E-invoicing rules: Debunking the myths around invoicing and reporting provisions

  • Will I have to change my invoicing system after the implementation of e-invoicing provisions?
  • I issue invoices from within my existing accounting software. How will I raise invoices under the e-invoicing era?

Several questions, one answer – don’t get trapped into the myths.

E-invoicing rules shall kick-in from January 1, 2020, for specified taxpayers voluntarily. However, clouds of uncertainties and confusion have surrounded most people on the generation of invoices under e-invoicing rules.

To remove these clouds, the GST council has prepared a detailed standard on e-invoicing in consultation with trade/ industry bodies as well as the Institute of Chartered Accountants of India (ICAI).

Our today’s article explains the broad overview of this standard. It also focuses on a reality check of the myths to inform taxpayers, tax consultants and ASPs about the e-invoicing provisions –

What is e-invoicing?

E-invoicing does not mean that the taxpayers have to issue invoices through a centralized portal. The businesses will still raise the invoices from their specific ERP/ billing systems without disturbing the current process.

E-invoicing mechanism will only specify the invoice schema and standard so that all accounting/ billing systems can standardize their data format.

The new e-invoicing standard will enable the billing/ ERPs systems to realign the data access and retrieval in the standard format so that GST Portal can read the data uniformly. (Also, a Unique IRN will be generated)

What is the need for implementation of e-invoicing rules?

At present, when an ERP system generates an invoice, another billing or invoicing system can’t read or interpret the details until the user makes a fresh data entry.

During the return filing, a user has to upload his invoices. Further, while generating an e-way bill, either a taxpayer has to manually fill the details or upload the invoice so the system can fetch the details automatically. Either way, it becomes cumbersome, duplicate process.

To avoid duplication and improve the compliance process, the Government has decided to implement e-invoicing rules.

E-invoicing will also allow the GST portal to receive invoices in a standardized format, making it easier to process those and perform the reconciliation process timely.

How will e-invoicing help the taxpayers?

  1. Taxpayers won’t have to report data multiple times (Presently, they have to report similar data in GSTR-1 and E-way bill).
  2. Once the taxpayers register e-invoices on the Invoice Registration Portal, they can generate sales and purchase register (ANX-1 and ANX-2) from this data to keep the return (RET-1) and e-way bill ready.

Will e-invoicing force the taxpayers to generate invoices from a common centralized portal?

No, it’s a myth. The taxpayers can continue to use their existing ASPs/ ERP systems to generate invoices.

However, they will need to register the invoices (and Generate an IRN- Invoice Reference No.) on Invoice Registration Portal (IRP) using one of the modes given below –

  1. Web based;
  2. API based;
  3. SMS based;
  4. Mobile App based;
  5. Offline tool based, and
  6. GSP based.

Will small taxpayers have to invest in a billing software post-implementation of e-invoicing rules?

As e-invoicing doesn’t require the taxpayers to purchase a separate billing software or set-up a new system, the small businesses can continue to use the existing modes of generating invoices.

GSTN is also going to provide an offline tool where the users can fill the data from a physical invoice. The system will convert the filled data into a JSON file, which can be uploaded on the Invoice Registration Portal (IRP).

READ MORE: Making Filing Returns Easier With SahiGST

What will be the steps involved?

  1. The taxpayer will generate an e-invoice on his current accounting/ ERP system or through the Application Service Providers (ASPs).
  2. The taxpayer will then report the e-invoice to Invoice Registration Portal (IRP).
  3. IRP will generate a unique Invoice Reference Number (IRN), digitally sign the e-invoice and also generate a QR code.
  4. IRP will return the QR code (which contains vital parameters of the e-invoice) to the taxpayer who generated the invoice.
  5. IRP will also send the digitally signed e-invoice to the email ID of the taxpayer mentioned in the invoice.

The taxpayer has to report all invoices, credit notes, debit notes, and any other documents as required by the law to the IRP.

How will the data fields of the e-invoicing system look like?

An e-invoice will contain a few mandatory and the rest optional fields. All the businesses will have to fill the mandatory fields, while the optional fields will depend on a business/ industry’s specific needs and requirements, based on current business practices in India.

IRP will accept an invoice only if a taxpayer has filled all the mandatory fields. An invoice will accept maximum information of upto 100 line items.

How will Vayana Network GSP make your life easier?

6 ways have been defined to register an invoice on Invoice Registration Portal (IRP), out of which one mode is through a GSP.

Vayana Network, one of the top GSPs in the country, is as always keen on assisting taxpayers to comply with the e-invoicing rules.

READ MORE: GSTN issues e-invoicing draft standard; Role of GSPs become inevitable under the new mechanism

With the introduction of e-invoicing rules, role of a GSP has enhanced. Every Application Service Provider (ASP), Fintech and corporate house will want to avail the services of a GSP who has adequate infrastructure to support huge volumes of data with absolutely zero Downtime, whether scheduled or non scheduled.

Vayana Network proudly vouches to have proved to be 100% up and running in the last 2 years, even with thousands of companies, chartered accountants and tax practitioners using our infrastructure concurrently.

Overall, exciting days ahead for GST, taxpayers and GSPs, as the whole GST regime looks to get revamped. GST 2.0 will make taxpayers’ lives easier, simpler, and more approachable, and Vayana Network will continue to remain the GSP of choice for every enterprise and SMB application.

Are you excited enough? Do let us know by clicking on this link:- Vayana Network