The next phase of E-invoicing is here! For businesses with a turnover of more than INR 100 crores and less than INR 500 crores, 2021 seems to be exhilarating. The dawn of New Year mandated the much-touted E-invoicing for the sector. The sector is yet to see the actual benefits and challenges of E-invoicing implementation. However, there are certain lessons and tips that the sector can gain from the experience of businesses that already implemented E-invoicing in October 2020.
For businesses whose turnover exceeds INR 500 crores, E-invoicing can be said to be successful. Steady growth in the number of IRNs generated month on month reflects that the system is growing sturdy with time.
Basis the above data and information, it can be surmised that the IRN’s have grown through the months with the same target sector. In the maiden month of October 2020, 495 lakh IRNs were generated followed by 589 lakh and 603 lakh IRNs generated in November 2020 and December 2020 respectively. Nearly 37000 GSTINs were enabled to generate IRNs in the given quarter.
However, with the 100 crore businesses generating IRN’s, this number is expected to reach the roof w.e.f. 1 January 2020.
The first phase of E-invoicing targeted large organisations with customised ERP systems and a robust in-house IT team. This led to a smoother and easier transition. However, for businesses with a turnover of more than INR 100 crores, the journey may be a tad bit more difficult. Not all organisations in this sector have a robust in-house team or for that matter, a customised ERP. Thus, these organisations may face challenges that never arose in the first phase.
The Government has been proactive and introduced a simple, user-friendly excel tool called GST E-invoicing Preparing and Printing Tool (GePP) for organisations not having an ERP system in place. Moreover, the help desk, communication with taxpayers, exchange of emails, and telephone calls are some steps that helped in resolving issues in the first phase of E-invoicing and shall prove to be useful in the second phase as well.
Impact Of E-Invoicing
- System integration: Even though the Government has come up with an easy and convenient excel utility for uploading invoices, it is a lot of manual work and hence inefficient as far as time and cost are concerned. Hence, eventually, the organisations would have to integrate their systems so that once an invoice is generated on the ERP, it automatically goes to the portal and a digitally signed E-invoice with IRN is received back in the ERP, once the IRN is generated. Hence, E-invoicing would push the organisations towards integrating their systems, which in the long run would benefit the industry.
- Change in time spent and the cost incurred on compliances: The GSTN has made it clear that once E-invoicing is implemented, auto-population of data in GST returns and E-way bills would start. This would lead to a significant reduction in time spent and the cost incurred on compliances. However, on the other hand, the implementation of E-invoice would also result in enhanced cost on the IT system of the enterprise.
- Standardisation: One of the major impacts that E-invoicing shall have is standardisation of invoice reporting across the country. This would result in easy readability of invoices by machines and hence plugging the fake invoice scams. Further, a new level of digitisation and artificial intelligence can be employed by the Government to check tax evasion in the country.
- Enhanced organisational security: E-invoicing shall not only plug revenue leakage in the economy but would also result in lesser organisational frauds and scams. It shall discourage any deceits within an organisation. Moreover, as a result of system integration, raising invoices would have minimal manual intervention leading to declining in human mistakes and errors.
- Training to employees: Considering that E-invoicing is the first schema of its kind, training to employees in the respective divisions such as Accounts payable, Accounts receivable, sales, taxation, finance, etc. would be required.
E-invoicing would result in a paradigm shift in the way tax is administered and compiled in India. With Phase II launched and going steady, the Government would certainly launch Phase III for all businesses on the anticipated date i.e. 1 April 2021 for all B2B supplies. The roll-out of E-invoicing at the country level would lead to an era of self-governance and real-time assessments. The regressive methods of delayed assessments and constant tax authority surveillance would have to bid adieu to the taxpayers. Additionally, E-invoicing can also resolve the grass-root issue of delayed credit cycles in the economy, providing respite to all industries. With the lesser time required to prepare and process invoices, invoices can reach the customer quickly and the entire process becomes swifter. However, it is equally true that in case of any minute deficiency or any error, the invoice would not be raised until all errors are fixed; therefore, it is of extreme importance that invoices are raised with appropriate details to save duplication of efforts.
Needless to say, E-invoicing if implemented wholeheartedly in the best possible manner, could yield unbelievable results. However, any stopgap arrangements could do exactly the opposite. Therefore, the significance of choosing the right GSP or GST Suvidha Provider cannot be insisted upon enough. A GSP understands and adheres to security standards and regulatory requirements and hence takes care of a smooth transition.
Lastly, E-invoicing is going to put India on the world map as far as the Paying Taxes index and Ease of doing business index are concerned. Though the reform has reached many countries across the globe, there are few who have been able to implement it well.