Challenges with E-invoicing

E-invoicing is the electronic validation of firms' tax invoices using their current billing, accounting, and invoicing systems. An individual invoice registration or invoice reference number (IRN) is provided to each invoice when the Invoice Registration Portal approves it. When a taxpayer files GST returns, this number is later used to cross-reference transaction information. Additionally, it has cross-links to the e-way bill gateway, allowing for quicker cargo transit and fewer checkpoint pit stops.

Businesses that qualify for e-invoicing must generate e-invoices with the specific invoice registration number (IRN) for relevant transactions and update their current billing systems with the e-invoice schema provided by the government. On October 1, 2020, the government authorities eventually brought out e-invoicing under the GST, even though it had been postponed multiple times. They concentrated on business-to-business (B2B) exchanges between organisations with more than Rs. 500 crores in annual revenues. A staggering 8.4 lakh e-invoices were generated on the first day mandatory e-invoicing was in effect. This quantity has increased quickly to around 5 crore e-invoices, which 27,000 taxpayers raised in October 2020 alone.

At a time when the country is still adjusting to the GST, our nation is learning as it goes and implementing completely new tax reform. Both the tax administration and the taxpayers may find such a situation difficult. Most firms should anticipate experiencing unavoidable problems while producing e-invoices manually or with their current business systems.

Challenges faced with E-invoicing

1. Complications with ERP System Integration

To ensure a smooth flow of invoice data to the IRP and e-invoices back to the ERP system, businesses must interface their ERP systems with those of the Invoice registration portal, GST Suvidha Provider, or Application Suvidha Provider. For this aim, the GSTN has made APIs available. Since most ERP systems used by different businesses allow for customisation, it gives room for changes in accordance with the typical e-invoice structure.

Additionally, it is essential to print the QR code in the present invoice format (scanning the QR code identifies the IRN). Integrating ERP systems is not required as the IRP also offers a bulk e-invoice production solution based on Excel. ERP non-integration, however, may be a problem for businesses that generate a lot of invoices.

2. B2B and B2C invoices

Only B2B invoices, not B2C, are subject to e-invoicing. As a result, B2B invoices require the creation of both e-way bills and e-invoices, whereas B2C invoices just need e-way bills (wherever e-way bill is applicable).

When generating an e-way bill is necessary, the transporter ID must often be given at the source. As a result, sorting invoices will be necessary and, to some extent, require automation; otherwise, a significant amount of time and effort will be required.

3. Cancelling and amending invoices

With the introduction of the new invoice system, you cannot cancel an invoice partially; you will have to cancel the invoice completely. E-invoice cancellation is permitted on the IRP within 24 hours. The cancellation must be performed on the GST portal after 24 hours and cannot be done on the IRP.

It should be noted that the prior invoice number cannot be used to create a new e-invoice. In addition to correcting inaccuracies, a taxpayer must raise a new e-invoice on the IRP and change the invoice number.

4. Storing data

The data will only be accessible on the IRP for 24 hours. As a result, since the IRP does not currently offer data preservation, a different mechanism for archiving needs to be set up. The GSTR-1 return allows users to access the e-invoice data that is provided to the GST site.

5. Reconciliation of e-invoice data

There can be situations where you will have to update the GSTR-1 form after uploading the invoice on the invoice registration portal. The taxpayer will have to reconcile his e-invoice data, e-way bill data, and GSTR-1 return. The process of reconciliations should take place with the help of tools or utilities. 

6. Non-applicability of e-invoicing on B2C transactions

In comparison to B2B transactions, more B2C transactions are made. Additionally, the majority of fraud cases involve B2C invoices because no Input Tax Credit is used. Therefore, a system that enables a client to report fraudulent invoices and thereby prevent tax evasion should be implemented.

7. Various workflows are used to process other documents.

We know the e-invoicing option is only available for business-to-business invoices and export purchases. Therefore, processing delivery challans, bills of supplies, job tasks, and other comparable transactions require a separate workflow. But it will take a lot of time and labour to develop a new workflow.

Conclusion

The introduction of e-invoicing under the GST in India resulted from numerous conferences, meetings, and feedback sessions. Once the taxpayer begins utilising the new e-invoicing system in real-time, its fundamental issues will not become apparent. However, we guarantee switching to an e-invoicing system will be simple and effortless if you choose Busy accounting software. Considering the difficulties faced by taxpayers, we crafted this electronic invoicing software.