What Is E- Invoicing?
An electronic invoice or e-invoice is a digital document exchanged by a buyer and a supplier and authenticated by the government’s portal. GST e-invoicing software was primarily built for invoice preparation of business to business (B2B networks. The invoice is prepared in a format indicated by the GSTN. The seller of a product now generates an invoice and reports to the e-waybill and GST portal.
Why Do We Need A Standard E-invoicing System?
Worldwide tax administration departments want to make the GST software a success because of the following reasons.
- If the pre-decided format is followed for the invoice generation means it is more accessible for all parties to read, share and understand the document
- The invoices thus prepared can be checked by the central system
- Under GST software, specific fields are already prepared when a seller is filing returns to avoid any disparity during data reconciliation
How to Generate An E-invoice Under Goods and Service Tax?
The GST e-invoicing software’s flow is classified into two parts
- First is the interaction between the IRP (Invoice registration portal) and the business
- Secondly is the communication between the e-waybill systems/GST, buyer, and IRP
Under the GST e-invoicing software, the taxpayers will have to generate an e-invoice in the way they have been doing, with the only exception being that the invoice will be electronic. They must fill in specific mandatory details like
- Details of transaction like the type of suppliers they are, the tax scheme they are under
- The document details like date, number, type
- The suppliers’ details like name, address, pin code, state code, GSTN address
- The buyer details like name, address, pin code, state code, GSTN address
- The address from which the goods are dispatched (it is mandatory if it is not similar with the details of the supplier)
- The shipping address (required if it is not similar with the buyers’ address)
- Details about the item like what goods, GST rate, the total amount, assessable value, number of items, HSN code. If the goods are being sent in batches, then the batch number should also be mentioned
- Invoice details like the total value of the invoice and the assessable value
These details are mandatory, but optional parameters introduced by the Council which may be filled if the business requires. After the e-invoice in the GST software has been finalized, the taxpayer needs to plan if the billing or the accounting software will create a JSON depending upon the IRP.
Create an Invoice Reference Number (IRN)
Based on the details provided by the seller, such as the document type, document number, fiscal year, and GSTIN, the invoice registration portal (IRP) will develop a hash factor. The IRP will decide whether similar invoices can be found in the Central Registry. If no similar invoices are found, the IRP will include a QR code and signature in the JSON data of the invoice. The previously stated hash will be the (invoice reference number) e-invoice number.
Generation of a GST e-invoice is primarily the responsibility of the taxpayer reporting the IRP in GST.
If you want to know the benefits you will get by using an e-invoicing software, here are some,
Benefits of Using the E-Invoicing System
- When prepared by the supplier, e-invoicing software allows for real-time tracking of invoices. This expedites the availability of input tax credit
- E-invoicing in GST also simplifies generating e waybills by pre-filling all details from the GST portal except the vehicle details, which the taxpayer must fill out
- The buyer can then compare the invoice to his purchase order and accept or reject it in real-time
- In Electronic invoicing (E-invoicing), data can be accessed in real-time, thanks to the software. As a result, the possibility of manipulating invoices is significantly reduced because invoices will be generated before carrying out a specific transaction. This reduces the production of bogus GST invoices, and only the real input tax credit can be claimed. Because input tax credit and output tax credit will be available in real-time, tax officials will easily detect a forged input credit
The use of electronic invoices is growing by the day, and software and standards are constantly being improved to assist users in resolving issues. To avoid falling behind in time, businesses must adapt to such technological advancements at the earliest.