E-Invoicing Under GST | To-Do List For Newly Added Businesses From April 2022
The CBIC issued a Notification No. 01/2022- Central Tax, dated 24th February 2022 regarding the revised eligibility for e-Invoice generation under GST.
The Government of India has now made e-Invoicing mandatory for all the businesses whose annual aggregate turnover exceeds Rs. 20 Crore. This will come into effect from 1st April 2022.
This decision will bring many new MSMEs under the e-Invoicing umbrella. In orders to get familiar with the e-Invoicing under GST and to enable a smooth e-Invoice generation process, we have devised a simple TO-DO list for all the businesses that are recently added to the eInvoicing system.
Skim through the article to know the basic details required for successful e-Invoice generation.
- Get an automated e-Invoice generation software
Most of the businesses that will be introduced in the e-Invoicing structure in April 2022 are currently using some popular ERP system or Billing software.These billing software are used for internal record keeping of all the purchases and the storage of invoice receipts.
e-Invoicing under GST expects businesses to follow standards set by the Invoice Registration Portal (IRP).
Businesses must decide whether they will be mapping their ERP system with the IRP portal to all the e-Invoicing schema specifications or go along with just the mandatory fields.
Hence, businesses should adopt automated e Invoicing software that allows you to report all your B2B invoices to the IRP portal and generate unique Invoice Reference Number (IRN) for every corresponding invoice. This activity can be done directly from your ERP and you are not required to visit the IRP portal.
- Make changes to your ERP system
Your existing billing system or ERP system should be aligned to the rules as prescribed for e-Invoice generation under GST.
Following are some of the specifics about e Invoicing system generation:
a. Document date
IRN has to be generated within 24 hours after uploading the invoices.
Backdated e-Invoices cannot be generated on the IRP portal.
b. Document Number
Businesses should note that the document number or the invoice number for which the e-Invoice is to be generated should NOT start with a zero (0).
If your existing billing software is set to generate the invoice number starting with a zero then that should be immediately modified.
c. Maximum line items
For an invoice generation,maximum of 1,000 line items are allowed. If the number of all line items exceeds 1,000 then separate invoices are required.
Grouping of invoices can also be done within the limit of 1,000 lines.
d. Special provisions for RCM transactions
RCM invoices are also applicable for generation of e-Invoices as the RECIPIENTS of RCM invoices have been mandatorily asked to create invoices for their INWARD supplies.
Taxpayers are required to generate e-Invoice in case of the Reverse Charge Mechanism transactions. For RCM transactions, suppliers are also required to generate the IRN sometimes. This should also be considered while aligning your existing billing system.
- E-Invoice printed in a proper format
E-Invoice has become an essential document to prove the authenticity of the purchase. Hence, taxpayers should keep a record of all the e-Invoices in the physical as well as a digital copy.
Hence, your existing billing systems should be well calibrated so that when you print the e-Invoice it should be in the appropriate format with unique Invoice Reference Number (IRN) and the readable QR code.
IRN&QR code are the most important fields on an e-Invoice & they should be properly printed on the physical copy of an e-Invoice to provide it to your recipient.
If your current ERP is NOT supporting the QR code printing, we suggest you to make necessary changes to the ERP by using any ERP connectors which will allow you to generate e-Invoices right from your ERP.
- E-Way Bill generation based on e-Invoice data
E-Way Bill is required to facilitate movement of goods whose value exceeds Rs. 50,000.
Hence, small businesses are required to generate E-Way Bills on a daily basis for their transportation of goods. For the businesses that are entering e Invoicing system from April 2022, must note that the e-Invoice data gets auto-fetched to your E-Way Bill portal so that you can generate E-Way Bills without any re-uploading of the data.
EInvoicing process data gets auto-fetched on the E-Way Bill portal so that the businesses do not need to re-upload this data.
Majority of the fields in your E-Way Bill gets auto-populated based on the information furnished in your e-Invoice. Part A&Part B of the E-Way Bill gets auto-populated.
Businesses can generate E-Way Bill corresponding to the IRN generated on the IRP portal.
E-Invoicing | A step towards digitization for MSMEs
MSMEs that are going to enter the e Invoicing system from April 2022 are looking towards this step as an overhead in their GST compliance process.
But businesses must understand that GST e Invoicing has introduced a transparency among businesses and have initiated the elimination of fake invoices.
Following are some of the prominent highlights of benefits that businesses will have in their GST return filing:
- Paperless record keeping of invoices
- GST e Invoices have made reconciliation activity a lot more easier
- GST Input Tax Credit claims have become smoother
- Counterfeit invoices are eliminated
- Smaller businesses can expand their business areas without any fear of malpractices in invoicing by large businesses.
Way ahead for Medium & small enterprises
MSMEs should be ready for e-Invoicing with good e-Invoicing software that will enable them for a smoother e-Invoice generation process.
- Businesses must adapt to the invoice reporting requirements as prescribed by the GST council.
- Be ready with automated e-Invoicing software that allows e-Invoice generation directly from your ERP.
- Staying GST compliant is strictly essential for all they businesses. Failing in doing so can land your business into a troublesome spot.
In conclusion
MSMEs for who are now e-Invoicing is made mandatory should not be worried about any overheads or extra compliance burden.
e-Invoicing under GST will benefit the MSMEs in many ways and help them to stay away from the fake invoices or fake ITC claims
Having a e-Invoice generation software would be a great choice for you to stay ahead in this new & improved regime of e-Invoicing.
