The transportation of goods from one place to another is facilitated by the filing of ‘E-Way Bills’ on the common GST portal. Similarly, the GST Council, in its 35th meeting, has decided to implement a system of e-invoicing, which will be applicable to specified categories of persons.
1. What is E-invoicing?
‘E-invoicing’ or ‘Electronic invoicing’ is a system in which B2B invoices are required to be raised or recorded electronically on the common GST portal. Under the proposed electronic invoicing system, invoices will be issued directly through the GST network (GSTN), and all information will be transferred to the portal in real-time. This will eliminate the need for manual data entry as GST returns will automatically be generated on the basis of these invoices.
2. What is the current system in place for issuing invoices?
Currently, businesses generate invoices through various softwares, and the details of these invoices are uploaded in the GSTR-1 return and are available for view by the recipient only when the return is filed. Under the new return system, Form GST ANX-1 will replace the GSTR-1 return, however, the process of generating and uploading invoice details will remain the same.
3. How will Electronic invoicing benefit businesses?
Businesses will have the following benefits:
- Real-time tracking of invoices prepared by the supplier.
- Backward integration and automation of the tax return filing process – the relevant details of the invoices would be auto-populated in the various returns.
- Faster availability of input tax credit.
- Lesser possibility of audits/surveys by the tax authorities since the information they require is available at a transaction level.
4. When will E-invoicing get implemented?
While no exact date has been provided yet, electronic invoicing is proposed to be implemented from January 2020. Similar to the new return filing system, the electronic invoicing system will first be available on a trial basis to certain taxpayers.
5. How will E-invoicing curb tax evasion?
It will help in curbing tax evasion in the following ways:
- Tax authorities will have access to transactions as they take place in real-time since the e-invoice will have to be compulsorily generated through the GST portal.
- There will be less scope for the manipulation of invoices since the invoice gets generated prior to carrying out a transaction.
- It will reduce the chances of fake GST invoices and only genuine input tax credit will be claimed, as all invoices need to be generated through the GST portal.