The GST Council, in its 35th meeting, has decided to implement a system of e-invoicing, which will be applicable to specified categories of persons
e-Invoicing does not imply the generation of invoice on GST portal. That would be a myth. Instead, e-invoicing involves the submission of an already generated standard invoice on a common e-invoice portal. Thus, it automates multi-purpose reporting with a one-time input of invoice details.
What is the current system in place for issuing invoices?
Currently, businesses generate invoices through various softwares, and the details of these invoices are manually uploaded in the GSTR-1 return. Once the GSTR-1 is filed by the respective suppliers, the invoice information is reflected in form GSTR-2A for the recipients for viewing only. On the other hand, the consignor or transporters must generate e-way bill by again importing the invoices in excel or JSON manually.
Under the e-invoicing system to be implemented from 1st October 2020, the process of generating and uploading invoice details will remain the same. It will be done by importing using the excel tool/JSON or via API integration, either directly or through a GST Suvidha Provider (GSP). The data will seamlessly flow to GSTR-1 preparation and for the e-way bill generation too. The e-invoicing system will be the key tool to enable this.
How will Electronic invoicing benefit businesses?
Businesses will have the following benefits by using e-invoice initiated by GSTN:
- E-invoice resolves and plugs a major gap in data reconciliation under GST to reduce mismatch errors.
- E-invoices created on one software can be read by another, allowing interoperability and help reduce data entry errors.
- Real-time tracking of invoices prepared by the supplier is enabled by e-invoice.
- Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns, especially for generating the part-A of e-way bills.
- Faster availability of genuine input tax credit.
- Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.
- e-Invoicing system shall apply to those taxpayers with annual turnover exceeding Rs 500 crore instead of Rs 100 crore.
- However, taxpayers can also apply for e-invoicing irrespective of the turnover.
- Special Economic Zones (SEZ) units shall also be exempted from issuing e-invoices.
- Implementation Date
The electronic invoicing was to be mandatorily implemented from 1st April 2020 but has been pushed to 1st October 2020 for taxpayers with turnover over Rs.500 crore. The aggregate turnover will include the turnover of all GSTINs under a single PAN, across India.