Change is the only constant – technology is an invincible tool that has changed our everyday life to an extent that it has become indispensable. A new addition to the technological revolution in India is the rollout of E-invoicing for businesses whose turnover is more than 500 crores.
One month down the line, the experience of E-invoicing can be said to be smooth and efficient, unlike the E-way bill roll-out last year. According to Shri Ajay Bhushan, the Finance Secretary, E-invoicing is a new chapter in the direction of Ease of doing business and Paying taxes in India. In the first week itself, more than 69.5 lakh IRNs were generated by around 71,000 users on the portal without any prominent hiccups. About 13.69 lakh IRNs were generated on 7 October as against 8.4 lakh IRNs on 1 October, thus marking a considerable increase in IRN generation over the week.
One cannot insist on the importance of GSPs more when the statistics also reflect that around 82% of IRNs were generated through GSP mode, while 15% were generated through direct API mode, and the remaining 3% were generated through bulk uploading using offline tools.
Thus, the first phase can be called a successful venture of the Government of India. Also, for GSPs like Cygnet, this has been a proud moment where we have gone live without any technical glitches as such. Cygnet’s E-invoicing solution has numerous features that include automated upload of e-invoices using single import format, QR code/ IRN printing, 400+ data validations, Sync with GSTN & NIC, 3-way Reconciliation between E-Way Bill, GST Returns and E-Invoicing, advanced reports such as provisional ITC report and 180-Day reversal rule and a GST Compliance Score. As a conduit between GSTN and the taxpayers, Cygnet always endeavors to provide a seamless experience to its clients with 24*7*365 support.
With the Cygnet E-invoicing solution, we have successfully generated 85.15 lac invoices from 1st Oct till 31st Oct, with a record 6.2 lac invoices being generated on 31st Oct itself.
The Government plans to include businesses with a turnover of more than 100 crores from 1 January 2021, in the E-invoice schema. This implementation would be crucial for the businesses and the GSTN both, as it will really test the robustness of the IRP, once it is live. Although, the GSPs seem to be ready and up for the challenge with high-end automation and technology at their fingertips.
Considering that E-invoicing is new on the block, the industry does have some unanswered questions and doubts regarding the scheme. We have captured the top 10 challenges below along with the Cygnet solution for these hurdles.
Top 10 Challenges Faced By The Industry:
1. We are suppliers of both - taxable and exempt goods. How are we supposed to keep a segregation between supplies while raising invoices and bills of supply?
Ans: Exempt supplies are not a part of the E-invoice schema as yet. E-invoice is not required to be generated for the bill of supplies. However, for a business that is engaged in both taxable and exempt supplies, ERP could be configured in a manner where it is identifiable by way of document series, or in any other manner whether the document generated is an invoice or bill of supply. Basis such identification or flags, it would be easy to keep segregation while generating E-invoice.
2. What should we do in case there is an amendment in the invoice after 24 hours of raising the invoice?
Ans: Amendment of E-invoice is not possible on IRP. The only cancellation is permitted, that too if it is done within 24 hours of generation of invoice. Further, in case of cancellation of the invoice, the same document cannot be used and a new invoice has to be generated.
In the case where there is a change in invoice after the expiry of 24 hours while preparing GSTR 1, the necessary amendment would have to be made to the auto-populated GSTR 1. This calls for extensive reconciliation between all amendments made during the month and GSTR 1. Reasons for difference in IRN vs GSTR 1 could be due to the following reasons:
- Invoice was generated with Incorrect value or Incorrect tax rate
- Customer provided GSTIN after raising of invoice; hence making a B2C supply, a B2B supply. In such a case, e-invoice was not generated for such supply and hence may not be auto-populated in the B2B section of GSTR 1. However, an e-invoice can be generated for such supplies as and when the customer provides GSTIN.
This is an illustrative list only and there could be many more reasons warranting the amendment of e-invoice. The Cygnet E-invoicing solution has in-built multiple level checks and validations which minimizes the errors. Consequently, the requirement to amend the E-invoices rises rarely.
3. Is E-invoice required for advances received also?
Ans: No, E-invoicing is not required for advances received. However, in the case when advances are received for supply of services, tax is to be paid to the Government in the same month; but, no invoice is raised. Thus, a difference between GSTR 1 (which shall reflect tax on advance) and E-invoices would arise. A reconciliation for the same would be required.
It should be noted that as and when such advance is adjusted in the future, an E-invoice would be required to be generated,
4. What would be the treatment of discounts on E-invoices?
Ans: For discounts given at the time of supply, the same can be included in the invoice. The Cygnet solution in lines with the invoice schema has a separate field for discounts at item level and discounts at invoice level.
However, for post supply discounts, the same would not be a part of E-invoicing. There would be a value difference between the books of accounts and E-invoices in such cases which would have to be reconciled.
5. We are an E-commerce operator. We are facing issues with regard to the real-time generation of E-invoices for us and on behalf of our vendors. Can the Cygnet software help us with the load of invoices to be generated along with a distinction between our invoices and vendor invoices?
Ans: The Government has permitted all E-commerce operators to generate E-invoices for themselves and on behalf of their vendors. Separate master basis the GSTIN can be created to identify the invoices. The Cygnet solution for E-invoicing carries out validations and verifications basis GSTIN to identify the invoices. Further, there are filters available in the solution to segregate the invoices. Furthermore, the Cygnet solution has a separate API process available which makes compliance easier by way of simple pass through APIs.
From a business perspective, E-commerce operators may choose to charge their vendors for the generation of E-invoices. For such computation, the Cygnet solution determines the charges basis the MIS master data.
6. Clients have already generated an IRN through NIC, how to obtain details of such invoices?
Ans: In such cases, the IRN or acknowledgment number can be provided to the Cygnet solution. The solution shall fetch all the details pertaining to such IRN or acknowledgment number from IRP and make it available to the user.
7. What will happen to the credit notes and debit notes raised after 1 October 2020 in respect of invoices issued earlier than 1 October 2020? Is there a requirement to report this on the IRP?
Ans: All credit notes and debit notes raised after 1 October 2020 (turnover > 500 crores) would have to be reported on IRP. The details of providing the original invoice number are optional. In case the same is not provided on the portal, the system will throw a warning, which can be ignored.
8. How will we carry out various reconciliations viz EWB vs GSTR 1, IRN vs invoices, IRN vs GSTR 1, IRN vs EWB etc. which will become necessary post 1 October 2020?
Ans: The reconciliations come hand in hand with any new technological disruption. Therefore, one cannot ignore the matching required between the above-mentioned forms and portals. Cygnet solution carries out a reconciliation between the following thereby ensuring minimum differences and gaps:
- EWB vs GSTR 1 vs IRN (three-way match)
- IRN vs Tax invoice (generated by ERP)
- IRN vs GSTR 1 (auto-populated)
- IRN vs E- Way Bill
- EWB vs GSTR 2A
The Government intends to add in three more columns to the GSTR 2A which shall make the reconciliations simpler viz. Mode of invoice (i.e. E-invoice or manual), IRN no., and IRN date.
9. Is E-invoicing required for High Sea Sales?
Ans: Since High Sea Sale is not a supply as per the GST law, E-invoice is not required to be generated for the same.
10. What will be the treatment of sales return?
Ans: In case of sales return, the customer shall have to raise a debit note and an E-invoice. Further, an E-way bill would have to generate by the customer for transporting the goods back to the supplier. However, in case the customer or recipient does not do so, the supplier shall have to raise a credit note followed by E-invoice and E-way bill for the sales return.