Issues and Concerns Surrounding the E-Invoice System
The E-Invoicing system has been introduced to streamline the invoicing process for businesses and reduce instances of tax evasion. While it has been hailed as a step in the right direction, there are concerns regarding its implementation and impact. Some businesses are struggling to adapt to the new system. There are also concerns about data security and privacy, as businesses have to share sensitive financial information with the government.
Furthermore, smaller businesses may face challenges in complying with the regulations, which could impact their compliance (but we have a solution for that). Here we will explore these issues and concerns surrounding the E-Invoicing system and provide recommendations for addressing them.
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Critical Challenges and Concerns Regarding E-Invoicing
Below are some of the problems taxpayers have faced since the implementation of e-invoicing began
- Integration to ERP System
To ensure a smooth transfer of invoice data to the IRP and e-invoice back to the ERP system, businesses must integrate their ERP system with the Invoice Registration Portal through a GST Suvidha Provider (GSP) or an Application Suvidha Provider (ASP). To facilitate this integration, the GSTN developed a customisable API that provides scope to make changes as per the standard e-invoice schema.
However, for companies that produce a large number of invoices, the lack of direct integration with the IRP may prove to be a problem
BUSY E-Invoicing Software helps you circumvent these problems by eliminating the need to go to the e-invoice portal to generate e-invoices. You only need to set up the software once, which takes a very short time, and then you can generate e-invoices automatically as and when required, in just one click! Watch the video below to see how easy it is to generate E-Invoices using BUSY.
Embed this video - Sorting of B2B and B2C Invoices
While B2C invoices just need e-way bills (wherever an e-way bill is applicable), B2B invoices require both e-way bills and e-invoices.
Sorting the B2C invoices from the B2B ones will take a lot of time and effort, unless a robust E-Invoice Software is used to help automate this process. - Cancellation and Amendment of E-Invoices
If a minor change is required to an e-invoice, that is the same as generating a new e-invoice, since they cannot be partially cancelled. A user only has 24 hours to cancel the e-invoice on the IRP itself. Thereafter, it can only be cancelled on the GST Portal.
A user cannot use the invoice number of the cancelled e-invoice in the new one, as that is basically the same as making changes to the original one. A fresh e-invoice needs to be generated, and users need to ensure that in addition to fixing any errors of the cancelled e-invoice, they are changing the invoice number as well. - Alternate Arrangement for Storage of Data
The IRP does not store any data post 24 hours. Since there is no archive, users will need to use alternate solutions to keep a record of the information uploaded to the IRP. However, details of the e-invoices generated on the IRP are sent to the GST Portal. Users can see this information reflected in their GSTR-1 Return. - Reconciliation Of E-Invoice Data On GST and E-Way Bill Portals
Even though the e-invoice portal shares data with the GST and E-Way Bill Portals, taxpayers would be well served to carry out a reconciliation of that data, as any errors, even in the data shared between the portals, will lead to penalisation. It is best if you use a tool or a robust GST Software to do the reconciliation for you, as it could be very time consuming depending on the amount of data. - Non-Applicability Of E-Invoicing To B2C Transaction
Since there is no ITC involved, B2C invoices experience the most fraud. E-invoicing is not currently applied to B2C transactions. But the legislation mandates specific organisations (to which e-invoicing is applicable. Dynamic QR codes must be generated and printed for B2C invoices for businesses with annual revenue of less than Rs. 500 Core as of December 15, 2020.
The penalty for failing to comply with the dynamic QR code rules between December 1, 2020, and March 31, 2021, will be waived if the eligible registered person does so starting on April 1, 2021, according to a CBIC notification. This requirement has come into force from 1st December 2020. - Workflow Changes To Process Other Types Of Documents
E-invoicing only applies to B2B bills, as was previously stated. A separate process must be in place for delivery challans, bills of supplies, job work, and other related transactions. It takes a lot of time and effort to design multiple workflows for various sorts of transactions.
Conclusion
E-Invoicing is a relatively new concept under GST, implemented in India after multiple meetings, conferences, discussions, and feedback sessions. The new e-invoicing system’s difficulties won’t become evident until the taxpayer uses it regularly. However, we can guarantee that if you choose busy e-invoicing software, shifting to an e-invoicing system will be simple and painless. Considering the difficulties faced by taxpayers, we created and developed this e-invoicing programme.
As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.
Frequently Asked Questions
- What are the primary challenges businesses face with the e-invoice system?Businesses face challenges such as adapting to new technology, integrating existing accounting systems, ensuring data accuracy, and meeting strict compliance deadlines under the e-invoice system.
- How does the e-invoice system affect small and medium enterprises (SMEs)?For SMEs, adopting the e-invoice system can be challenging due to limited resources, additional costs for software upgrades, and the need for staff training.
- What are the most common compliance issues in the e-invoice process?Common issues include incorrect invoice formats, missing mandatory fields, delays in uploading invoices, and mismatch errors during GST reconciliation.
- What technical problems can arise while generating or uploading e-invoices?Technical problems include server downtime, slow internet speeds, software integration errors, and incorrect JSON file generation.
- How do connectivity issues impact the efficiency of the e-invoice system?Poor internet connectivity can delay invoice uploads, disrupt real-time validations, and cause businesses to miss compliance deadlines.
- What are the penalties for non-compliance with e-invoice regulations?Non-compliance can lead to penalties of ₹10,000 per invoice and rejection of ITC claims, along with potential legal scrutiny.
- How does the e-invoice system address data security concerns?The e-invoice system ensures data security through encryption, secure portals, and limited access to sensitive information, protecting businesses from breaches.
