You might be aware that fake invoicing is one of the most significant issues faced by the tax authorities in India. Fake invoices are generated for tax theft and frauds.
GST e-invoicing is a promising mechanism that might help put an end to this issue.
In this piece of information, I’ll be talking about everything that you need to know about GST e-invoicing.
Let’s start with the basics!
What is GST e-invoicing?
There is a common misconception that GST e-invoicing means the business will have to generate an invoice through the GST portal.
But, the fact is, GST e-invoicing is the process in which any B2B invoice generated by a business has to be authenticated on the GST portal. Once authenticated, every invoice will get a separate Invoice Reference Number (IRN). This is done on the Invoice Registration Portal.
Once the invoice is authenticated and allotted a dedicated IRN, all the data of that particular invoice will be updated in the E-Way Bill (EWB) portal and GST portal for the reference. This process eliminates the need of doing manual data entry while preparing and filing GSTR 1.
This process also auto-fills the part-A of E-Way Bill as the data of that particular invoice is updated in real-time.
Shall every taxpayer has to generate E-invoicing?
No. As per current law, e-invoicing is mandatory for the businesses having an aggregate turnover of INR 500 crores or above has to generate E-invoices.
If your business’s aggregate turnover is below is INR 100 crore, there is no need of generating e-invoicing.
How to generate e-invoice?
Steps for generating E-invoice
- To generate E-invoice, having a compatible GST software is mandatory.
- At first, the taxpayer has to generate a bill using such software.
- Once the bill is generated, the taxpayer has to create and upload the JSON file of that invoice on the Invoice Registration Portal (IRP).
- Once the JSON file is uploaded, it will be authenticated, and a dedicated Invoice Registration Number (IRN) will be generated.
- If the Supplier has generated the IRN, then the Portal will perform validation for any duplicity and will add a QR code to it.
- If the Supplier has not generated the IRN, the Portal will generate it.
- After the QR code is attached and the bill is signed digitally by the Portal, it will be sent to the e-mail id of the recipient mentioned in the JSON file.
- The invoice generated in this manner, which is available to download by Supplier and recipient, is called e-invoice.
How will e-invoicing benefit the businesses?
- E-invoicing will help eliminate the mismatch errors that occur during various return filings as Supplier and recipient will have the same copy of the e-invoice.
- Different accounting software generates invoices in different file format, reducing inter-operability. But, e-invoice is in a standard format, so all software can read it.
- It simplifies and speeds up the process of claiming legit Input Tax Credit for the businesses.
- All data will be readily available for tax-authority, reducing the possibility of audits.
- Invoices prepared by the suppliers can be easily tracked.
- It will simplify the process of e-way bill generation as the details in “Part-A” of the bill will be auto-filled with the details form the Portal
How will e-invoicing help authorities curb tax-theft?
- All the details of transactions will be readily available to tax authorities as soon as a bill is generated on the Portal. This will reduce the scope of tax-theft.
- Fraudulent Input Tax Credit is a significant issue for GST authorities. But with the introduction of GST e-invoicing, ITC can be easily matched with output tax; it will reduce the possibility of fake GST invoices.
- As the invoice will be generated before the transaction, it will not be possible to alter it afterwards for any type of tax evasion.
E-invoicing is a revolutionary step that will simplify the process of return filings and e-way bill generation by plugging gaps in the details at the Supplier and recipient’s end. This will reduce the burden while filing quarterly and annual returns, making the GST regime more taxpayer-friendly.
Moreover, it will also help tax authorities in reducing tax evasion and tax-theft done via fake claims Input Tax Credits and fake invoices.
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