Under the new e-invoicing system, all business-to-business (B2B) invoices will pass GSTN electronic certification. As in the past, all companies will continue to generate invoices on their ERP. The ERP provider must change its structure to accommodate the new standardized format. This new model will ensure the standardization of invoices.

A new reform called e-invoicing was introduced under the Goods and Services Tax (GST). It will be effective for taxpayers with a turnover of more than Rs 500 crore from October 1, 2020. From January 1, 2021, it will soon be applicable to all taxpayers with a turnover of more than Rs 100 Crore.

Advantages of the New E-Invoicing System

Real-time tracking of invoices: E-invoicing can track invoices prepared by suppliers in real time. This allows faster input tax credits (ITC).

One-time reporting of B2B invoices: In E-invoicing, taxpayers only need to report the invoice once and verify its identity through the invoice registration portal (IRP), which verifies the invoice and issues an invoice reference number (IRN). After verification, the detailed information will be automatically filled in the GSTR-1 return. This reduces the manual reporting process previously performed.

Also Read: eBillPro GST Billing Software - Input Tax Credit Guidelines under GST

Easily create electronic road tolls: As taxpayers only need to update vehicle details, E-invoicing can easily generate electronic road tolls. E-invoicing authenticated through the GST portal will automatically fill in the details in Part A of the E-invoicing bill.

Help the buyer: Once the E-invoicing for identity verification is uploaded on the GST portal, it will also be shared with the buyer and his email ID will be mentioned on the E-invoicing. This will help buyers to check their purchase orders with E-invoicing and accept/reject invoices in real time.

Reduce fraud: Real-time data provided by tax authorities will reduce fraud.

Reduce data entry errors: In the E-invoicing system, invoices will be uploaded to the public portal, which will facilitate multi-purpose reporting. Once the authentication is passed, all invoices will be transferred to the GST portal and E-invoicing billing portal in real time. This automatic filling will eliminate the need to manually enter data when submitting a GST return form and reduce data entry errors.

Allow interoperability: Since E-invoicing are generated in a standardized format, invoices generated from one software can also be read by other software. This allows interoperability.

Contain tax evasion: Real-time access to data will reduce the scope of invoice processing, because invoices will be generated before the transaction. This will further reduce the scope of forged goods and service tax invoices, and similarly, only real ITC can be required. Because input tax credits and output tax details are readily available, tax officials can more easily track false input tax.

Also Read: Best Retail, GST Billing and Accounting Software in India

QR code: GST invoice is essential for calculating ITC amount. The assesse may have misplaced the invoice that has been issued, or may request another copy of the invoice. In this case, the QR code will help a lot. By scanning this code, the assesses can generate invoices in PDF format multiple times.

Disadvantages of electronic invoice system

The main purpose of introducing E-invoicing is to reduce tax evasion. However, the new system only promotes E-invoicing for B2B invoices, not B2C invoices. Since ITC is not involved, the most fraud occurs in B2C invoices. Therefore, such a system should be effective, which allows customers to report non-compliant invoices, thereby curbing tax evasion at the source.

Another disadvantage is that there is no archive option on the IRP. It is not authorized to store invoices for more than 24 hours.