In an effort to further plug income leaks and ensure improved tax compliance from corporations, the Central Board of Direct taxes (CBDT) has made E-Invoicing in India compulsory for businesses with annual revenues surpassing Rs 10 crore from October 1. According to the centre, the norm regarding council suggestions has been changed. Currently, companies having yearly revenue of more than Rs 20 crore are required to use GST e-invoices.
Beginning on October 1, 2020, businesses with a turnover of more than Rs 500 crore were included in the scope of e-invoicing in India for business-to-business (B2B) transactions. Businesses in the second phase were required to start issuing e-invoices from January 1, 2021, if their annual revenue exceeded Rs 100 crore. From April 1, 2021, businesses having a turnover of more than Rs 50 crore were required to generate e-invoices. With effect from April 1, 2022, enterprises with annual revenues above Rs. 20 crore are using GST e-invoicing in India.
According to officials, e-invoicing in India would be required for companies with a Rs 5 crore in annual revenue by the next year.
What Effects or Changes will E-Invoicing have on Business Operations?
Businesses must now connect their systems with the government's invoice registration portal in order for every B2B invoice to automatically generate an Invoice Reference Number (IRN). To comply with the e-invoice standard, they will also need to make adjustments to their accounting software. The following business processes will be impacted by the creation of e-invoices:
1. Businesses must choose whether to comply with e-invoicing requirements through API integration, offline tools or GSP integration (GST Suvidha Provider).
2. The company will now need to determine which transactions may be subject to e-invoicing and separate them properly for compliance.
3. Businesses must keep a vendor and customer database to include extra information on invoices, such as bank information and payee information.
4. Since B2B supplies can be automatically filled out in the returns while B2C supplies must be manually updated, businesses will need to make modifications to how they prepare GST returns.
5. Engaging in the ongoing generation and capture of IRNs will be the key challenge for businesses. Each day, large retailers produce tens of thousands of B2B invoices. The consumers cannot be made to wait until the e-invoice is generated. These companies must use GSP's services for a seamless rollout.
What If No E-Invoice is Generated?
Non-generation of an e-invoice is a crime punishable by law. It carries a fine of up to Rs.10,000 per invoice. In addition, erroneous invoicing might result in a Rs.25,000 penalty each invoice.
Aside from criminal restrictions, if a taxpayer fails to generate an e-invoice-
· The GST returns will not be automatically filled out.
· Customers will be unable to claim validated ITC.
· Customers can refuse to accept an invoice that doesn't meet the requirements for e-invoicing.
Preparation for the Adoption of E-Invoices
India is a new market for e-invoices. Therefore, companies will need to take the following actions to ensure a smooth transition to e-invoicing in India:
· Choosing the Most Effective ERP Integration
API-based and SFTP-based interfaces are the most frequent for e-invoice generation. The integration may be chosen by an organization based on its budget and specific business requirements.
· Modifications to the Accounting Software
For the purpose of generating IRNs, businesses will need to reconfigure their ERP/accounting software to interface with the IRP portal. Additionally, the printing infrastructure will need to be modified to include new features like QR codes. Such adjustments will demand a large financial commitment.
· Data Security
Because e-invoices are typically created straight from an organization's ERP/accounting software, data security is critical. This accounting software contains critical business information. Additionally, if a taxpayer intends to use ASP/GSP services, employ two-factor authentication that is enabled and ISO 27001 certified.
· Employee Education Sessions
Prior to E-Invoicing in India, businesses generated invoices in standard forms. However, e-invoicing necessitates that businesses adhere to established formats. This format is broken down into three sections: e-invoice schema, masters, and e-invoice template. As a result, they will need to teach their employees in order to familiarize them with the new regulations.
Have you been lately hearing a lot about ‘E-invoicing’ or ‘electronic invoicing’ which is keeping you worried all day and night as how it will impact your business?Know more about GST E-Invoice Here
The tax GST exists in multiple countries.
and since 2018 the GST tax term associated with India also.
GST is levied at every step in the production process, and it is intended to refund to all parties in the various stages of production to avoid the cascading effects of tax.
The rates were fixed as 0%, 5%, 12%, 18% and 28%.An invoice or a bill is a list of goods sent or services provided, along with the amount due for payment.
Tax invoice is generally issued to charge the tax and pass on the input tax credit to the beneficiaries.GST invoice is a document which is supposed to contain all the relevant details of a business transaction and both the parties involved.
As per rules, only GST registered business needs to provide GST complaint invoices on account of sale of goods and services.
