After successfully launching the first phase of E-invoicing for the businesses with turnover exceeding INR 500 crore, the next phase is set to begin w.e.f 1st January 2021 for businesses whose turnover exceeds INR 100 crore. E-invoicing is going to be a game-changer in the Indirect tax arena. Though it may take some time for the businesses and Government to adapt to the change, E-invoicing shall change the face of GST compliances soon.
The blog aims to focus on the buyers or purchasers who shall be receiving E-invoices from their suppliers and it is equally important for buyers to store IRN and QR code back in their source accounting/ERP systems. Though the major discussion regarding E-invoicing has happened from the supplier’s perspective the purchase cycle also needs a major focus.
While the regulator has not set any mandate for the purchase invoices, as a measure towards greater transparency and efficiency, one has to be equipped as most of the businesses will have to generate IRN before any further transaction. Thus, it becomes mandatory for all the buyers to ensure they reconcile the supplier’s E-invoice data and then create a purchase entry in their legacy systems.
5 Things That A Purchaser Should Know
- To check whether your supplier is mandated to issue E-invoice, the enablement status on the IRP portal can be checked using the vendor’s GSTIN. Further, not all suppliers having an aggregate turnover above INR 500 crores shall be generating E-invoices.
- The E-invoice received shall now have an IRN and QR code on it. The same would have to be mapped with the ERP system to ensure smooth Procurement to Pay system. A noteworthy point here is that a tax invoice, debit note, a credit note is covered by the E-invoice mandate. Hence, all these documents shall have the IRN and QR code on the inward side.
- Verification of IRN is possible through the NIC portal. The buyer can check the signed invoice by uploading the response file or the JSON file on the portal. Currently, in absence of API, this is a manual process.
- Currently, no invoice wise data flows from the IRP portal to the recipient. The only option to obtain an E-invoice is when the supplier shares such an invoice in PDF/other formats. The NIC only provides data of invoices generated to the generator or the supplier.
- The portal does not allow partial cancellation of the E-invoice, it can be canceled on the IRP within 24 hours of generation. However, any amendments of any sort can only be done through the GST portal.
Keeping in mind that the E-invoicing is going to affect both the purchaser as well as the seller, entities need to prepare themselves to catch up with the reform. Worry not, we at Cygnet GSP can help automate and do a backward integration with your source systems using the Robotic Process Automation approach.
The term backward here refers to the situation when an organization expands backward in the supply chain. For eg. a retailer buying a manufacturing unit. In the current set of facts, backward integration of purchase means the purchaser imports its E-invoice details from the supplier followed by the creation of a draft purchase entry and saving of invoice for records.
In our next blog understand why the backward integration approach is important especially post E-invoicing era.