pertinent information, including the name and address for the billing address, the supplier's GSTN, the transaction's value, the item's GST rate, the amount of tax due, etc.

• Once one of the aforementioned alternatives has been selected, create the invoice using the appropriate ERP or billing programme. After that, submit the invoice's details, particularly those pertaining to the required fields, to the IRP using a JSON file, an application service provider (app, GSP, or direct API), or both. The central registrar for electronic invoicing and its validation will be the IRP. Other ways for connecting with IRP include SMS and mobile app-based methods.

• IRP will verify the essential information on the B2B invoice, search for any duplicates, and produce an invoice reference number (hash) for future use.

The four criteria used for producing IRN are as follows:

1. The seller's GSTIN
2. Invoice number
3. The fiscal year (YYYY-YY)
4. Document type (INV/DN/CN).

• A QR code is created by IRP in Output JSON for the supplier. Then it generates the invoice reference number (IRN), and digitally signs the invoice. On the other hand, the supply seller will be informed by email of the creation of the electronic invoice if the invoice is provided.

• For GST returns, the authenticated payload will be transmitted by IRP to the GST portal. Also, if required, information will be sent to the e-way bill gateway. The seller's GSTR-1 is automatically filled out for the applicable tax period and then tax obligation is established.

Who is exempt from E-invoicing?

There are some exclusions, including those that apply to banks, NBFCs, insurance companies, GTAs, passenger transport services, government agencies, services that provide entry to the screening of motion pictures in multiplexes, SEZ units, and individuals who provide OIDAR services. The system must be adhered to by everyone else.

Let’s get to know furthermore on the ones exempted from e-invoicing:

Notified Businesses

• An insurance provider, bank, or other financial organization, such as an NBFC
• A registered individual providing services for admission to the showing of cinematic films in multiplexes
• A SEZ unit that has been exempted by CBIC Notification No. 61/2020 (Central Tax)
• A licensed individual who offers passenger transportation services
• A Goods Transport Organization (GTA)
• Individuals who have registered under Rule 14 of the CGST Rules (OIDAR)
• A government agency and a local government (exempted pursuant to CBIC Notification No. 23/2021 - Central Tax)

Documents

The documents include delivery receipts, invoices from ISD, bills of supply, financial or business credit notes, or debit notes.

Transactions

Any business-to-consumer sales, nil-rated or non-taxable or exempt business-to-business sales, exempt business-to-government sales, imports, high seas sales, bonded warehouse sales, free trade & warehousing zones (FTWZ), and Section 9(4) of the CGST Act covers the supplies made under reverse charge.

The bottom line

E-invoices are being used in different businesses to enhance efficiency and reduce expenses in the firms. Accoxi is an effective accounting software that simplifies all your accounting tasks, creates e-invoices, generates business reports, and helps to stay on top of the global market.

Are you in search of a quality-assured accounting software that can aid in generating e-invoices easily and managing all your accounting tasks smoothly? Connect with us and know how Accoxi can help you scale up your business effectively.