October 4, 2023
E-invoicing, or electronic invoicing, is the digital exchange of invoices between businesses. It is a system in which B2B invoices are authenticated electronically by the Goods and Services Tax Network (GSTN) for further use on the common GST portal.
E-invoicing has many benefits for both businesses and the government. For businesses, e-invoicing can reduce paperwork and manual processing, improve efficiency and accuracy, reduce costs, improve cash flow, and enhance transparency and compliance.
For the government, e-invoicing can help to reduce tax evasion and fraud, improve tax collection, and increase transparency and accountability in the tax system.
In this blog post, we will discuss everything you need to know about e-invoicing in India, including:
If you are a business in India, it is important to understand the basics of e-invoicing and how it will impact your business. This blog post will provide you with all the information you need to get started with e-invoicing.
So, let’s get started!
E-invoicing, or electronic invoicing, is the digital exchange of invoices between businesses. It is a system in which B2B invoices are authenticated electronically by the Goods and Services Tax Network (GSTN) for further use on the common GST portal.
E-invoices are generated in a standard electronic format, known as the e-invoice schema. This schema is prescribed by the GSTN and ensures that all e-invoices contain the same information. This makes it easier for businesses to exchange invoices and for the government to track the movement of goods and services.
Once an e-invoice is generated, it is sent to the GSTN for authentication. If the invoice is valid, the GSTN generates a unique Invoice Reference Number (IRN) and assigns it to the invoice. The IRN is then sent back to the supplier, who can then share the e-invoice with the buyer.
The buyer can then import the e-invoice into their accounting software. This eliminates the need for manual data entry and reduces the risk of errors.
E-invoicing has a number of benefits for both businesses and the government.
E-invoicing has become mandatory for businesses in India with an annual turnover of more than Rs. 50 crore.
In addition to the benefits listed above, e-invoicing can also help to:
Overall, e-invoicing is a modern and efficient way to invoice customers and suppliers. It has many benefits for both businesses and the government.
In the past, businesses in India typically used manual or paper-based invoicing systems. This was a time-consuming and inefficient process, and it was also prone to errors.
Under the manual invoicing system, businesses would generate invoices by hand or using a typewriter. The invoices would then be printed and mailed to customers. Customers would then have to manually enter the invoice data into their accounting systems.
This process was time-consuming for both businesses and customers. It was also prone to errors, such as typographical errors and data entry errors.
E-invoicing has many benefits over the previous invoicing system, including:
E-invoicing, or electronic invoicing, is the digital exchange of invoices between businesses. It is a system in which B2B invoices are authenticated electronically by the Goods and Services Tax Network (GSTN) for further use on the common GST portal.
Here is a step-by-step explanation of how e-invoicing works:
The supplier generates the e-invoice in their accounting software. The e-invoice must be in the standard e-invoice schema prescribed by the GSTN. The e-invoice schema ensures that all e-invoices contain the same information, such as the supplier's GSTIN, the buyer's GSTIN, the invoice date, the invoice amount, and the items invoiced.
Once the e-invoice is generated, it is sent to the GSTN for authentication. The GSTN will validate the e-invoice to ensure that it is in the correct format and that all of the required information is present.
If the e-invoice is valid, the GSTN will generate an IRN and assign it to the invoice. The IRN is a unique number that is used to identify the e-invoice.
The supplier then shares the e-invoice with the buyer. The e-invoice can be shared electronically via email or through a file sharing service.
The buyer imports the e-invoice into their accounting software. This eliminates the need for manual data entry and reduces the risk of errors.
The buyer then makes the payment to the supplier. The payment can be made electronically or through a traditional method, such as cheque or cash.
Recommended Read: Tally Solutions vs. Traditional Accounting: Why Tally is the Future
E-invoicing can aid in preventing tax fraud in a number of ways, including:
YES, Businesses with a yearly income above Rs. 5 crore must generate e-invoices starting August 1, 2023, as stipulated by the Central Board of Direct Taxes in Notification No. 10/2023–Central Tax dated May 10, 2023.
Businesses that are required to comply with e-invoicing must generate e-invoices for all B2B transactions. E-invoices must be generated in the standard e-invoice schema prescribed by the Goods and Services Tax Network (GSTN).
To generate e-invoices, businesses can use their own accounting software or a third-party e-invoicing solution.
If you are using your own accounting software, you will need to make sure that it is compatible with the e-invoice schema prescribed by the Goods and Services Tax Network (GSTN). If not, you will need to upgrade your software or switch to a different accounting solution.
If you are using a third-party e-invoicing solution, you will need to create an account and then follow the instructions provided by the solution provider.
No, the government tax portal does not create invoices directly. Businesses are responsible for generating their own e-invoices. The government tax portal only provides a platform for businesses to authenticate their e-invoices and generate Invoice Reference Numbers (IRNs).
To generate an e-invoice, businesses can use their own accounting software or a third-party e-invoicing solution. Once an e-invoice is generated, it must be sent to the government tax portal for authentication.
If the e-invoice is valid, the government tax portal will generate an IRN and assign it to the invoice. The IRN must be included on the e-invoice and must be shared with the buyer.
The buyer of the e-invoice can then import the invoice into their accounting software.
As we move towards easier invoicing, it's also worth thinking about bigger accounting challenges - and how they can be solved. A buzzing topic is about automation - about tools that help automate basic accounting tasks like data entry, so that you can streamline your overall financial process.
While e-invoicing is streamlining billing, there are also accounting automation tools out there that are making the rest of financial management a breeze.
So, if you are interested in learning more about accounting automation, we, at Suvit, have got a whole lot of useful resources waiting for you in our blog section!