The introduction of e-invoices was approved by GST council during its 37th meeting held in September 2019 with the key objective to ensure inter-operability of e-invoices across the GST ecosystem. Invoice being a key document and e-invoicing being a reform related to it, it is extremely important for businesses to understand it fully and prepare for it, accordingly. In the recent update, from 1st August 2023, e-Invoicing will be essential for all the registered persons whose aggregate turnover (based on PAN) in any prior fiscal year from 2017-18 onwards exceeds 5 crores.
What is e-Invoicing?
e-Invoice known as ‘Electronic invoicing’ is a system in which all B2B invoices are electronically uploaded and authenticated by the designated portal.
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Post successful authentication, a unique Invoice Reference Number (IRN) is generated for each invoice by IRP. Along with IRN, each invoice is digitally signed and added with a QR code. This process is collectively called as e-invoicing under GST
Know more on IRN, Format and process to generate it.
Challenges surrounding e-invoicing
While the government aimed at simplifying the invoice generation process by introducing e-invoicing for businesses, there seem to be some resistance from the B2B business owners. Let’s take a look at some of the challenges which will be faced by taxpayers on the implementation of the new provisions under e-invoicing:
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Capturing real time data through an integrated ERP system
Invoice generation is an activity that cannot be pushed to a later stage. As soon as there is a transaction between two parties, the invoice needs to be generated instantly. Since invoice generation is a key process in every business, it is imperative that implementation of e-invoice is done seamlessly. A software or the ERP system that you currently use for your businesses process should be such that it allows you to easily modify the standard invoice generation process as per the recently launched program without having to change your methods.
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Sorting B2B and B2C invoices
E-invoicing applies only to B2B invoices and not B2C invoices. B2B requires filing of both E-way bills and e-invoices, whereas B2C invoices only require e-way bills to be generated (wherever applicable). Thus, in case you want to generate an e-way bill for a B2B invoice you would require to filter out B2B invoices from a big stack of invoices. This process in itself is extremely time consuming and will take a lot of effort to sort the invoices.
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Tracking of invoices
Though the offline tool for generating e-invoices is available for anyone to download and authenticate their invoice data. However, this manual process is quite cumbersome since they have to raise the GST invoice in their existing accounting system and upload the same invoice data in the offline utility to generate JSON files. Once the JSON file is generated, it is then uploaded on Invoice Registration Portal (IRP) to generate final e-invoice with Invoice Registration Number (IRN), digital signature & QR code. While a manual process is suitable for managing lower volumes of invoices, it is not sustainable for businesses generating bulk or high volumes of invoices every day. This challenge can be overcome with a software that helps you track all your invoices, seamlessly and give you the status of each invoice to avoid any mishaps.
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Revised workflow to process relevant documents
Since, e-invoicing applies only to B2B invoices, thus, a separate workflow has to be created for delivery challans, bill of supply, job work and other similar transactions. This obviously requires additional time and effort, which is definitely not expected, especially when there is automation in the picture. Thus, a business management software that will help you seamlessly generate e-invoices without impacting the way you use to operate your business will help reduce that extra time and effort to generate these crucial reports.
e-Invoicing is a concept under GST which was implemented in India after several meetings, discussions and feedback sessions. The real challenges and drawbacks can be identified only once the taxpayer starts using it in a full-fledged manner. However, business owners can make the most out of this new process, by choosing GST software that will assure a smooth transition to an e-invoicing system. TallyPrime's e-invoicing solution will enable businesses to perform all necessary e-invoicing functions including:
- e-Invoice generation with IRN and QR-code
- e-Invoice cancellation
- Bulk upload of e-invoices
- Upload of invoice data in various file formats like Excel or JSON
- Smart validation for ensuring compliance
- Flexibility to generate offline JSON to handle exigency scenarios
Video on e-invoicing in TallyPrime
Know more about e-invoices in GST
