E-invoice is a big initiative for the development of the country and a step ahead for the ‘Digital India’ program. E-invoice has become the reality of business with a turnover of Rs 100 crores and above & it will be applicable for all the businesses doing B2B invoicing starting 1st April, 2021.
Earlier, E-invoice was made mandatory under Goods And Service Tax (GST Law) for Business-to-Business (B2B) transaction by businesses with a turnover of more than 500 crores from October 1, 2020 and businesses over Rs 100 crores from January 1, 2021.
Under the 37th GST Council, a system of e-invoicing under GST for all MSMEs has been introduced to streamline GSTR and e-way bill filing and allow transparency between businesses and government.
How is e-invoice different from the current system of invoicing?
E-invoice or Electronic Invoice is a system where the invoice is electronically uploaded, authenticated with a unique IRN (Invoice Reference Number) & digitally signed QR code which has all the details of the invoice. Businesses using Business Management Software that allows you to create and customize invoices & seamlessly connect IRP systems will find it easy to manage e-invoice requirements.
But the change here will be the invoices reported in GSTR-1 and Part - A of E-way bill. Now MSMEs will only need to submit bills to the e-invoice portal.
GST e-invoicing is basically a means to authenticate B2B bills.
What is MSMEs?
Micro, Small & Medium Enterprises was introduced by the Government back in 2006. As per the new definition, MSMEs are grouped baked on their monthly incomes:
Benefits of e-invoicing for MSMEs
- Reduced compliance burden - The system is integrated with one another which will ultimately reduce the burden of compliance. The information flows from the GSTN system to E-way bill system. Once you have created a number of e-invoices, the fields will be auto-populated in the return.
- E-invoicing helps MSMEs to secure loans faster
The biggest challenge for most of the MSME is to get loans. They need to file a number of documents to get their loan sanctioned from financial institutions like banks etc. However, E-invoicing has played a major role for MSMEs as they can secure loans faster and easily and the reason behind this is that banks can score them based on compliance rating and sanction them.
- Seamless Account Reconciliation
E-invoice can help to minimize mismatch errors & data entry errors. It also allows to track the invoices created by the supplier in real time and so the data will be available at the transactional level which will reduce audits by the tax authorities. Once the pre-population of GSTR Return is enabled, the reconciliation related problems will be reduced.
- Reducing Fake and Duplicate invoices
The non-digitalising of invoices has increased in fake / duplicate invoices which results in tax evasion. This will hugely drop with the implementation of e-invoice by keeping a track of such invoices and ensuring a common database is available to tax authorities.
- Easy Tracking of E-invoices
It is easy to track the e-invoice in real time. You will know when it is received and submitted. You will also know the status of the invoice - approved, denied, pending or seen by the client.
Gimbooks has an integrated and collaborative approach between e-invoice, Eway Bill that has helped many businesses shift to e-invoice with ease and benefited them in a big way.