E-Invoicing is a mechanism that reviews the Business to the Business statement to the GST system automatically for an easy filling of monthly returns. In the current system, invoices generated by different accounting software used by divergent. E-Invoice is a system to review business to business(B2B) invoices to the businesses who are unable to be read by unlike software systems, nor the GST Network, which requires them to be again manually translated by data entry into the new software. The e-Invoice System is a unified standard that is being introduced so that all the invoices of GST registered invoices can be configured according to the same standard throughout the whole industry and applicable to all the software automatically.

The documents that are needed to be e-Invoiced and reported to the Invoice Registration Portal (IRP) –

  • credit notes by the supplier,
  • supplier debit notes,
  • supplier invoices
  • or any other required document should be to be disclosed under the law by a specific mention

Impact of the e-Invoice system in business:

 There are many positive impacts on implementing the e-Invoice on business such as:

  1. The taxpayer receives better service
  • E-Invoices will self regulate the process of the generation of invoices for GST. This will remarkably speed up the task, reduces cost, eliminate human error due to the requirement of manual data entry at every step.
  • Elimination of multiple formats by automation of reporting of B2B invoice data (purchase, sale, etc.) in a unified and native format that it is generated in. No need for different formats for the generation of GSTR 1 and e-way bill.
  • Sales and Purchase registered data is automatically generated from this to keep the Return (RET 1) is pre-prepared and kept ready for filling. These details can also be used to initiate an e-Way Bill.
  1. Business process enhancement:

The format will become a part of the business process and practice of the company. For businesses that are already using accounting software, a unified system format across the industry will help the relationship between businesses and banks, auditors, and investors, who can now access the given data without converting it into the format that they are using. For small enterprises, who do not use digitalized accounting software, the GST Council courtesy of the Government is providing free ERP and Accounting software to GST registered businesses, to boost the Digital India Initiative.

  1. Reduction in the issues of Input Tax Verification:

Input Tax is the amount of tax already paid for the raw materials in the product (input) which has to be deducted from the taxable amount for the output product. By-hand calculations in GST Returns filing often results in errors regarding under or over-claiming of input tax credits. This results in the amount of deduction a business is entitled to tax already paid on the product. Inadequate claiming of Input Tax Credit can lead to a substantial loss for the business as well as additional cost and hassle to fix errors. An automated system will eliminate human errors and ensure correct Input Tax information is being entered always.

  1. Easy Verification of Info before final submission

After producing the information to the GST system, the system will produce a darn return which can be verified against the actual business invoices to ensure that the correct data is provided. If not the buyer can reject it and start a new process. If accepted the buyer and confirm and the system will generate a final return.

  1. Administrative Efficiency
    A lot of fake invoices used to be created before the e-Invoice system which will now get check as the system becomes automated.

The e-Invoice system is planned to be rolled out from January 2020 on a voluntary basis. The compulsory nature of the program will be imposed slowly in phases to get the whole system acclimatized to the new software level changes to their accounting standards and business practices. Initially, the scheme will be made compulsory for business over a specific turnover, voluntary for everyone else.

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