e-Invoicing under GST is dated to implement from October 2020 along with the New GST Return System, it is already in the word that both the New Systems are going to bring along massive changes to the current system.
In this article, we have broken down & explained the impact of e-Invoicing on the e-Way Bill generation system & the changes brought by it.
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What is e-Way Bill under GST?
Ever since its implementation in 2018 under Rule 138 of the CGST Act, e-Way Bills or Electronic Way Bills have become an essential part of the GST Regime.
This document is mandatory for all types of transportation of goods both inter-state & intra-state.
e-Way Bill under GST is a document based on the Invoice of the consignment which needs to be carried by the transporter of the consignment mandatorily, throughout the movement of the goods.
e-Way Bills need to be created for Invoices worth Rs. 50,000 or more, majorly by the dealer who initiates the movement of such goods.
Widely, the supplier creates the e-Way Bill but for exceptional cases, the transporter & the recipient can also create e-Way Bills, given that the creator must be registered under GST.
An e-Way Bill generation is an excellent compliance tool that helps keep the transportation process on track with the GST Rules, hence reducing the chances of Tax Evasion.
Non-Compliance with the e-Way Bill Rule attracts penalties (minimum of Rs. 10,000), seizure, detention & confiscation of goods, leading to monetary losses for Businesses.
How is e-Way Bill generated in the current System?
The e-Way Bill System has 2 Parts, Part-A which consists of the Invoice details such as GSTINs of the supplier & the Recipient, delivery address, HSN Codes, values of goods, invoice number, etc.
whereas Part-B has all the transporter details such as Transporter ID & Vehicle Number etc. With either of the parts missing, an e-Way Bill will be considered invalid.
Currently, both the parts are generated at the same time from the e-Way Bill Portal by businesses, individually or in bulk.
You can generate an e-Way Bill from the GST Portal by following these simple steps
1. Log-in to the e-Way Bill generation Portal using your User Id & Password
2. Click on 'Generate New' Under 'e-Way Bill' tab
3. Fill all the mandatory fields with correct invoice details
4. Furnish the Item Details, such as the HSN Codes, Product Name, Description, etc.Furnish the Item Details, such as the HSN Codes, Product Name, Description, etc.
5. Fill in the Transporter details such as Mode, Transporter Name, Transporter ID, Transporter Document No. & Vehicle Number.
6. Verify if all the details are entered correctly, then click on 'Submit'
7. If there are no errors the e-Way Bill will be generated & you can download it as JSON or PDF File.
8. The e-Way Bill can also be printed from within the Portal.
What is E-Invoicing under GST?
e-Invoicing was introduced in the 35th GST Council Meeting, as a system to be implemented by the Government on Businesses with an annual aggregate turnover of Rs. 100 Crores & above, for B2B Invoices.
e-Invoicing under gst is the electronic up-gradation of the current B2B invoicing system. e-Invoicing will eliminate the use of paper invoices up to some extent.
Apart from B2B Invoices, Businesses with an annual aggregate turnover of Rs. 500 Crores & above are obliged to generate QR Codes for B2C Invoices as well.
In practical use, e-Invoicing is the systematic & standardized reporting of Invoices on a unified portal & in a single, common for all format.
Let us see how it works with an illustration
Mr. A creates a B2B Sales Invoice against a purchase that he made for his Business.
Under e-Invoicing, he needs to upload this Invoice to the unified Invoice Registration Portal.
The Portal will verify if all the mandatory fields & values in the Invoice & correct.
Upon successful validation, the IRP will generate a unique code- Invoice Reference Number & a Bar Code for the Invoice, turning it into an e-Invoice.
Note- In case of errors, the IRP will notify you & highlight the errors for your reference, you can rectify them & re-upload the Invoice.
From here the e-Invoice data will be transferred to the e-Way Bill Portal, GST Portal & to the recipient if their e-mail ID is mentioned.
After the successful creation of e-Invoice, the data will be available on the IRP for the next 24 hours. In case of any errors, the e-Invoice cannot be rectified, you must cancel it.
This too you need to do within 24 hours from the time of IRN generation.
This simplifies work up to a large extent by automating most of the process. This also reduces the chance of errors & enhances accuracy.
But the major function of the e-Invoicing System is increased transparency & accuracy in invoice management to reduce Tax Evasion.
Note - contrary to what its name suggests, e-Invoicing is in fact applicable to other important documents such as Credit Notes, Debit Notes, B2G (Business to Government) Invoices, Export Invoices & Reverse Charge Invoices as well.
Introduction of e-Invoicing to the e-Way Bill System
Unlike the current system, the e-Way Bills in the future will be auto-populated from the e-Invoicing data. This will either increase accuracy or straight put the error scale up.
As per the new plan, Part A of the e-Way Bill is expected to auto-populate for Invoices that are eligible for e-Way Bills, through the e-Invoice data, that is shared with the e-Way Bill System on the successful validation of the e-Invoice.
As the user, you will only need to furnish the Part-B or transporter details in the e-Way Bill.
Upon this, there is no such provision to address the cancellation of Invoices. For example, if you cancel your Invoice due to some error, what happens to the e-Way Bill so generated? The system does not answer this question yet.
In the case of erroneous invoices, the e-Way Bill will automatically have errors. Although, the same is true for the other around as well, meaning, automated generation of accurate invoices.
Changes Introduced to the e-Way Bill System & its Effects on Businesses
The motive behind bringing these changes to the system is to ease up compliance & bring the e-Way Bill System further inside the GST Regime. To feed this agenda, the Government has also linked e-Way Bills to GST Return Filing.
Apparently, e-Way Bill generation will be blocked for the taxpayers who have two or more consecutive GST Returns Pending to be filed.
The Government is also considering to reconcile the e-Way Bill data with the data of GSTR-1 to cross verify if there were proper e-Way Bills against Invoices & vice versa.
And now, there is the linking of e-Way Bills with the e-Invoicing system to make the process more thorough & revised. As automation will reduce manual entry & the errors that follow, making the process more accurate.
As a result of all the system modification, there are going to be a few effects-
- Ease of Compliance for taxpayers
- Automation of the process to ensure accuracy &
- Reduced Tax Evasion.
These effects are for the benefit of the Businesses as well as for the Government.
The upcoming changes are predictable up to a high extent, given the various statements given by the CBIC or very close informants. In the case of the e-Invoicing & e-Way Bill situation as well, it is safe to say the following things-
The integration of the two systems seems like a test, to see if the mixing up of the two systems going to be helpful for the Businesses & the Government.
The two systems are integrated for the sake of accuracy & transparency as well as for easing the process up.
But the point is, e-Invoicing can easily replace or swap the e-Way Bill system because both of the Systems have the same agenda, which is to reduce compliance burden & tax evasion.
But since e-Invoicing brings the transactions in light in real-time & through vigorous validation, the system may not feel the need of e-Way Bills which serve almost the same purpose but on a later stage.
Although, nothing specific can be said about ruling out the e-Way Bill System, considered that the Tax evaders & improvisers. And the more thorough & transparent the system the better it will be for curbing the evasion of taxes.
For a shorter run, however, the integration of the e-Way Bill system with the Invoicing & the GST Return Filing System seems to be a smarter & more efficient move.