What is GST e-invoicing?

GST e-invoicing is also known as the electronic-invoicing. It is a mechanism under which transaction between Business to Business (B2B) generates e-invoices. It is a way through which businesses can generate e-invoices by using software and another can easily view that same invoice without any difficulty. This mechanism is mandatory for the businesses to follow to avoid disadvantageous consequences. These e-invoices are digitally validated by GST Network before being used on the government GST portal. This mechanism is initiated mainly to deal with the increasing GST evasion.

E-invoicing supports the dual feature of tracking B2B transactions and fixing GST compliance.  It is a process under which Invoice Registration Portal (IRP) provides a unique identification number & QR code for each invoice for every sale. Here, the IRP is regulated by GST Network. A seller can generate an e- invoice that computer systems can read at any point along the supply chain by using the QR codes. This mechanism has made transactions more simple and smooth for businesses

To whom it is applicable?

The GST e-invoicing mechanism is applicable only to the business having annual turnover threshold of more than 10 crores as per the latest amendment made by Ministry of finance on 1st of August 2022. This amendment will be effective from the 1st October 2022. However, earlier to this amendment the limit was of 20 crores turnover. This threshold is subject to revision from time to time.

Who are exempted under GST e-invoicing?

The following sectors are exempted under GST e-invoicing-

• Special Economic Zone Units,

• Insurance Banking (including NBFCs),

• Goods Transport Agency,

• Passenger Transport Services and

• Multiplex Cinema Admissions.

How the GST e-invoicing mechanism works?

According to the Rule 48 of CGST Rules, 2017 following are some essential steps for a successful compliance of GST e-invoicing-

• Step 1- GST invoices is generated by taxpayers using their own ERP/accounting/billing systems.

• Step 2- IRP will get notification of generation of the e-invoices.

• Step 3- IRP in return issue a signed e-invoice with a QR code and a specific Invoice Reference Number (IRN).

• Step 4- Thereafter, the e-invoice will send to the recipient for the record.

What are the advantages of GST e-invoicing?

Here are some advantages of the using GST e-invoicing:

• It put an end to manual data entry as it automates the filing process.

• It helps in tracking the real-time of invoices.

• It mitigates error or fraudulent practices.

• The chances of disputes between the businesses parties get reduced.

• It results in faster payment cycles.

• It made easy to keep tabs on a business's sales and financial transactions.

• It helps in decreasing the compliance cost for businesses.

• It helps in ease in doing business

What to avoid for issuance of a valid GST e-invoicing?

• It won't be considered an electronic invoice if the invoice is issued via any other method.

• If an invoice is issued in two or three copies then it is invalid.

Conclusion

With the rise of global market, the government is trying to propagate policies suitable to facilitate smooth business as to compete to international market. GST e-invoicing is a step taken by the government towards digitalisation as to make the remotes transactions simple and dispute free. The government has been trying to curb tax evasion and fraud through false invoices even before the GST era.

Consequently, GST e-invoicing mechanism has been introduced to manage remote transactions efficiently. A corporation can increase productivity and convenience of doing business only by switching from a manual and paper-based procedure to digitalisation process. As invoice reporting in real-time deters unauthorised modifications or revisions in the future which mitigate the chances of tax evasion and human error. GST e-invoicing promotes businesses to expand from national to international market.