Two things that will change the way transactions are reported under the goods and services tax (GST) system in 2020 are electronic invoicing and new returns. While both of these will be introduced mandatorily from April 1, e-invoicing would be implemented on a voluntary basis by those having an annual turnover of above Rs500 crore from January 1. Those with an annual turnover of over Rs100 crore can use e-invoicing from February 1. Finally, those with annual turnover of over Rs100 crore will have to use e-invoicing system from the beginning of the next financial year. In the e-invoicing system, the invoices are authenticated electronically by GST Network (GSTN) for further use on the common GST portal.
Two procedures are required in einvoicing system generation of invoices in standard format and reporting it on to a central portal system. The new system requires invoice details to be uploaded on the government site Invoice Registration Portal or IRP on real-time basis. Based on the uploaded details, a unique invoice reference number (IRN) will be allocated against an each invoice. IRN would be get validated through IRN portal and GSTN. According to GSTN Chief Executive Officer Prakash Kumar, e-invoices are generated by large number of businesses even today. However, they all use the format as provided by the ERP or billing software they use. Lack of a standard leads to a scenario where e-invoice generated on one billing software can’t be read by another, requiring manual data entry from electronically generated invoice.
“All this means lots of engagement in maintenance of invoice, manual feeding in system, a pile of paper work, and lot of transcription errors,” he said. Here comes a system that does away with much of paper, human error, transcription error, saves time and gives you a format which is compatible to all. He said no changes are required as far as the businesses are concerned as they will continue to use the same software with same user interface to generate the e-invoices such as ERP, accounting and billing software, excel based billing system etc.