Challenges with E-invoicing
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E-invoicing generates, transmits and receives invoices electronically instead of traditional paper-based methods. It generally involves using software or online platforms that allow businesses to generate and send invoices to their customers digitally. It helps businesses streamline invoicing processes, reduce errors, and improve efficiency in financial operations.
When the Invoice Registration Portal approves, a unique invoice reference number (IRN) is provided to each invoice. When a taxpayer files GST returns, this number is later used to cross-check the transaction information. Additionally, it has cross-links to the e-way bill gateway, allowing for quicker cargo transit and fewer checkpoint pit stops.
Businesses 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.
Challenges Faced With E-Invoicing
E-invoicing has become a popular billing method in recent years, but it also presents several challenges for businesses and governments. Below are some of the common challenges faced with E-Invoicing.
Complications With ERP System Integration
To ensure that invoice data flows smoothly between the ERP system and the Invoice Registration Portal (IRP), businesses must integrate their ERP systems with the IRP, GST Suvidha Provider, or Application Suvidha Provider using APIs provided by the GSTN. Most ERP systems businesses use can be customised to comply with the e-invoice structure.
In addition, it is important to include a QR code in the invoice format, as this code identifies the IRN. Businesses can use the bulk e-invoice production solution offered by the IRP, which is based on Excel, without integrating their ERP systems. However, the non-integration of the ERP system may pose a problem for businesses that generate invoices in bulk.
B2B and B2C Invoices
Only B2B invoices are subjected to e-invoicing. B2B invoices require the generation of both e-way bills and e-invoices, whereas B2C invoices just need e-way bills wherever applicable.
When generating an e-way bill, providing the transporter ID at the point of sale is essential. To efficiently sort invoices, automation is necessary to save time and effort; otherwise, manual sorting will require a significant amount of time and effort.
Cancelling and Amending Invoices
The new invoice system does not allow partial cancellation of an invoice; it must be cancelled entirely. An E-invoice can be cancelled on the IRP within 24 hours.
It is important to note that the previous invoice number cannot be reused to create a new e-invoice. If inaccuracies need to be corrected, the taxpayer must create a new e-invoice on the IRP with a new invoice number.
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.
Reconciliation of E-Invoice Data
There can be situations where you must update the GSTR-1 form after uploading the invoice on the invoice registration portal. The taxpayer must reconcile his e-invoice data, e-way bill data, and GSTR-1 return. The reconciliation process should occur with the help of tools or utilities.
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 enabling clients to report fraudulent invoices and prevent tax evasion should be implemented.
Various Workflows are Used to Process Other Documents
We know that e-invoicing only applies to business-to-business invoices and export purchases. Thus, separate workflows are needed for processing delivery challans, bills of supplies, job tasks, and other similar transactions. However, developing a new workflow can be time-consuming and labour-intensive.
Conclusion
The implementation of e-invoicing under the GST in India resulted from several conferences, meetings, and feedback sessions. Although some fundamental issues may not become apparent until taxpayers start using the new e-invoicing system in real-time, we assure you that transitioning to e-invoicing software will be simple and effortless if you choose BUSY accounting software. We have considered the difficulties taxpayers face and designed this e-invoicing software accordingly.
I am a Chartered Accountant with over 20 years of experience and a finance content writer. I focus on educating people about finance and taxation. I have written many blog posts on finance, taxation, trading, and investment on the BUSY website. My goal is to increase financial understanding by making complex concepts easier to grasp and to support educational programs in India.
