The e-invoice portal electronically validates all business-to-business (B2B) invoices under the new e-invoicing system. All firms can continue to create invoices on their billing software or ERPs but must ensure the service provider has updated the systems to generate invoices that comply with the new, standardized format. This new schema will guarantee the uniformity of invoices. This article explores the benefits of the recently implemented e-invoicing system.
What is the e-invoicing System?
GST-registered individuals meeting the turnover threshold limit set by the authorities must upload all B2B invoices to the Invoice Registration Portal (IRP) via the e-invoice system. They then receive a unique Invoice Reference Number (IRN), an e-invoice that is digitally signed, and a QR code from the IRP.
Through the e-invoice system, B2B invoices are verified electronically by GSTN before being used on the shared GST portal. Every invoice under the electronic invoicing system will have an identification number assigned to it by the IRP.
Once the IRP generates the e-invoices, it sends the same information to the GST and e-way bill portals in real time, and the respective information gets updated automatically. In the GST portal, GSTR-1 gets auto-filled, and in eway billing, Part-A of the e-way bill gets updated.
Advantages of the e-Invoicing System
Real-time tracking
Real-time tracking of supplier-prepared invoices is made possible by e-invoicing. This makes the input tax credit (ITC) available more quickly.
One-time reporting
When using e-invoicing, a taxpayer must only submit the invoice once and verify it by the IRP, which subsequently issues the IRN after validating the invoice. The details will auto-populate the GSTR-1 return after authentication. As a result, less manual reporting is required than in the past.
Efficient e-Way Bill Generation
Through e-invoicing, taxpayers just need to update Part B of e-way bills, which includes transporter and vehicle details. This reduces manual entry of information and saves time for the taxpayers.
Fraud Prevention
With real-time reporting and error-free entries, there are fewer chances of invoicing-related fraud like not reporting invoices, tax evasion, duplicate invoices, etc.
Reduced Data-Entry Errors
The e-invoicing system will have the option to upload invoices on one common portal, making it easier to generate several reports. Once the verification is complete, each invoice is sent in real-time to both GST and e-way bill portals, removing the need for manual data entry and decreasing the chances of errors.
Buyer Support in Real-Time
After uploading the e-invoice to the GST system for verification, it is sent to the buyer via the email mentioned on the invoice. The buyer can promptly accept or decline the invoice and utilize it to match their purchase order with the electronic invoice.
Interoperability
Interoperability is possible as e-invoices generated are in a standard format, which allows anyone to read invoices created with different software.
Prevent Tax Evasion
Real-time generation and access of invoices leads to reduced manipulation of invoices, and only valid ITC is accepted, reducing the risk of fraudulent GST bills. Tax authorities can easily track fake input credits since the output tax data and input tax credits are readily available.
To sum up, the GST e-invoicing system offers several advantages, which include better data accuracy, faster payment cycles, enhanced tax compliance, simplified procedures, and greater transparency. Businesses can use e-invoicing software available in the market to streamline the invoicing processes, reduce errors, and save time.
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