The Central Board of Indirect Taxes and Customs ( CBIC ) has notified E-Invoice System mandatory for business with Rs. 100 crores turnover from April 1st, 2020.
The E-invoice will be mandatory for both these businesses categories. For businesses having turnover less than 100 Crore, it would remain voluntary and on trial basis from 1st April 2020.
The upcoming ‘E-invoicing’ system will be a boon to MSMEs as it will open the facility of instant bank loans for MSMEs. With the new system of E-invoicing, banks may not require a plethora of physical documents and their validation processes rather they can do MSMEs’ ratings for the loan on the basis of their e-invoicing. Also, the E-invoicing will bring in ease of doing business as it will pre-populate the GST returns besides reducing the reconciliation problems.
In the Notification, the CBIC has also notified the GST electronic portals for the generation of e-invoice and E-Invoice Rules.
Having done a full preparation for last 6 months to introduce E-invoicing system, the government has decided to start ‘E-invoicing’ in a phased manner for generating business to business (B2B) invoices on a voluntary basis. It has been decided by the government that businesses having a turnover of Rs.500 Crore or more would take up E-invoicing from 1 st January 2020 on voluntary and trail basis while the businesses with a turnover of Rs.100 Crore or more would start E-invoicing on voluntary and trial basis from 1st February 2020. However, from 1st April 2020, the E-invoicing will be mandatory for both these businesses categories. For businesses having turnover less than 100 Crore, it would remain voluntary and on trial basis from 1st April 2020.
The basic aim behind the adoption of the e-invoice system is to facilitate convenience to the taxpayers by further simplifying the GST Return system. Through E-invoicing the tax department would help the businesses and taxpayers by pre-populating the returns and this would also result in reducing the reconciliation problems. Actually the fundamental principle behind introducing the e-invoicing is to put the technology at the service of the people to create ease of living and ease of doing business.
The E-invoicing system would help to generate invoice in a standard format so that invoice generated on one system can be read by another system and reporting of e-invoice to a central system becomes possible. The adoption of these standards would not impact the users of invoice; however, all the accounting software would adopt the new e-invoice standard wherein they would re-align their data access and retrieval in the standard format.
The generation of e-invoice will be the responsibility of the taxpayer who will be required to report the same to Invoice Registration Portal (IRP) of GST. This portal will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The QR Code will contain vital parameters of the e-invoice and return the same to the taxpayer who generated the document in the first place. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.
E-invoice would not mean the generation of invoices from a central portal of the tax department. The taxpayer would continue to use his accounting system/ERP or excel based tools or any such tool for creating the electronic invoice as s/he is using today. To achieve this goal there would be a need to standardize the format in which electronic data of an Invoice will be shared between various stakeholders to ensure interoperability of the data.