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    Categories: GST

How Small Businesses can benefit from E-Invoicing under GST

For the greatest benefits, businesses are to be placed in a range of technologies and digital solutions. They’ll be able to reap more rewards when they have much business to do with reduced cost and compliance efforts. Both the objects are well targeted by the Indian government in their ease of doing business policies. A recent digital effort from the government for businesses came with the introduction of the Goods and Service Tax E-invoicing scheme.

E-Invoicing in GST is a parallel strategy of the government to its other ease of doing business policies. With E-invoicing in GST, a taxpayer registered will be able to pay his tax dues in an automated and simplified manner where within uploading of digital invoices, the taxpayer will receive benefits of automated GST compliance, return filling, ITC credits, reconciliations, etc. Simplifying taxes for people, the strategy will be implemented in the GST system from 1st January 2020.

#1 What is GST E-invoicing?

To help small taxpayers perceiving difficulties, the GST Council announced in August 2019 for the new technology-driven, Invoice submission and digital return filling system on the GST Portal. In the normal course, the taxpayers maintain ERP (Enterprise Resource Planning) software or take the help of a legal entity to keep up with his books of accounts, which are later uploaded manually on the GST portal for tax filling. With GST E-invoicing the taxpayer will be able to:

  • Quickly upload any number of invoices in JSON format.
  • Reconcile B2B Transactions, ITC Credits and the right tax amount payable.
  • Coordinate with vendors, buyers, banking and tax authorities in different transactions.

#2 Benefits of GST E-Invoicing

  1. A standard template issued by the GST department will be used by all parties registered under GST and they will be using a GST E-invoicing facility. They are just required to prepare their invoices in any Enterprise Resource Planning (ERP) or free accounting packages available to a JSON format and upload it to the GST system. This is a simplified approach for the taxpayers rather than putting each invoice manually.
  2. On accessing the value of the Invoice, an E-way bill will be generated for the transaction saving time of the taxpayer.
  3. All invoices will be registered on the Invoice Registration portal which will keep the entire database safe and secured for the taxpayer digitally.
  4. No more delays in manual verification of invoices shall be there, as the taxpayer receives multi -options to reach authorities through SMS, Email, Mobile app to request for on-time verification of invoices.
  5. No more duplication of entries and reconciliation errors will be faced in GST E-invoicing.
  6. The cost and time of sending invoices to suppliers or buyers will be even reduced, as the department after verification of each invoice sends the verified copy to both the seller and the buyer digitally.
  7. With no lag in the system, the E-invoicing facility can be used anywhere, any time by the taxpayer for uploading or accessing invoices.
  8. Values from all verified invoices will be automatically entered to returns for final submission; this was done by the department to reduce the compliance burden on taxpayers.
  9. For exporters, the standard format provided will make the overall tax filing experience easier, with an automated filling of values and ITC claims.
  10. Access to free user-friendly ERP software would be provided to small taxpayers for easy filling of invoices.

#3 Use of ERP in GST E-Invoicing

Enterprise Resource Planning (‘ERP) are special software packages used in the accounting system of the business. They are required to manage and keep a systematic record of all transactions and financial events happening in the business. The new GST E-invoicing system requires the submission of invoices in a standard format for automation in tax filling. With the help of ERPs, invoices can be generated in the JSON format which will be used by the E-invoicing portal for further processing.

Benefits of ERP

  • Preparation of digital invoices.
  • A systematic record of transactions.
  • Preparation of Financial Statements
  • Automated charging of GST.

All in all, E-invoicing in GST holds a lot of myths and misconceptions for people that e-invoicing in GST is a facility which will help them generate invoices on GST portal, rather it is a facility introduced by the government to reduce business compliance burden and work of tax authorities with early detection of tax evasion.

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Also Read: Circular Trading under Goods & Services Tax Act, 2017 (“GST”)

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