All About Mandatory GST E-Invoicing in India from 1 October for Businesses

 In an effort to further plug income leaks and ensure improved tax compliance from corporations, the Central Board of Direct taxes (CBDT) has made E-Invoicing in India compulsory for businesses with annual revenues surpassing Rs 10 crore from October 1. According to the centre, the norm regarding council suggestions has been changed. Currently, companies having yearly revenue of more than Rs 20 crore are required to use GST e-invoices.

 


Beginning on October 1, 2020, businesses with a turnover of more than Rs 500 crore were included in the scope of e-invoicing in India for business-to-business (B2B) transactions. Businesses in the second phase were required to start issuing e-invoices from January 1, 2021, if their annual revenue exceeded Rs 100 crore. From April 1, 2021, businesses having a turnover of more than Rs 50 crore were required to generate e-invoices. With effect from April 1, 2022, enterprises with annual revenues above Rs. 20 crore are using GST e-invoicing in India.

 

According to officials, e-invoicing in India would be required for companies with a Rs 5 crore in annual revenue by the next year.

 

 

What Effects or Changes will E-Invoicing have on Business Operations?

Businesses must now connect their systems with the government's invoice registration portal in order for every B2B invoice to automatically generate an Invoice Reference Number (IRN). To comply with the e-invoice standard, they will also need to make adjustments to their accounting software. The following business processes will be impacted by the creation of e-invoices:

 

1.      Businesses must choose whether to comply with e-invoicing requirements through API integration, offline tools or GSP integration (GST Suvidha Provider).

 

2.      The company will now need to determine which transactions may be subject to e-invoicing and separate them properly for compliance.

 

3.      Businesses must keep a vendor and customer database to include extra information on invoices, such as bank information and payee information.

 

4.      Since B2B supplies can be automatically filled out in the returns while B2C supplies must be manually updated, businesses will need to make modifications to how they prepare GST returns.

 

5.      Engaging in the ongoing generation and capture of IRNs will be the key challenge for businesses. Each day, large retailers produce tens of thousands of B2B invoices. The consumers cannot be made to wait until the e-invoice is generated. These companies must use GSP's services for a seamless rollout.

 

 

What If No E-Invoice is Generated?

Non-generation of an e-invoice is a crime punishable by law. It carries a fine of up to Rs.10,000 per invoice. In addition, erroneous invoicing might result in a Rs.25,000 penalty each invoice.

 

Aside from criminal restrictions, if a taxpayer fails to generate an e-invoice-

·        The GST returns will not be automatically filled out.

·        Customers will be unable to claim validated ITC.

·        Customers can refuse to accept an invoice that doesn't meet the requirements for e-invoicing.

 

 

Preparation for the Adoption of E-Invoices

India is a new market for e-invoices. Therefore, companies will need to take the following actions to ensure a smooth transition to e-invoicing in India:

 

·        Choosing the Most Effective ERP Integration

API-based and SFTP-based interfaces are the most frequent for e-invoice generation. The integration may be chosen by an organization based on its budget and specific business requirements.

 

·        Modifications to the Accounting Software

For the purpose of generating IRNs, businesses will need to reconfigure their ERP/accounting software to interface with the IRP portal. Additionally, the printing infrastructure will need to be modified to include new features like QR codes. Such adjustments will demand a large financial commitment.

 

·        Data Security

Because e-invoices are typically created straight from an organization's ERP/accounting software, data security is critical. This accounting software contains critical business information. Additionally, if a taxpayer intends to use ASP/GSP services, employ two-factor authentication that is enabled and ISO 27001 certified.

 

·        Employee Education Sessions

Prior to E-Invoicing in India, businesses generated invoices in standard forms. However, e-invoicing necessitates that businesses adhere to established formats. This format is broken down into three sections: e-invoice schema, masters, and e-invoice template. As a result, they will need to teach their employees in order to familiarize them with the new regulations.

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