Issues under e-invoicing system may concern taxpayers

A new concept of e-invoicing was introduced under GST. It is optional for the taxpayer with a turnover of more than Rs 500 crore from January 2020. It will be available from February 2020 onwards to those taxpayers with over Rs 100 crore turnover. Finally, taxpayers with an aggregate turnover exceeding Rs 100 crore must compulsorily generate e-invoices from April 2020.

Some of the issues which a taxpayer may face on the implementation of e-invoicing are discussed below: 

The new e-invoicing system requires changes to the ERP system and integration becomes crucial. Businesses must integrate their ERP systems with that of IRP/GSP/ASP to allow a smooth flow of invoice data to the Invoice Registration Portal (IRP) and e-invoices back to the ERP system. As most of the ERPs’ used by various enterprises can be customised, it provides leeway for making changes as per the standard invoice schema. Also, the printing of the QR code (scanning this QR code identifies the IRN) on the current invoice format is necessary.

Even for a small change, the entire e-invoice needs to be cancelled. Cancellation of e-invoice is allowed on the IRP within 24 hours. After 24 hours, the cancellation cannot be made on the IRP, and can be done on the GST portal. A taxpayer will then have to revise the invoice number in addition to fixing the errors and raise a new e-invoice on IRP.

As of now, the e-invoice applies only to B2B invoices and not B2C invoices. Thus, B2B requires both the e-way bill and e-invoice, whereas B2C only requires an e-way bill. In most cases, the transporter ID will need to be mentioned at the source in cases where e-way bill generation is required. Hence, sorting of invoices will be required and needs automation to some extent, without which a lot of time and effort gets invested.

Also Read: Issuing E-Invoices Under GST – May Not Be Mandatory for Banks and Telcos

In case the ANX-1 is updated after the invoice has been uploaded into the IRP, both versions will be kept available in the GST system. Thus, the taxpayer has to perform separate reconciliation with the support of tools or utility.

The main purpose of the introduction of e-invoicing is the reduction of tax evasion by keeping a check at the origin of the invoice. But, the new system facilitates e-invoicing of only B2B invoices and not B2C invoices. The maximum number of frauds happen in B2C invoices as no ITC is involved. Thus, such a system should come into force which allows customers to report non-compliant invoicing and thus help to curb tax evasion at its source.

The workflow should be changed for processing other types of documents such as delivery challans, bill of supply, job work and other similar transactions. Creating a different workflow for various types of transactions requires a lot of time and effort.

Even though bulk upload to IRP is allowed, IRN will be generated against a single invoice at a time and cannot be bulk generated. Thus, the ERP of a company is required to be customised for this. The archiving option is not available on IRP. It has no mandate to store invoices, and the data will remain for only 24 hours. Thus, an alternate arrangement for archiving needs to be set up.

The capacity for the upload of e-invoices is based on the GSTR-1 data submitted over the last two years. Hence, if the GSTN expects a higher number of users, it should also be prepared with up-to-date technology to ensure minimum downtime as the same will impact the compliance negatively.

There are certain questions which remain unanswered. For example, there is no clarity regarding whether the auto-populated data in the e-way bill be revoked when an e-invoice is cancelled due to incorrect details. GSTN has proactively been answering FAQs, and we can expect increased awareness programmes in the coming weeks by CBIC.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in