GST council in its 37th GST meeting dated December 20, 2019 has taken a decision on implementing the new E-invoicing system for all tax payers from April 1, 2020. This is proposed to be introduced to reduce major gaps in data reconciliation, quick availability of genuine input tax credit to the recipient, avoid tax evasion and increase efficiency in tax administration.
Salient Features of E-Invoicing
- ‘E-invoicing’ or ‘electronic invoicing’ is a system in which B2B invoices are authenticated electronically by GSTN for further use on the common GST portal. Under the proposed electronic invoicing system, a unique identification number (IRN) will be issued against every invoice by the Invoice Registration Portal (IRP) to be managed by the GST Network (GSTN).
- JSON (generated from invoice) to be uploaded on the IRP which digitally signs e-invoice and generates unique IRN and QR code
- This new system will be mandatorily applicable for a business with a turnover of INR 100 Crores or more with effect from April 1, 2020.
- E-invoicing will cover supplier invoices, credit notes and debit notes.
- Registered person (PAN based) with more than 500 Cr turnover in a FY is required to mandatorily print QR code on B2C invoices to enable quick review, validation and access of invoice from hand held systems available with authorities.
Challenges that might be faced
- E-Invoices once verified by IRP cannot be partially cancelled
- All amendments to the e-invoice may have to be done on GST portal only and not on the Company’s ERP
- While the IRP may allow Bulk posting of invoices, however, invoices will be verified on IRP one at a time, which could lead to delays in supply chain timelines
- E-invoice can be cancelled on IRP within a time frame of 24 hours. Any cancellation post that may have to be done manually on GST portal.
- Storage of data on the IRP portal will be available only for 24 hours and hence cannot be relied for the purpose of storing the data
What companies ought to do from a transition perspective
Companies may have to make the following changes in their ERP to ensure a smooth transition:
- Development of functionality in ERP to generate JSON files which is acceptable by IRP.
- Configuration of additional mandatory fields as required by E-invoicing Scheme like IRN, Invoice type etc. in the current invoice format.
- ERP shall ensure that the invoice data generated from the ERP system adheres to maximum length criteria defined as per IRP.
- Availability of readymade excel reports as mandated by IRP’s offline utility.
- Develop API’s to interact with ASP’s or IRP portal.
- Amendment in document configuration to restrict up to 100 line items per document.
While the aforesaid workflow, is based on the available scheme announced by the Government, they may further come up with suitable notifications and circulars on e-invoicing applicability on B2C supplies, RCM transactions (includes import of services) and in future may be made applicable for all sort of transactions.
However, considering the giving effect to notifications have also been issued, the time is ripe for companies to gear and make their systems ready for the new change that is to happen so that the transition is smooth.
(The writer is Manager, BDO India LLP)