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About E-Invoicing
GSTN electronically validates B2B invoices under the “e-Invoicing” or “electronic invoicing” system before being used on the public GST portal. Every invoice issued under the electronic invoicing system will receive an identification number from the GST Network-managed Invoice Registration Portal (IRP). The first IRP was made available by the National Informatics Centre at einvoice1.gst.gov.in. All invoice data will instantly be sent from this portal to the GST and e-way bill portals.

E-Invoicing Exemption Limit
Enterprises with a turnover higher than Rs. 500 crores were first given access to electronic invoicing in October 2020. The government decided to expand the use of e-invoicing after a successful trial and, starting on 1 January 2021 and 1 April 2021, respectively, extended it to companies with a turnover above Rs. 100 crores, Rs. 50 Crores, Rs. 20 Crores, Rs. 10 Crores and Rs. 5 Crores. With this recent notification, companies with a revenue of more than Rs. 5 crores will now be required to begin producing electronic invoices as of 1 January 2023.

How will E-Invoicing benefit businesses?
Businesses that use the GSTN-initiated electronic invoice will gain the following benefits:
1. To prevent mismatch mistakes, e-Invoice resolves and plugs a significant gap in data reconciliation under GST.
2. Interoperability and a decrease in data input errors are made possible by the ability to read e-Invoices created on one software by another.
3. E-invoice makes it possible to track supplier-prepared invoices in real-time.
4. The tax return filing process would be backward integrated and automated; the pertinent information from the invoices would be pre-populated in the various returns, particularly for creating part-A of e-way bills.
5. Increased speed of actual input tax credit availability.
6. Less likelihood of tax authorities conducting audits or surveys because the data they need is available at the transaction level.

How does E-Invoicing impact both the Government and the taxpayers?

E-invoicing is aimed at standardising the invoice format and compatibility between the business and tax ecosystems. The advantages of electronic invoicing go far beyond this, though. E-invoicing enables the government to monitor each B2B transaction made by companies in real-time, reducing the incidence of fraudulent invoices and input tax credit (ITC) fraud. Every electronic invoice has a QR code that aids tax officials in verifying its validity, particularly when items are in motion.

There are many advantages for corporations. In the GST returns and e-way bills, the information from e-invoices is automatically filled in. As a result, less data needs to be duplicated overall. Additionally, it expedites the ITC claims procedure and gives taxpayers confidence that only real ITC is being submitted.

What preparations must small businesses make for e-invoicing if their annual revenue exceeds Rs. 5 crores?

Small and medium-sized companies having a turnover of at least Rs. 5 crore must act rapidly to identify a solution that will enable them to be prepared for e-invoicing. With the appropriate tools, creating electronic invoices is not a complex process. However, it can take a few weeks to set up, understand the system, and adjust. These newly qualified businesses must be ready to take on this digital revolution.

The first step is for qualified businesses to sign up on the government’s e-invoice platform. The login information for the e-invoice portal can be used by taxpayers who have already registered on the e-way bill portal. The business must next decide which method for creating e-invoices is ideal. The government offers an Excel-based application for creating electronic invoices. However, using this program takes time because there is no option for mass IRN production. Given that the entire procedure is manual, it might also be prone to mistakes.

What are the other E-Invoicing options accessible to Small businesses?

Several well-known, reputable e-invoicing systems offer an improved web-based tool for creating e-invoices. These UI tools are simple to use and take only 10 to 15 minutes to set up. Businesses receive an Excel template here that they may use to upload and ingest data to produce e-invoices in masses with just one click.

In addition to bulk e-invoice production, it’s critical to choose an e-invoicing solution with sophisticated features like 200+ data validations, MIS reports, smart dashboards, 7-8 years of data archival, quick response times, and SmartScreen fixes to reduce errors. Additionally, it would be highly beneficial for a business if its e-invoicing solution included a centralized mechanism for e-way bill preparation.

Conclusion

Due to the difficulties presented by the proposed e-invoicing system, firms will likely save time and effort while completing GST compliance. An automated system will remove human errors and ensure that accurate invoice information is fed, thus reducing the prevalence of erroneous and fraudulent claims for input tax credits. Thus, E-Invoicing ensures a significant impact on businesses in India.

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As per GST Act, all GST registered business should maintain the books of accounts and records for at least a period of 6 years. If you have multiple GST registration, you maintain it for each of the GSTIN.

The importance of bookkeeping in GST
A business should know precisely how much money it is transacting and the details of each transaction. The maintenance of accounting records is essential for the business to accurately generate invoices, bills, and accounting reports. However, another vital use of bookkeeping is to keep records in order to compute the taxes and other dues that are to be paid to the authorities and government agencies. A company that does not maintain proper records will not be able to maintain compliance and is more likely to default or file faulty returns and face penalties or fines.

Bookkeeping is also essential to maintain a record of accounts receivable and as well as accounts payable and the amounts that are due to be paid to others. Both these amounts have tax components that the issuer of the invoice has to record in order to pay taxes correctly.

Best practices businesses can embrace to manage their books with multiple GSTIN
Companies with a single location or office usually have one GSTIN making it simple enough to manage the accounts and file GST with that single GSTIN. However, when there are multiple locations, the company may have to apply for multiple GST registration for each location and maintain their books of accounts accordingly. When the locations are in different states or union territories, opting multi GSTIN is mandatory. An individual with two very different businesses within the same state or union territory may also apply for an individual GSTIN for each of the business vertical.Maintaining accounts for multiple GSTINs involves compiling the GSTIN filing statements/returns separately. This has a significant impact on how one should manage books of accounts.

Considering the multi-GST registration, there are two ways in which books can be maintained that facilitate GSTIN-wise reporting.

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The GSTR-2A form is a view-only auto-populated statement of inward supplies. It has a dynamic nature because it gets modified as the supplier uploads the invoices and so on. It is generated when the supplier has filed form GSTR-1/5, GSTR-6. The receiver can download GSTR-2A and see the details in his inward supplies.
Input Tax Credit or ITC depends on the details reported by vendors in the GSTR-1 form through invoices. The amount specified in that form is the extent to which ITC can be claimed by the taxpayer. Note that the taxpayer will get information about how much ITC can be claimed from the GSTR-2B, which is generated monthly and remains static.

What is GSTR-2A/2B reconciliation?

The reconciliation process involves matching or checking the data that has been uploaded by your suppliers with that of your purchase data in your books. As the supplier’s uploaded information is available to you in GSTR-2A/2B, you can use that statement and then compare it with your books to check for any discrepancies. This shows you if every transaction that has taken place between the two of you has been accurately recorded or if any invoices are missing. Any data that is missing can cause future troubles and make you liable to pay penalties in the form of interest and other fees as specified by the GST authority.

Importance of GSTR-2A/2B for businesses

On January 1, 2022, the Finance Ministry launched the 100% invoice matching criteria and made it mandatory for all businesses. Essentially, any business that wishes to claim the ITC will have to show 100% parity between their filed returns and supporting invoices. In simple words, you will only be able to claim ITC if the concerned invoice is present in GSTR-2A/GSTR2B. Here are a few reasons why GSTR-2A/2B reconciliation is important for businesses.

Loss of ITC

If the supplier has failed to upload an invoice, then it means the taxpayer cannot claim ITC because ITC will be allowed only on the reflecting on GSTR-2A/GSTR-2B statement. This will have a major impact on the working capital especially if this is done constantly by the supplier where he does not upload the invoices despite constant reminders for the same. It may not seem like a lot in the beginning but for MSMEs, this can make a huge difference because they need capital for running the business smoothly without hassles. ITC reconciliation ensures this loss of ITC does not occur and the taxpayer can claim the correct ITC on time.

Claiming excess credit/Incorrect values
The GSTR – 2A/2B reconciliation will prevent you from claiming ITC on the invoices that are reported in the GSTR-2A or GSTR-2B. For example, you may claim ITC on all the inward supplies in GSTR-3B return but, there are few that are not uploaded by the supplier. This results in an excess claim and may attract interest and penalties. There are situations where the invoices are uploaded, but the values are incorrect. Reconciling helps you identify such invoices and get those ratified with the supplier.

Notice from department
The GST authority will send notices to the taxpayer if there is a mismatch between GSTR-2A/GSTR-2B and GSTR-3B with ITC. Without GSTR – 2A reconciliation or 2B, the mismatch cannot be caught on time by the taxpayer thereby causing trouble in the future. With the help of reconciliation, the taxpayer will be claiming the correct ITC and thereby not attract such problems with the authorities. The notice asks the taxpayer about the reason behind the mismatch. If any documents are missing or the taxpayer cannot verify the same within the stipulated time, they will face penalties and may have to reverse along with interest.

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A comprehensive business management software, TallyPrime helps businesses manage all their needs starting from invoicing, accounting, inventory to payroll, banking and much more. The intuitive features of TallyPrime easily fit into your needs and simplifies processes quickly. More than 2 million businesses trust TallyPrime for all business activities – starting from accounting, inventory management, to so much more! What’s more? If you are a Quickbooks user, then moving from Quickbooks to Tally, then here are the 8 factors that will simplify your business processes:
Invoicing and accounting
: With TallyPrime you can generate professional-looking invoices seamlessly and tailor them to suit your business requirements. What’s more? TallyPrime’s powerful accounting system comes with a fleet of features like multi-currency support, flexible order processing system, seamless receivables and payables management, and much more.

Inventory management
: For any business, managing inventory is a key aspect. With TallyPrime, you can organize your stock into unlimited stock groups and categories such as product type, brand, size, and more. Additionally, you can also manage multiple warehouses, and get insight into your stocks with reports such as stock ageing analysis, movement analysis, reorder levels, and more.

GST compliant:
TallyPrime is a comprehensive GST solution that enables you to generate GST-compliant invoices, e-way bills, file accurate GST returns, and more. The software’s prevention, detection, and correction mechanism ensure that your books are accurate, assuring you that the returns you file are always correct.

User management and security
: For any business, keeping data safe and secure is of utmost importance. If you are moving from Quickbooks to Tally, then you can create multiple security levels, define user level rights, provide specific access to certain employees, deactivate users and much more.

Business Reports: Get 360-degree visibility into your business with 400+ insightful and customized business reports, thereby helping in decision-making. What’s more? It also allows you to slice and dice reports as per your requirements.

Online access
: In today’s rapidly evolving business world, accessing business data all the time is crucial. TallyPrime allows you to access business reports online anywhere, from any device, all the while keeping your data safe and secure.

Payroll management
: TallyPrime allows you to manage employee payroll efficiently, process error-free salaries, and much more.

Multi-tasking: How many times has this happened that you are in the middle of generating a sales invoice; however, you need to suddenly access a different report? If you shift from Quickbooks to TallyPrime, you get the flexibility to multi-task with ease and get back to your work seamlessly.[/vc_column_text][/vc_column][/vc_row]

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