e invoice mandatory

Input tax credit fraud, which has become a significant problem for the government, will also be easier to spot, thanks to the GST authorities' improved ability to analyse patterns and the utilisation of ITC across industries. Article briefly focused on e-invoicing new update which will be in effect from 1st October, e Invoice mandatory for business whos turnover is more then 10cr

Over 18 months, the Center and the States were able to identify fraudulent Input Tax Credits (ITC) worth more than 50,000 crores. However, experts have asked for more of these attempts to verify fake invoice because the recovery has been far lower than expected. (Source - the hindu business line on 16th May 2022)

The Central GST's Mumbai South Commissionerate has imprisoned two people and uncovered a massive fraud scheme involving 185 crore rupees worth of fraudulent GST invoices that were being used to claim 22 crore rupees worth of Input Tax Credit. (Source- Moneylife on 25th July 2022)

From October 1, the centre would require businesses with total annual revenue of more than Rs 10 crore to use e-invoicing. This action will further plug revenue losses and guarantee improved tax compliance from businesses. (Source - The Economic Times)

What are the major challenges in e-Invoicing under GST

e invoice challenges
  • Many mid-size businesses do not prioritise the implementation of solid and up-to-date software for their e-Invoicing operations.
  • At times, bulk uploading of invoices is necessary. This may be extremely challenging if your ERP system is not coupled with the IRP site.
  • APIs continue to lack support for custom ERPs. As a result, the number of organisations that use customised ERP systems is relatively high.
  • Many small and medium-sized firms are hesitant to invest in automated technologies and hence prefer to perform the e-Invoicing work manually. Some of the major impact points listed down where e invoicing under GST can hits small & medium market companies in India

For more, we covered 7 Major e-invoicing challenges faced while generation of e invoice under GST.

Concerns and Issues Regarding the e-Invoicing System

GST implemented a new reform known as e-invoicing. It went into effect on October 1, 2020, for taxpayers with a revenue of Rs 500 crore. However, e invoice mandatory for those with a revenue of Rs.20 crore are exempt. It will apply to taxpayers with revenue of Rs.10 crore beginning October 1, 2022.

Some of the challenges that taxpayers may encounter as a result of the new e-invoicing requirements are mentioned below:

  • ERP System and Integration Modifications
    To ensure a seamless flow of invoice data to the IRP and e-invoices back to the ERP system, businesses must integrate their ERP systems with IRP/GSP/ASP. The GSTN has made APIs available for this purpose. In addition, because most ERPs used by diverse businesses may be altered, it allows for variations to the conventional e-invoice structure.
  • Invoice classification for B2B and B2C transactions
    E-invoicing is only applicable to B2B invoices, not B2C bills. Thus, B2B invoices necessitate both e-way bills and e-invoices, but
     e invoice under GST for B2C simply necessitate e-way bills (wherever e-way bill is applicable).
  • E-invoice cancellation and modification
    An e-invoice cannot be cancelled in part. Even a little adjustment must be cancelled entirely. Cancellation of e-invoices on the IRP is permitted within 24 hours. The cancellation cannot be performed on the IRP after 24 hours; it must be done on the GST site.
  • What is e invoicing? 

    GSTN electronically validates B2B invoices under the "e-Invoicing" or "electronic invoicing" method before being used on the public GST site.
    Every invoice issued under the e-invoicing system will get an identification number from the GST Network-managed Invoice Registration Portal (IRP) (GSTN). The first IRP was made available by the National Informatics Centre.
    All invoice data will instantly be sent from this site to the GST and e-way bill portals. Since the data is transmitted directly from the IRP to the GST site, it will also eliminate the requirement for manual data entry for GSTR-1 return filing and creating part-A of the e-way invoices.

How to Generate e Invoice in GST

  1. Create an invoice using an ERP or billing software.
  2. Create a JSON file for this invoice.
  3. Upload this JSON file to the IRP
  4. IRP Validates the Uploaded Data
  5. IRP generates IRN & generates QR code
  6. E-Invoice returned to the Taxpayer

You can read the in-depth blog on e-invoice generation guide.

By Section 16 of the GST Act's Input Tax Credit regulations. 

  • The GSTR-3B must contain a disclosure of any invoices for which the business fails to submit an ITC claim.
  • If the corporation does not submit the proper ITC, there might be a financial loss.

What are the benefits of e-invoicing

e invoice benefits

Improved cash flow and faster payment

When the buyer receives paper or PDF invoices from the supplier, they must sort, route, re-key, and submit the invoices for approval. This procedure is time-consuming. There is also the risk of invoices being misplaced.

Improved account reconciliation

One of the issues that every supplier has is reconciling invoices submitted to clients with payments received. Customers have the option of combining numerous invoices into a single charge. Furthermore, such costs may differ from the original invoices for various reasons, such as buyers claiming deductions for defective items.

Cost savings

E-invoicing helps suppliers dramatically cut expenses involved with printing, storing, processing, and delivering paper invoices. In addition, because of the greater accuracy of e-invoicing, fewer customer support calls are necessary.

Fewer invoicing challenges and rejections

Invoice disputes and rejections are expensive, time-consuming, and can result in late payments. Data from the supplier's AR (accounts receivable) system is communicated directly to the customer's API system using e-invoicing, reducing the possibility of mistakes caused by data re-entry. As a result, the case of invoice rejection is lowered.

Greater customer satisfaction

Suppliers can provide better customer service since e-invoicing allows for faster processing and fewer payment difficulties. As a result, consumer retention is higher.

There are obstacles and e invoicing benefits for small and medium enterprises are explain in detailed.

When will e invoice mandatory for your business?

e invoice applicability

From October 1, companies with a turnover of Rs 10 crore GST e invoice mandatory. (Source Business Standard)

According to Johri, "We can analyse the data at the four-digit HS (Harmonized System) level to see which industries contribute more to the GST and which have higher potential but aren't contributing enough. 

Also, as per the Central Board of Indirect Taxes, the requirement for GST e-invoicing will likely be lowered from the current threshold of Rs 20 crore to Rs 5 crore as of January 1, 2023, further to ensure better e-invoice compliance and support in policy implementation.

As per the latest update from CBIC: GST e-invoicing sandbox testing is approved for enterprises with a turnover of between Rs. 10 crores and Rs. 20 crores.

Why choose GSTHero

Your business will grow thanks to GSTHero because of its e-Invoice solution's benefits.

GSTHero has processed 1 Lac+ invoice from 15% of sectors in a month and has over 1200 active GSTNs utilising its e-invoicing service. It also records essential events.

  • Write about Integration with tally, sap and 100+ top ERPs
  • Bulk operations - generate, cancel
  • Cloud portal is also available
  • No manual entries
  • Recon with GSTR-1 and other reports for audit under GST
  • Auto-population into GSTR-1
  • GSTHero provides APIs for numerous accounting software.
  • Fast processing of data in huge volumes.
  • Seamless interaction with several sophisticated government servers, including GSTN, IRP (e-invoice Portal), NIC (e-way Bill Portal), etc.
  • Seven levels of data security.
  • You can manage and access your IRNs with GSTHero for years.
  • GSTHero offers 24/7 service for all client inquiries and is entirely automated.

We have included all of the vital e-Invoicing parts in the comprehensive article. For 100% accurate reports for internal and departmental audits, use the GSTHero GSTR 2B Reconciliation Tool.

e invoice generation

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  • Print e-Invoice with QR Code and IRN

Sameep Mohite

About the author

Sameep Mohite is a computer engineer with a passion for GST. He has written many articles on GST, Finance, and Technology topics.

He is a GST expert who writes for GSTHero. He wants to ensure you know what you're paying for and why.

He enjoys explaining complex technical terms in primary, easy-to-understand language.

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