In this period of frequent lockdowns and physical distancing, almost all the organizations in somewhat manner were affected by the Covid-19 pandemic. The countries are facing the issues of improving the health conditions of their people on one front. Also, keeping their economic front stable. Likewise, the businesses in any sector face the two front problems of maintaining them financially stable. Also, to start automating and digitizing themselves. And the enterprises needed the first thing while automating themselves was to automate their invoicing process as there was no physical contact allowed. Then the business started using the E-invoicing features as a first step in digitizing themselves.
Now, as we are talking about E-invoicing, you all may be thinking, what is it, and is it the same we know about as mentioned in GST or not? So let's find out about this.
What is E-invoicing?
E-invoicing or Electronic Invoicing is a method of digitally generating an e-invoice document with the help of Invoicing software that the seller exchanges with the buyer in an integrated electronic format. With the help of this process, the whole invoicing activity of the business gets automated, from the creation of the invoice to sending the document to the buyer and getting accounting and inventory management adjustments getting done simultaneously.
How does E-Invoicing works in India under GST Regulations?
Now under the GST functionality, E-invoicing becomes GST E-invoicing, and in this, the invoices get uploaded on the Invoice Registration Portal (IRP).
Then on this portal, the GST department validates these invoices by assigning digitally signed QR codes to these invoices. It provides a standardized look to all invoices generated by different businesses.
The main purpose of uploading these invoices on the IRP portal is to get a report on details of Business to Business (B2B) and export invoices. And GST E-invoicing is only applicable to those taxpayers' companies with Rs.50 Crores and above aggregate turnover.
Now, after learning about E-invoicing and its rules under GST, let's learn about the benefits it provides.
Benefits of E-Invoicing.
- Time-saving - With the help of E-invoicing, the need to enter all details of transactions manually is not present. And this helps in saving time as if you once create an invoice on the software, it automatically takes care of other adjustments like managing the stock items and creating the relevant voucher and journal entries for the accounting needs. Also, the need to print invoices is not there. Also, payments and cash flow management become easy as less time is spent on re-sending the invoices and payment reminders to customers.
- Real-time tracking of invoices - With the help of E-invoicing real-time tracking of invoices prepared by a supplier is possible. It allows for faster availability of input tax credit (ITC).
- Easy creation of e-way bill - E-invoicing makes the generation of the e-way bill easy as the taxpayer has to update vehicle details only. The details in Part-A of the e-way bill will get auto-populated from the e-invoice authenticated from the GST portal.
- Increases Accuracy - With E-invoicing help, the probability of human error gets minimalized. All the activities are getting real-time updated and monitored, ensuring no more accuracy issues, leading to overpayments and duplicate payments.
- Interoperability is possible - In E-invoicing, invoice generation takes place with the help of one software in a standardised format. Then this invoice can be read with a different software help only. And this functionality makes interoperability possible.
- Restrains Tax-evasion activities - With the help of E-invoicing, the tax evasion possibilities get removed. As each invoice needs to get uploaded on the IRP portal first, then only the transactions happen. So this will remove chances of usage of Fake GST Invoices and wrong ITC credit claims.
- Environment friendly & Cost-Effective - With the use of e-invoices in any business, the need for manual paperwork becomes very less. And this helps in two ways firstly in saving money in the use of paper and printed invoices. Further, less use of paper helps in saving trees, ultimately improving the environment.
- Benefits Small and medium-sized enterprises (SMEs) - With the E-invoicing facility available to SMEs, it helps them in removing some repetitive business activities from their plate. SME owners tend to jump from managing one activity to other. And electronic invoicing helps them manage both invoicing and payables and receivables easily. So now they can concentrate on many other important activities in the organization.
Read more about - E-Way Bill - Ultimate Guide for SMEs About E-Way Bill Rules
While reading this article, you all may have understood, one thing is that e-invoicing is helping businesses to take their first step in their journey of digitalization.
So you all may just not stop in your organization by just stopping at this step of e-invoicing only. But you all should move forward in digitizing your whole organization. And TranZact is one aid that can help you in your journey of digitization.
TranZact is a zero-effort digital transformation tool and platform for SMEs to digitize business processes right, from customer inquiry to dispatch. Also, it helps businesses with all their invoicing and e-invoicing needs following all the GST guidelines.