Will avoid errors caused by manual entry of data, end duplication, and ease filing
Beginning January 1, a game changing invoicing system will be introduced in the Goods and Services Tax (GST) system. A standardised protocol, powered by the Institute of Chartered Accountants of India (ICAI) and information technology, will enable machines to read electronic invoices.
An e-invoice raised by a trader can be ‘read’ by computer systems at a bank, and traders up or down the supply chain. The consumer, too, can integrate the data on their systems.
The GST Council has approved the introduction of e-invoicing in phases for reporting of business-to-business (B2B) invoices to the GST System. This will be introduced on a voluntary basis.
The e-invoice system, developed by NIC, will be rolled out in phases. Taxpayers with a turnover of over ₹500 crore can implement it on voluntary basis from January 1, while those with a turnover of over ₹100 crore can adopt it (on voluntary basis) from February 1.
It is likely to be made mandatory for taxpayers with a turnover of over ₹100 crore from April 1, 2020. Post that, the turnover threshold will be reduced so that others will be covered.
“An e-invoice shared by a seller with his buyer or bank or agent or any other player in the supply chain can be read by machines, thus eliminating data entry errors,” Prakash Kumar, Chief Executive Officer of GSTN, said.
The GSTN, with the help of ICAI, developed a standard and got the approval of the GST Council three months ago. The e-invoices can be read using online/offline and on mobiles.
“Different traders use different formats provided by different billing software providers. An invoice generated on one system can’t be read by another in the absence of a standard format,” said Kumar.
The GST system will prepare an automated ‘return’ (based on the e-invoices generated) and deliver it to a trader with a digital signature. This also eliminates the hassle of taking the help of an advisor to prepare the returns. “The trader can approve the same and submit it at the appointed time,” he said.
No changes required
Being introduced on a voluntary basis, the new system doesn’t require any changes as far as businesses are concerned. “The service providers offering the ERP or billing software will have to make changes in their codes to make them conform to the approved standards,” said Kumar.
E-invoicing would help avoid errors caused by manual entry of data, end duplication and keep tabs on unscrupulous elements.
The GSTN has also uploaded a FAQ (frequently answered questions) on the portal to help tax consultants, traders and software companies understand the nuances of the new standard.
Source- Business Line.