This October, the government will be introducing e-invoicing in India, to standardise the generation of B2B invoices across the country. The initial roll-out will cover all organisations who have a turnover exceeding Rs.500 crore. The plan is later to bring all businesses in India under its purview.
E-invoicing will help plug the gap in data reconciliation; a problem taxpayers have long been facing since the implementation of GST. It will also enable the real-time tracking of invoices, and the claiming of the only genuine input tax credit. However, the main benefit of implementing e-invoicing will be the interoperability and universal readability of the invoice formats across all software systems.
Update as on 8th March 2021
The CBIC has notified that e-Invoicing will be applicable from 1st April 2021 for businesses with an aggregate turnover of more than Rs.50 crores (in any financial year from FY 2017-18 onwards).
Update as on 29th November 2020
The CBIC issued a notification seeking to waive the penalty imposed on non-compliance of dynamic QR code provisions for B2C invoices between 1st December 2020 and 31st March 2021, provided the eligible registered person complies with these provisions from 1st April 2021.
Update as on 10th November 2020
The taxpayers having an aggregate turnover exceeding Rs.100 crore should implement e-invoicing from 1st January 2021.
Update as on 30th September 2020
Now, the aggregate turnover should be checked from FY 2017-18 till FY 2019-20, for checking the applicability of e-invoicing. Also, the date of implementation of the dynamic QR Code for B2C invoices has been extended until 01.12.2020.
The e-invoicing reform is the first of its kind in India, and organisations need to take dynamic steps in ensuring its smooth implementation, such as those listed below.
1. Determine the requirements to implement e-invoicing
The term e-invoicing is new, and most organisations are not familiar with what is to be done to incorporate it. First things first, a checklist needs to be prepared to determine your organisation’s readiness for e-invoicing.
This will guide you on further steps to be taken to affect the implementation of e-invoicing in your organisation.
- Does e-invoicing apply to my company?
- If not now, will it apply soon?
- Can my present ERP system be retained and integrated with the e-invoice schema?
- Does my present software vendor offer e-invoicing integration?
- Are my employees trained in handling the aspects of e-invoicing?
- Have the requirements been communicated with various stakeholders, and are they on board with the implementation?
2. Familiarise your organisation with the e-invoice schema
Previously, businesses used to generate invoices without any regulations or common formats in place. Now, the e-invoice generated will be a standard format for all organisations, having taken into account international and various industry standards. The format is exhaustive and consists of three parts – the e-invoice schema, masters and e-invoice template.
It would be wise for the employees of the organisation to familiarise themselves with the various data fields under the new format. Another major initiative under e-invoicing is that e-ways bills can also hereafter be generated at the time of creating the Invoice Reference Number (IRN). Understanding the process to issue e-invoices, generation of e-way bills and return filing will help facilitate a dynamic implementation.
3. Find a suitable vendor to reorient your ERP systems
The next step would be to look into finding a suitable vendor who will reorient your ERP systems to align with the new e-invoicing standards. The vendor you choose should be one with sufficient experience in the field of invoicing and GST in India. The software solution provided should have dynamic updates, and the vendor should offer you constant support through the e-invoicing journey.
There is no need to purchase a new ERP if you’re using one your organisation is already well-acquainted with. Hence, it would be good to find a vendor who will reconfigure your existing ERP system as per the new schema and offer you frequent updates and training for your staff.
4. Complete the systems integration with the e-invoice standards
With less than two months to go, it is already high-time your software vendor has begun integration of the e-invoicing standards into your ERP systems. However, if not, ensure that you prepare for the same right away. Some of the methods to integrate your software systems are API-based, SFTP-based and using utilities such as Excel.
It would take longer to integrate say, an API-based solution as compared to using an external utility such as Excel. However, the former requires no manual intervention and enables the real-time generation of e-invoices, unlike the latter. It would be better to incorporate an in-built solution, which will reduce both time and costs in the long-run. However, this decision should be taken considering budget constraints and the volume of invoices.
5. Prepare for the launch of e-invoicing
Setting up any new system for the first time is challenging. It’s not just the installation of physical systems and software or training the staff, but the smooth running of the new processes after that. Employees should be made aware of the benefits of implementation and should voluntarily contribute to making it a success. The objectives should be clearly outlined. Printing of invoices to contain all the relevant data is crucial. Invoice formats may need to be changed to incorporate this, including the IRN and QR codes generated.
Besides employees, communication should be sent to stakeholders, especially vendors, who should be encouraged to implement e-invoicing norms themselves. Frequent reviews should be conducted throughout the teething stage to assess performance and prevent any errors from occurring.