e-Invoicing

In the 35th meeting held by the GST Council, a proposition has been made to implement a particular system known as E-invoicing, which would be relevant to specific categories of businesses.

What do you mean by ‘E-invoicing’?

The term ‘E-invoicing’ refers to the submission of a standard invoice which has already been generated on businesses accounting system to Invoice Registration Portal (IRP) and validation of the same. In this way, it automates the process of multi-purpose reporting by furnishing the invoice details only for a single time. In fact, ‘Electronic invoicing’ or ‘E-invoicing’ is a system where the B2B invoices are electronically validated by GSTN on the common portal for the sake of using them further.

Under this system, an identification number would be generated against each invoice by the Invoice Registration Portal (IRP), which would be subsequently managed by the GSTN. The entire invoice details would be transferred from IRP to both the E-way bill portal as well as the GST portal concurrently. In this way, it would not be required to enter the data manually while filing the ANX-1/GST returns, or while generating part-A of the concerned E-way bill.

Current Issues

How would the Businesses benefit from E-invoicing?

The businesses are expected to reap many benefits from the process of E-invoicing. Some of these are given below:

Value Added Features
  1. E-invoice enables immediate tracking of invoices which are prepared by the supplier
  2. It enables backward integration as well as automation while filing the tax returns, where the details pertaining to the invoices are auto-populated in different returns
  3. The E-invoices which are created on one software could be easily read by another, thus facilitating interoperability and minimizing errors in data entry
  4. E-invoicing resolves and bridges the gap in reconciliation of data under the GST system in order to minimize the mismatches
  5. The chances for audits by the tax authorities are minimized significantly as the data they seek is available on the transaction level itself
  6. It offers instant accessibility of Input Tax Credit in genuine cases.

Is E-invoicing expected to curtail Tax Evasion?

In the GST circles, many believe that E-invoicing would definitely help to decrease tax evasions in an effective manner. Here are some of the ways how this is made possible:

  • The tax authorities can have instant access to the transactions as they occur in real-time, and the concerned E-invoices would have to be validated mandatorily via the Invoice Registration Portal (IRP)
  • E-invoicing is expected to minimize any chances of generating false GST invoices. Further, there is provision for claiming only genuine Input Tax Credit, as the concerned invoices would have to be validated via the Invoice Registration Portal (IRP) itself. Also, as the input credit can be matched easily with the output tax data, the GSTN could easily track false claims of tax credit
  • There is no scope for invoice manipulations, as it has to be validated before carrying out any transactions.

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