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View from India: Scope for e-invoicing software increases

Electronic invoicing became mandatory this year for all tax-paying businesses with an aggregate turnover exceeding one billion rupees (Rs 100 crore, around £10m). An announcement of this nature opens out various opportunities and challenges, which were outlined last week in a webinar for those affected.

E-invoicing is an electronic authentication under the GST (Goods and Services Tax) framework. It helps track transactions between businesses. Several issues need to be dealt with in this new invoicing system. This includes tracking the updates, evaluating available methods, deadlines and eligibility obligations as well as requirements for modifying the IT systems and adapting to the e-invoice mechanism.

It’s only pertinent that taxpayers need to be updated about the tax and technology and understand the e-invoicing implementation process in a simple manner. “Taxpayers need to fill in the mandatory fields in the Excel file downloaded from the portal. The Excel file needs to be converted into JSON and uploaded on to the common portal,” explained chartered accountant Abhishek Mittal. JSON or JavaScript Object Notation is a lightweight format for storing and transporting data.

E-invoices can be generated through modes such as a direct API (Application Programming Interface) integrated with the Invoice Registration Portal (IRP). The e-invoice can be integrated with the IRP through GST or Application Suvidha Provider (ASP). Offline utility is another means of generating bulk e-invoices. Regardless of the mode of operation, e-invoicing is beneficial. “E-invoicing not only curbs fake invoicing, but also assures a standardised invoice. It also cuts down manual errors or data entry glitches,” highlighted Mittal. Nevertheless, the procedure has hiccups. For instance, it is not possible to make partial amendments. So it means that if there’s a minor change to be made, the e-invoice needs to be entirely cancelled. If the cancellation happens within 24 hours, it is allowed on the IRP. Or else, the cancellation can be done through the GST portal. Another aspect is that when the invoice is edited or revised, a new e-invoice should be raised on the IRP. The previous invoice number becomes invalid.

The Central Board of Indirect Taxes & Customs (CBIC) had already mandated E-invoicing for businesses with an annual turnover of Rs 500 crore from October 1, 2020. And now, the new mandate is applicable to all taxpayers with a turnover of Rs 100 crore. It would mean that the e-invoicing system will encompass a much larger number of taxpayers to include medium-scale enterprises. Consequently, small businesses can become part of the digital economy by imbibing the accounting software required for e-invoicing. This will help businesses manage their accounts efficiently as invoices are processed digitally and speedily. Administrative processes will become simpler. 

The demand for accounting software will continue as the number of micro, small and medium enterprises (MSMEs) increase. “We have created software that can auto-generate e-invoices in a single step. It is designed with error-checking tools that can save time and maintain the authenticity of the data,” added Kamal Yadav, technical support manager at Busy Accounting Software. Busy is an integrated business accounting software designed for MSMEs.

From the tech point of view, many factors within the system need to be scaled up. Random formats of invoicing will be eliminated as businesses incorporate their ERP (enterprise resource planning) systems with that of IRP or GSP (GST Suvidha Provider) or ASP. This amalgamation is essential to ensure that the invoice data flows into the ERP system. A unique quality code (UQC) needs to be printed on to the e-invoice. The e-invoice will be authenticated as it will be signed digitally. Yet there are some mistakes that are likely to happen. “When a cancelled GSTIN (Goods and Services Tax Identification Number) is being used as a recipient, then users get messages stating that the GSTIN is not active. GSTIN will not be available under situations when an invalid GSTIN is floated or if the GSTIN is not updated on to the portal,” explained Yadav. A 15-dgit number, GSTIN is assigned to every GST-registered individual. GSTIN is a PAN based number or alphanumeric identifier. Each individual has a PAN card issued by the Indian Income Tax Department.

Clearly the CBIC announcement has opened out channels for the development of e-invoicing software, which is fast, precise and dependable. CBIC is the nodal national agency responsible for administering customs, GST, central excise and service tax in India.

All this was discussed in the webinar titled “E-invoicing – Challenges & way forward.” ASSOCHAM, an apex body, in association with Busy Infotech Pvt. Ltd organised the event last week.

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