Avalara > Blog > Goods and Services Tax > E-Invoicing Under GST: Part 3 - Benefits of e-invoicing

E-Invoicing Under GST: Part 3 - Benefits of e-invoicing

  • Feb 10, 2020 | Divita S Gupta

E-invoicing was introduced for now on a voluntary basis but taxpayers should know that adapting to e-invoicing will be highly beneficial for them in the long run since it will be eventually mandatory for all businesses. Here are the benefits of e-invoicing from the GST perspective.

Benefits to the taxpayer

Freedom from multiple data entries

In B2B transactions that use e-invoicing, data is sent directly from the supplier to the buyer’s AP system, eliminating the need for manual and multiple data entry. Similarly, once the taxpayer starts generating an e-invoice, they will be required to report B2B invoice data just once. This will subsequently reduce reporting in multiple formats viz. one for GSTR-1 and another for e-way bills. Adapting to an e-invoice system will encourage system automation - an efficient and time saving process. This means freedom from time consuming data are-entry that is prone to human errors.

Data not limited to GSTR-1

You already know that adapting to the e-invoice system can save time by eliminating multiple data entry while filing GSTR-1 and can use the same data for issuing e-way bills. But the good news is that adapting this system expands your avenues for other tax returns as well. You can use the same data while filing ANX-1 viz. sales and ANX-2 viz. purchase register. But that's not all. This data will help you while filing for New Returns under GST as well.

Fewer disputes

Taxpayers will witness a substantial decrease in issues around verification of input credit as data from the e-invoice will not only be reported to the tax department, it will also be sent to the buyer in their purchase register (inward supply).

Better account reconciliation

Because the data from the e-invoice is sent to the buyer through the GST system, there is an opportunity for reconciliation with the purchase order ie. accept or reject the data in time.

Holistic productivity

Finally, adding the practice of e-invoicing to your daily business operations will allow your entire tax process to become equally productive and efficient by facilitating automation, enhancing compliance and preventing losses due to errors.

Benefits to the Government

Having a record of the complete trail of B2B invoices allows the government to reduce the number of fraudulent invoices submitted with a view to claim input tax credit. With the use of e-invoicing, the Government will be able to conduct system level matching of input credit and output tax - this means a significant reduction in losses due to tax fraud and an overall increase in productivity in tax administration.

Remember: The generation of e-invoices will be the responsibility of the taxpayer who will be required to report the same to Invoice Registration Portal (IRP) of GST, which in turn will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The QR Code will contain vital parameters of the e-invoice and return the same to the taxpayer who generated the document. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.  

Note: For starters, there will be only one IRP, but more IRPs will be added to provide higher availability, redundancy, speed and a diversified and distributed service to taxpayers with a choice.

To know more about our E-invoicing and GST compliance solutions, contact us here.

Follow our E-invoicing under GST Series on the links below:

  1. E-Invoicing Under GST: Part 1 - What is an e-invoice?
  2. E-Invoicing Under GST: Part 2 - E-invoicing and the Tax Department
  3. E-Invoicing Under GST: Part 3 - Benefits of e-invoicing
  4. E-Invoicing Under GST: Part 4 - Documents to be reported under e-invoicing
  5. E-Invoicing Under GST: Part 5 - How does e-invoicing work?
  6. E-Invoicing Under GST: Part 6 – E-Invoicing Workflow from Supplier to Invoice Registration Portal
  7. E-Invoicing Under GST: Part 7 - Workflow from IRP to Buyer and GSTN or E-Way Bill System
  8. E-Invoicing Under GST: Part 8 - Everything you need to know about Invoice Registration Portal
  9. E-Invoicing Under GST: Part 9 – Features of e-invoice system you need to know
  10. E-Invoicing Under GST: Part 10 – How to register your e-invoice
  11. E-Invoicing Under GST: Part 11 - Myths around e-invoicing
  12. E-Invoicing Under GST: Part 12 – Frequently asked questions on e-invoicing

Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.