E-INVOICING | E-Invoicing System, Objective and Benefits

by Kushal Verma Search Engine Marketing

E-INVOICING

GST council of India has recently approved the introduction of E-Invoicing or Electrical Invoicing mainly for reporting business to business invoicing to GST system. The process came into action on 1st January on a voluntary basis, which means not all taxpayers will have to follow this. If you want, you can also use private software that makes the work much easier.

The GST Council has now approved the standard of the E-Invoices in their recent meeting as there was no earlier existing E-Invoice in the country. Having a standard is a must to ensure that all your invoices are compatible across all the GST platform. Now that a standard has been set, E-Invoices that are being made from one software can also be made from another software. This standard has made the work easier, as there’s a limited need for fresh data entry. This step is also important while you fill in your details for the part of the return. Apart from the GST system, the standard will also ensure that your Invoices can be read by machines and systems all over the country with ease.

Purposes and Intended Audience

In this article, we are trying to explain the operational procedure on how you can use the offline and online tool that helps in generating e-invoices. This is to make things easier for registered taxpayers under GST India.

What Is E-Invoice?

Before we proceed further, here’s what E-Invoice actually means. Taxpayers have different requirements and expectations, which obviously isn’t possible with a single software. Invoice generated by different software may look similar to each other, but they can’t be understood by every software even though they can be understood by businesses. There are thousands of accounting and E-Invoice generating software that help users in making their very own formats to store information electronically. Unfortunately, these invoices can’t be read by the GST system if reported in their respective formats.

This confusion and restriction gave birth to a standard E-Invoicing system. The adoption of the brand new standard will make the process easier for the users, the best part is that it would not impact the users in any way or shape. Any Taxpayer using the E-Invoicing software will be working as before because they would continue to use the physical copy of the invoices.

E-Invoicing System Under GST

Another reason a certain standard was set up for E-Invoicing so the government can use them to curb the GST evasion by making fake invoices. The standard E-Invoice will also make it easier to file taxes at the end of every accounting year for businesses as their yearly data is stored by the software already. Ever since the GST was implemented in the country, both small and large scale businesses came up with innovative ways to evade taxes. So the issue of a new standardized E-Invoice is a method employed by the government to make sure more and more people pay their taxes.

As of late 2020, there are more than 1.25 crores registered businesses under GST. To avoid duplication, the E-Invoice system will be in straight contact with the GST system.

Objective of E-Invoicing

India is a huge country and there’s no limit to the number of small, medium, and large scale businesses operating in the country. E-Invoicing will be a huge step for India solely because of the sheer volume of business transactions completed every day. There are countless non-standardized formats being used in the invoice industry. The new E-Invoicing system is to make sure that invoicing becomes a crucial part of the business operations and to remove the boring and redundant task of compiling invoices at the end of every single term.

Benefits of Standard E-Invoicing System

As we explained the method was employed mainly to reduce frauds and make steps easier for yourself.

Standardization: Helps in reducing the use of multiple invoicing formats. The one standard E-Invoice will be supported during B2B transactions, B2C, Exports, Imports, and every industry.

Lesser Compliance: Reduction in overall compliance burden, a huge reduction in input credit verification issues.

Reduction of Fake Invoices: Fewer people will forge fake invoices to evade taxes. Standardized E-Invoices help the government in keeping track of fraudulent activities.

Environment Friendly: Less paper will be used as the use of multiple copies of the same bill is not needed. Thus, thousands of businesses will save millions of pieces of paper every day.