Everything you need to know about E-invoice

By : |March 18, 2020 0

Optionally implemented from the 1st of January this year, e-invoicing is a new system wherein tax invoices will be electronically validated before being sent to the buyer. The issue of e-invoices is mandatory from 1st April 2020 for taxpayers whose aggregate turnover exceeds Rs 100 crores in a financial year.

What is e-invoice?

e-invoice is a revolutionary concept wherein an invoice is generated using the ERP/billing/accounting software, and from there, it is sent to get authenticated electronically to the GST Network. Once the invoice is validated and approved by the IRP (Invoice Reference Portal) the unique identification number known as Invoice Reference Number(IRN)

Dates to remember and for who to be specific:

Given the implementation of e-invoice from 1st Jan 2020, the GSTN has allowed access to the sandbox for all the taxpayers. Taxpayers can enroll on the portal and start testing of the same.

How to go about it

The taxpayers who are having turnover above Rs 100 crores are required to generate the tax invoice from their ERP/Accounting software and then transfer the data to an outbound folder where the GSP/ASP of the taxpayers IT will be given access to transmit the data to the IRP portal. Once the Tax Invoice is validated and authenticated IRN is generated using SHA256.

There should be an inbound folder to received data related to the Tax Invoice Number, IRN Number, ACK Number, and ACK Date for future audit and trail purposes. The IRN along with the QR code has to be printed on the tax invoice and then issued to the supplier.

The Taxpayers / GSP/ASP should ensure there is proper net connectivity, and the lines are secure and should have SSL or TSL (with minimum TLS 1.2) based domain name for the interface. The Taxpayer/GSP should take proper care and ensure that any malware or bots or C&C threats are not transmitted during the process and in case if there are found, NIC will block such taxpayers.

Things to keep in mind

All taxpayers who are having a turnover above Rs 100 crores are required to issue IRN from 1st April 2020 and for this, they have the to prepared by making necessary changes to their ERP/Accounting software. The IT team have the consider the following

1. e-invoice is required only for these following documents – tax invoice, credit notes, debit notes issued for B2B (Business to Business), B2G (Business to Government), exports, Supplies through e-commerce operators & RCM invoices for B2B.

2. The ERP/Accounting system has to be updated for the same either through the patch given by the software provider or through customization

3. The GSPs or the Taxpayers should have SSL (Secure Socket Layer) or Transport Layer Security 2.0 (TSL)

4. Taxpayers using GSP route will be given the API User Name and Password and who are accessing the IRP portal directly will be provided ClientId, ClientSecret, API UserName and Password

5. Taxpayers and GSPs are required to whitelist the Static IPs, and the system allows only Indian Static IPs.

6. If the taxpayer is not accessing through GSP’s, he has to ensure that the GSP provides them access to the Production environment

7. It is recommended to do testing before they move its production.

8. The authentication token is valid for 6 hours and is recommended to get a new token at least 10 minutes before the expiry of the token.

9. If e-waybills are being generated using the APIs, the same needs to be revisited as the IRP portal is expected to update the Part – A of the e-waybill basis of the data shared for the generation of IRN.

10. In the initial stages, the Taxpayers and GSPs will be accessing the e-invoice system using the internet and after a certain period, they will be allowed to access only through the MLPS.

The suppliers can upload innumerable invoices. There is no limit on the number of invoices one can put up on the portal. However, there is no option for bulk upload. Only one invoice will be uploaded at a time.

Conclusion

The main reason for the introduction of e-invoicing is to curb tax evasion and for the lowering of GST Rates down the line. e-invoicing is already implemented in about 75+ countries across the globe. Most of the MNCs are aware of the same and they have started working in that direction based on the previous experience.

It is new for Indian Companies as a result they may find it challenging but it can be overcome by dedicating a team for the same or hiring external consultants. The invoicing process will work as it is and only new additional data elements are to be captured. If planned and implemented properly the same can be rolled out by 1st April 2020 when it becomes mandatory else the business will be impacted.

   CMA B Mallikarjun Gupta – Chief Taxologist & Head of Cloud Business, Logo Infosoft

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