E-invoice system under GST
Hemlata Khandelwal / 2021-04-08 09:14:33
GST e-invoice: What is e-invoice system in GST
By the end of FY 2020-2021, e-invoicing has successfully completed its 6 months. Currently, more than 75,000 GSTINs (belonging to more than 25000 units / PANs) with more than Rs 100 crore turnover are reporting invoices on the Invoice Registration Portal (IRP).
GST Network (GSTN) Vice President Ravi Kiran Irda says that about 7.3 crore IRNs (invoice reference numbers) are being generated every month (since January 2021). Now, from 1 April 2021, Businesses with turnover of Rs. 50 to 100 crores will also be able to take advantage of e-invoicing. In this context, it is important to see how e-invoicing is going to completely transform the eco-system.
There are many benefits of e-invoicing
From this perspective, e-invoicing has many advantages. Tax compliance or tax compliance is becoming a part of business process, pre-population of GST returns, auto-generation of e-way bill (where required), reduction in fraud etc. There are many positive results which are due to e-invoicing Are possible. Recently, the government also indicated that e-invoicing would soon replace the e-way bill system and replace the existing methods of GST return filing. While these are some immediate benefits from the point of view of tax companies, the entire business eco-system will have many far-reaching benefits of e-invoicing.
What is e-invoicing?
The features of 'e-invoicing' mainly include reporting of invoice details on the notified portal and generating reference numbers. In addition, it is also important to see that a similar standard has been worked out for invoices and has been notified as 'INV-01'. It is a mixture of a specific commercial invoice to supply any type of goods or services. The standard is based on the Universal Business Language (UBL), which is highly compatible with the functioning of Indian business. This paves the way for 'machine-readability' of invoices and urgent 'inter-operability' between businesses. That is, by allowing direct broadcast of invoices digitally from one accounting / ERP system to another. This can be achieved by enabling the recipient or Recipient Business to download the signed invoice JSON directly from the GST system.
Data entry error over
E-invoices are paperless, eliminating data entry errors, reducing reconciliation issues, reducing disputes between transactions, accelerating payment cycles, substantial reduction in paper consumption, reduced processing costs, improved internal Control and all such facilities will help in increasing the efficiency of businesses. Not only this, these networks can not only support the exchange of invoices, but will also be helpful in the process of other documents such as purchase orders and payments. Thus, e-invoicing is revolutionizing the way businesses send and receive invoices between each other.
Businessmen will get loan easily
Even from a debt standpoint, banks and financial institutions (FIs) like to check the financial health and compliance profiles of loan-seeking businesses. To expedite settlement of tax proposals, the Expert Committee on Micro, Small and Medium Enterprises (MSMEs) noted that banks should have access to relevant surrogate data. Banks, NBFCs and other fintech players are adopting innovative digital technologies to streamline the collection and processing of financial information from various sources. The GST Network (GSTN) is envisaged as one of such financial information providers to share taxpayer data.
Data will be shared with banks on real time
Banks and FIs in the country are gradually moving from traditional asset-based / rating-based lending to cash flow-based lending. This is a very beneficial trend for MSMEs. A major factor affecting the ability of MSMEs to convert trade receivables into liquid funds is 'slow paying' invoices. As an account aggregator framework, e-invoicing will make it possible to share real time basis invoice data with banks and FIs. A digitally signed invoice from a government portal can act as a single source for a document issued by the supplier. It will also be possible to flag an already financed invoice, thereby avoiding the possibility of the supplier or supplier submitting the same invoice to another financier.
Integration with other platforms
Integration with other platforms has also been an e-invoicing feature. Trade Receivables E-Discounting System (TRE-DS) was established by RBI as a secure digital platform to allow MSMEs to 'trade' their invoices and access finance at competitive rates. Now, suppliers will have to enter such invoice details on TRE-DS portals. Once e-invoicing will be extended to medium and small businesses, the details of reported e-invoices can be obtained securely by Tre-DS digital platforms, reducing the need for re-entry of invoice data on those portals can be done.
There will be a game changer in the coming times
The way in which e-invoicing is changing and the pace of innovation is increasing, especially in the fintech domain, e-invoicing can prove to be more profitable in the coming years. In view of this, it can be easily said that in the coming time, e-invoicing business is going to be a game-changer for eco-systems.