E-invoicing system vs Old Invoicing system
E-invoicing system vs old invoicing system: a clear distinction
In this post, We will discuss the differences between the current invoicing method and the newly implemented E-invoicing system in GST. Let’s take a closer look at each section:
What is an E-invoicing system?
An e-invoice, also called an electronic invoice, is a digital document between a buyer and a seller and is validated by the government’s tax office. In an e-invoicing system, business-to-business (B2B) invoices are prepared digitally and authenticated by GSTN (Goods and Services Tax Network). By following this system, all businesses are required to report invoices to the GST portal in a common format.
Process of E- invoicing
- The taxpayer generates invoices on their accounting and billing software or ERPs in the specified format (GST INV-O1).
- The invoice generated will then be sent to the Invoice Registration Portal (IRP).
- After IRP has validated the invoice, it will have IRN with a digital signature and QR code.
- Your customers can receive an electronic invoice along with a QR code.
Note: An E-invoice is authentic only with a valid IRN.
Difference between Invoicing system vs E- invoicing system
Now let’s look at some major differences between the 2 invoicing systems.
|
SITUATION |
INVOICING SYSTEM |
E-INVOICING SYSTEM |
|
Physical invoice |
A physical invoice is generated as per the rules. There is no change in how an organisation issues invoices. |
A physical invoice is generated as per the rules. There is no change in how an organisation issues invoices. |
|
Report of invoice on the GST portal |
Manual data entry, JSON upload, accounting software that uses the API to upload invoices. |
Invoices have a prescribed schema and contain the mandatory parameters. |
|
Invoice Reference Number(IRN) |
There was only an invoice number and no IRN. It had no prescribed format. The invoice number had to be assigned sequentially. |
IRN generated through an algorithm. Thus, an easy comparison of e-invoices through unique IRN validates on the Central Registry and is stored for reference. |
|
Dispatch of e-invoice |
GST portal has no facility for validation and downloading invoices. |
Validated e-invoices are sent to the supplier to their registered e-mail ID. |
|
Digital Signature |
Only the supplier’s digital signature was needed on the invoice and no facility for digital signing uploaded invoices by the GST portal. |
Validated invoices are digitally signed by the IRP. |
|
QR code |
Invoices could not be verified by a QR code. |
Validated invoices contain generated QR code. Invoice verification can be done even if there is no internet facility. |
|
Possibility of mistakes |
Higher possibility of mistakes. |
Much lower possibility of mistakes. Once you upload the invoice JSON file and it is verified on IRP. The seller’s GSTR-1 is then updated. E-Way bill details under Part A are also filled. |
|
To amend invoice |
Amendment/cancellation can be done on the GST portal. |
E-invoice is only available for 24 hrs in the IRP when it can be fully canceled. You can amend it in the GST portal. |
|
To view invoice |
Invoice details could be viewed on the GST portal |
Necessary invoice details are available on an app that scans the QR code. E-invoices are sent to e-mail ID so the supplier can always save a copy. |
|
Verify an invoice |
Not easy to verify an invoice |
Easy to verify by scanning QR code and also checking of IRN |
|
Possibility of search |
Relatively higher possibility of a search by the department |
Lower possibility of a search by the department. The invoice details (transaction level) is already available. |
Note:
It is mandatory for B2C transactions to have a QR code.
FAQs on e-invoicing
1, Who is subject to e-invoicing?
Ans: E-invoicing is currently being implemented for GST-registered persons whose aggregate turnover in any previous financial year has exceeded Rs.20 crore. It will apply to those with a turnover of more than Rs.5 crore up to Rs.10 crore from August 1, 2023.
2, Can an e-invoice be cancelled partially or completely?
Ans: An e-invoice cannot be partially canceled, but it can be canceled entirely. If you cancel, you must notify the IRN within 24 hours. Any further attempts to cancel must be manually compensated on the GST site before the returns are filed.
3, Will mass uploading of invoices for IRN creation be possible?
Ans: No, invoices must be entered into the IRP one at a time. The invoice must follow the standard e-invoicing format and include the mandatory parameters.
And with that, we end our discussion on the E-invoicing system vs Existing Invoicing system. If you have any questions, drop them in the comment section below.
