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Present Invoicing system vs E-invoicing system
Updated on: May 15th, 2023
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7 min read
The e-invoicing system was introduced with the objective of providing better taxpayer services, reduction in tax evasion, increasing efficiency in the administration of GST and many other benefits.
Latest Updates
10th May 2023
The CBIC notified the 6th phase of e-invoicing, applicable to businesses with a turnover exceeding Rs.5 crore in any financial year from 2017-18 w.e.f. 1st August 2023.
6th May 2023
The GST department has deferred the time limit of 7 days to report the old e-invoices on the IRP portals by three months. Further, the department is yet to announce the new implementation date.
13th April 2023
As per the GST Network's advisories dated 12th April 2023 and 13th April 2023, taxpayers with annual turnover equal to or more than Rs.100 crore must report tax invoices and credit-debit notes to IRP within 7 days of invoice date from 1st May 2023.
In this article, let us know how the face of invoicing changes with the e-invoicing system as compared to the present system of raising invoices.
| Sl. No. | Point of comparison | Under the present system of invoicing | Under the e-invoicing system |
|---|---|---|---|
| 1. | Applicability | All taxpayers | Those taxpayers making B2B supplies or exports with an aggregate annual turnover more than Rs.10 crore (or Rs.5 crore w.e.f. 1st August 2023) in any preceding financial year from FY 2017-18 onwards must generate e-invoices. |
| 2. | Physical invoice | A physical invoice will continue to be generated as per the rules prescribed under the Act. There is no change in how an organisation issues physical invoices | |
| 3. | Reporting of invoices on the GST portal | Manual typing-in of invoice details, JSON upload, accounting/billing software that use the API to upload invoices. | Same as the present system, but invoices have to follow the prescribed schema and contain the mandatory parameters. |
| 4. | Invoice Reference Number | There was only the concept of the invoice number and not an invoice reference number. No prescribed format/conditions in this regard were present except that the invoice number had to be assigned sequentially. | Invoice Reference Number generated through Hash generation algorithm must be used under e-invoicing system. The objective is to allow easy comparison of e-invoices through unique IRN validated on the Central Registry and stored for future reference. |
| 5. | Dispatch of e-invoice | GST portal did not contain any facility for validation and downloading of invoices. | Validated e-invoices are sent to the supplier to their registered e-mail ID. |
| 6. | Digital Signature | Only supplier’s digital signature was required on the invoice and there was no facility for digital signing of uploaded invoices by GSTN/GST portal. | Validated invoices will be digitally signed by the IRP. |
| 7. | QR code | Invoices could not be verified on the basis of a QR code. | Validated invoices will also contain QR code generated by IRP. This will enable verification of invoices even when internet facility is not available. It is mandatory for B2C transactions to have QR code. |
| 8. | Possibility of mistakes | Higher possibility of mistakes since higher manpower involvement. | Much lower possibility of mistakes since once the JSON of invoice details is uploaded and verified on the IRP, GSTR-1 of seller is updated. Further, e-Way bill details under Part A are also filled up, wherever applicable. |
| 9. | Amendment of invoice | Amendment/cancellation facility available on GST portal and can be made as per law | E-invoice is only available for 24 hours with the IRP during which time the invoice can be fully cancelled. After that, the invoice can be amended as per GST laws on the GST portal. |
| 10. | Viewing the invoice | Invoice details entered could be viewed on the GST portal | Necessary invoice details can be made available on an app that can scan the QR code. Further, e-invoices are sent as an e-mail ID so the supplier can always save a copy under the e-invoicing system. |
| 11. | Verification of invoice | Not easy to verify the genuineness of an invoice during an inspection | Easy to verify the genuineness by scanning QR code and also checking of IRN |
| 12. | Possibility of search | Relatively higher possibility of a search by the department | Lower possibility of a search by the department since invoice details at the transaction level is already available with them. |
Quick Summary
The introduction of e-invoicing system aims to enhance taxpayer services and efficiency in GST administration. Latest updates include new regulations for businesses, deferred reporting deadlines, and new requirements for reporting tax invoices. Changes from the present system involve applicability, reporting methods, digital signatures, QR codes, and amendment processes. The e-invoicing system offers benefits such as reduced errors and improved verification processes.
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