The central board of Indirect taxes and custom (CBIC) issued a notification and made it mandatory for businesses with turnover over 50 Cr in any fiscal year from FY 2017-18 onwards to issue e-invoice for all B2B transactions from April 1, 2021. It came in as the third level of implementation. Earlier, the GST e-invoicing was made a mandate for businesses with turnover over 500 Cr from October 1, 2020, followed by companies with a turnover of over 100 Cr from January 1, 2021.
The businesses will have to generate e-invoices on their internal systems (accounting/billing software) and then report them online on the Invoice Registration Portal (IRP).
The Invoice Registration Portal (IRP) will validate the information provided in the e-invoice and return digitally signed e-invoices with a unique Invoice Reference Number (IRN) and a QR code to the taxpayer.
How will e-invoicing impact business operations?
First and foremost, businesses will have to integrate their systems with the invoice registration portal of the government for an undisrupted flow and generation of Invoice Reference Number for all B2B transactions. Also, businesses may have to make changes in their software to comply with the e-invoicing schema.
There is a need to add more information to the invoices hence, companies will have to adjust and change the billing layout to accommodate and print QR codes. Additionally, businesses will also have to invest capital in providing necessary training to the personnel involved in GST compliance.
These may be some hindrances, but businesses will save a lot of time and effort as far as GST compliances are concerned. The automated system will eliminate any scope of human error and ensure the formulation of accurate invoices.
Some other ways in which e-invoicing will impact business operations are:-
- Businesses will now have to identify the transactions to which e-invoicing will apply and separate them for compliance.
- Businesses will have to make changes in GST returns process so that B2B transactions can be auto-populated, while B2C transactions will have to be added manually.
- Another significant impact that businesses will encounter is the continuous generation and capturing of Invoice Reference Number (IRN). They will have to integrate with GSP (GST Suvidha Provider) for smooth billing and generation of e-invoice.
- Businesses will have to maintain and update masters of vendor and customers to cater to additional information now required in invoices like payee details, bank details, PIN codes, etc.
Standard modes for generation of IRN
- Web-based: the taxpayers can generate IRN by entering invoice details through the website of IRP.
- SMS-based: The taxpayer will have to enter invoicing details in a specified format and send it to the IRP through SMS.
- Mobile application-based: GSTIN has also made mobile apps for taxpayers to comply with e-invoicing compliances.
- API-based: The accounting system can interact with IRP to generate IRN. IRN can be generated one at a time and also in bulk.
- GSP-based: the taxpayers can use GST Suvidha Provider (GSP) services for the generation of IRN.