Phase three of e-invoicing rolled out to businesses with a turnover of more than Rs.50 crore on 1st April 2021. Several lakh businesses in India have further adopted this digital reform, in line with the government’s aim of bringing ease and transparency in tax reporting. These electronic machine-readable invoices will help the interworking between the Goods and Services Tax (GST) system and the e-way bill system, preventing tax evasion and fraud.
To break down e-invoicing, it is the generation of tax invoices on the taxpayer’s accounting system and reporting them to the Invoice Registration Portal (IRP) hosted by the government. The invoice data gets uploaded to the IRP directly from the taxpayer’s accounting system or ERP or by using an Excel-based offline tool. The IRP validates this data and generates a unique invoice reference number (IRN) and a QR code before digitally signing the invoice. This validated, and digitally signed invoice is called an e-invoice.
The IRP then sends this e-invoice data to the Goods and Services Tax Network (GSTN) and the e-way bill portal. The supplier’s GSTR-1 return gets auto-populated from this e-invoice data, and the buyer’s GSTR-2A/2B/4A and 6A returns, as applicable, get further auto-populated. This entire process not just saves taxpayers’ efforts in data reporting but also streamlines business processes in terms of automated data flows, faster ITC claims, real-time tracking of invoices, etc.
Now, every business in India whose turnover exceeds Rs.50 crore, if eligible for e-invoicing, is looking to purchase a good, value-for-money e-invoicing solution for their business. While using the offline tool is an option, it is extremely time-consuming and requires manual effort, making it prone to errors. Hence, most businesses are opting for an automated solution that enables them to generate e-invoices without leaving the comfort of their current accounting software.
If you’re looking for a solution to generate e-invoices automatically while continuing to use your existing accounting software, then these are the things you should keep in mind while choosing an e-invoicing solution.
1. Bulk e-invoice generation and cancellation
In our present fast-paced world, no one wants to wait to generate e-invoices one at a time. Hence, find an e-invoicing solution that offers bulk e-invoice generation and cancellation directly through your ERP system.
A pro tip here is to check if your e-invoicing solution also offers data bifurcation, i.e., classification of transactions as B2B, B2C, exports, e-commerce supplies, reverse-charge supplies, etc. Also, a bifurcation of data based on e-invoices applicable for e-way bill generation and those that are not is a must. This way, you can sit back and relax while your e-invoicing solution generates thousands of e-invoices at a time, with no effort required from your end.
2. Error-handling and reliability
There are just a few e-invoicing solutions that guarantee error-free e-invoices. This is because they have government-compatible APIs and an error-correction mechanism built into the solution. These data validations will verify the data and send the request only if the data is accurate. Hence, you can rest assured that your e-invoices are error-free.
Also, find an e-invoicing solution that offers zero downtime for uninterrupted e-invoice generation. You definitely do not want your customers to suffer due to a lag on your solution provider’s part.
3. 24×7 customer support
Let’s face it. e-Invoicing is a new reform, and the implementation of most new reforms is stressful. You could always be in a situation where your client urgently needs an e-invoice to be generated, but due to some reason, you are unable to generate the same. Also, as you know, the GST and e-way bill system are integrated with the e-invoicing system. Hence, there could be issues of data not getting reflected in the GST returns or issues with e-way bill generation, etc., that could crop up at any point in time. This is why 24×7 customer support is of utmost importance.
4. 100% data security
e-Invoicing is an integrated process through an organisation’s ERP, which also contains vital financial information. Hence, data security is one factor that cannot be compromised at all. You must ensure that your service provider has two-factor authentication enabled, has IP whitelisting done, has advanced user access management with access control depending on the type of user, and is ISO 27001 certified.
5. A comprehensive solution
Look for a service provider that offers an e-invoicing solution and an integrated solution that includes GST return filing and e-way bill generation. Otherwise, you could end up wasting a lot of time working with different software and coordinating with different vendors, while overall, paying a lot more money.
Also, check if your solution provider is offering data reconciliations and MIS reports. This will help your business gain insights from the data, which will further help managerial decision making. Data reconciliations also help accurate data reporting in the GST returns and avoid the tax department’s notices.
Keeping these important factors in mind while choosing the right e-invoicing solution, you can now help get your business e-invoicing-compliant in no time!
For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in
I’m a Chartered Accountant by profession and a writer by passion. ClearTax lets me be both. I love travel, hot tubs, and coffee. I believe that life is short, so I always eat dessert first. Wait.. life is also too short to be reading bios… Go read my articles!
