The government has made it clear that the October 1 date of operationalising e-invoicing in the country stands firm. This is even as the corporate sector and experts hope the proposed move will be postponed.
E-invoicing essentially involves reporting details of specified GST documents to a government-notified portal and obtaining a reference number. GSTN (the IT systems provider for GST) claims that there is not much difference between the present system and new one. Registered persons will continue to create GST invoices on their own accounting/billing/ERP systems.
These invoices will now be reported to the Invoice Registration Portal (IRP). On reporting, the IRP returns the e-invoice with a unique Invoice Reference Number (IRN) after digitally signing the e-invoice and adding a QR Code. Then, the invoice can be issued to the receiver, along with QR Code. A GST invoice will be valid only with a valid IRN.
The government in March had notified that a new system will come into operation from October 1. Initially, it will be mandated for registered persons with aggregate turnover of ₹500 crore or more in a financial year.
According to GSTN, use of e-invoicing will make filing the returns easier as all the information will be auto populated. E-invoicing will also facilitate standardisation and inter-operability, leading to reduction of disputes among transacting parties, improvement of payment cycles, and reduction of processing costs, thereby greatly improving overall business efficiency.
Also read: GST e-invoicing to start from Oct 1, as planned: GSTN CEO
Though there is intense lobbying to defer the move, Finance Ministry sources told BusinessLine that no change is proposed on the timeline. However, experts feel that it should be deferred.
Mahesh Jaising, Partner at Deloitte India, says preparedness amongst corporates to go live on GST e-invoicing effective October 1 is sub-optimal. He quoted a survey by the US-India Strategic Partnership Forum (USISPF) amongst its members where it was found that 64 per cent of companies were not ready to go live on October 1. According to Jaising, the reasons for seeking deferment include incorporation and testing of recent changes, that is, changes in the accounting platform and validation parameters, upcoming festival season in October/ November, and manpower crunch as a result of Covid-19.
“The reform is an important one and the government should consider going live on a voluntary basis, and hence, the benefits of e-invoicing are available for companies that are ready. A mandatory roll-out could be considered in a few months, say, by January 1, 2021,” he said.
Rajat Bose, Partner at Shardul Amarchand Mangaldas & Co, felt that the shift to the e-invoicing regime requires significant changes to ERP systems of companies, which is both time consuming and entails costs for the companies. Given the pandemic situation, industry is struggling with human and fiscal resource crunch, and therefore, this may not be an ideal time to implement such a major change in GST framework.
“Further, there are still some open issues, especially in B2C transactions such as requirement of static and dynamic QR codes on invoice, which haven’t been resolved completely by the government,” he said.