Government of India announced
the adoption of electronic invoicing (E-invoicing) from 1st Jan 2020. The
benefits expected from E-invoicing system include reduced payment cycles, quicker input
tax credits, better compliance, lesser errors etc..
It is important for companies to adopt E-invoicing, prepare accounting/ERP systems ready
for this very important compliance
The new e-invoicing system proposed by the government mandates that an invoice
file with parameters (Json File) with an Invoice Reference Number (IRN) shall be
submitted to the Invoice Registration Portal (IRP) or it can be created at the
portal. To generate the IRN, GSTIN of the company, the financial year and
invoice number are the base parameters.
GST council of India had proposed E-Invoicing as invoice reconciliation between
companies became a big issue and many fraudulent activities were reported in the
past, also that many companies faces problems in getting proper input credit. To
avoid these, the council suggested to have a system which enables
interoperability between the systems used by companies and report the invoices
in a unified format to the government through a dedicated portal. This will
solve problems exists in getting GST credits due to mismatches in data, delay in
The major benefit is the easier compliance achieved to GST taxation system. Since
the invoice is available to the buyer instantly, reconciliation is not required
or it is become very easy. Further, because only an invoice registered on the
IRP is a legally valid invoice, the instances of fake invoices will go down.
This streamlines the GST input credit saving money and huge effort for this. The
entire process become paperless and easier to manage. This can help companies to
raise working capital or to facilitate bill discounting etc as the banks and
financial institutions can take it as a proof for the sales transaction. In
future E-invoicing will help to reduce the burden of compliance significantly,
mainly while interstate transportations are happening. The e-way bills can be
generated using the E-invoices.
Since the data is available to tax authorities, there audits and surveys will
come down drastically.
Quicker GST input credit as it is instant matching of invoices and acceptance by
Controlling, monitoring and curbing tax evasion in the following ways: