E-invoicing in India | Seamless GST Compliance with E invoicing

A transformational move by the CBIC, e-invoicing in India can help curb tax evasion drastically and also bring efficiency and ease to GST compliance. Not only this but with e-invoicing, India has joined the bandwagon of countries worldwide who have adopted universally accepted standards to streamline their invoicing, taxation and compliance reporting to the Government.

Updated on 2nd Aug 2022: As per GST Notification 17/2022 dated 01-08-2022 mandates e-invoicing for taxpayers having AATO above Rs. 10 crores in any financial year since FY 2017-18 w.e.f. 1st October, 2022.

Updated on 24th Feb 2022: As per CGST Notification 01/2022 released on 24th Feb 2022, GST e-invoice has been made mandatory for entities with turnover of Rs. 20 Cr and above.

Is E-invoicing compulsory in India?

The e-invoicing system in India rolled out in October 2020. It is mandatory for all taxpayers with an annual aggregate turnover of Rs. 20 Cr. to generate e-invoices (B2B invoices). Read E-invoice under GST to know more.

Who defines the e-invoice framework?

After the go-ahead for e-invoicing under GST in India, GSTN along with the Institute of Chartered Accountants of India (ICAI) had published an e-invoicing draft for public consultation. The feedback thus received from the stakeholders, industry associations, businesses and technology enablers shall be incorporated to define the e-invoicing framework for India.

As the Government is working to get the e-invoicing implementation framework in place, let us get some fundamentals clear

How does an e-invoicing system work?

Generally, the e-invoicing implementation involves defining a standard format/data fields for an invoice, a centralised or federated approach for exchanging the invoice data between the supplier, a government body (or the Tax Authorities) and the recipient. Furthermore, the eco-system can also include technology enablers and system integrators for a smoother implementation process. Businesses send the standard data-fields as required by the e-invoicing system, which could be direct or through technology enablers and system integrators. Here a unique/standard number is used to identify and separate the documents from each other.

While the contours of the e-invoicing system in India are yet to be announced, the established network of ASPs and GSPs are going to play a critical role in the system.

To know more about e-invoicing system:

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What are the benefits of e-invoicing system for a business?

Inter-operability and seamless exchange of data are often compelling reasons when it comes to implementing standards, not only to the Government but also to the businesses.

At the outset, it may appear to be an additional process that businesses need to follow and efforts will be needed to get data ready as per the specified e-invoice standard. However, with e-invoicing becoming an integral business process, it will have more benefits to offer, such as:

Standardization: One format and standard data fields applicable to all businesses. Thus, eliminating the need to generate invoice data in varied formats and purposes.
Seamless Reconciliation: Reconciliation and data verification between suppliers and recipient will be seamless and thus provide better control over input tax credit computation and claim.
Automation: Auto-generation of Sales and Purchase Registers (ANX-1 and ANX-2).
Lesser Compliance: Reduction in overall compliance burden.
Information Availability: Near real-time availability of information to all the relevant participants in the supply chain.

Know more about the benefits of e-invoicing

On the other hand, the e-invoicing under GST will allow the tax authorities to keep a check on under-reporting and reporting of fictitious transactions, which probably can result in tax evasion.

Which e-invoice standard will be followed in India?

The standard for India is currently being formulated. Recently the e-invoice format and the specifications of the data fields in this format was released for public consultation.

There exist various standards for e-invoice that cater to varied needs to countries and implementation agencies, there are various standards for an e-invoice. However, looking at the globally used standards, PEPPOL and UBL are indicative of preferable choices.

When GST was introduced in 2017, there was no standard format prescribed for invoices. Until now, the information specified under GST law and rules defined the general framework of invoices under GST. With e-invoice, a standard e-invoice format is expected.

With the implementation of e-invoicing in India, one can ensure:

Inter-operability of E-invoices across the entire GST eco-system.
Uniform machine readability and interpretation of invoice data
Obviation of data entry errors in the absence of Standard language amongst various players in a business eco-system.

IRIS Onyx, an e-invoicing software from IRIS GST, is a one-stop platform for you to view, share and collaborate with your customers and suppliers alike while managing the entire communication with the GST systems in a hassle-free manner.

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