11 August, 2020 | Posted by: Aliter
The current system of tax return filing is tedious for businesses as multiple reporting is required and the audit process is time consuming when records are maintained manually. As the government is laying the foundation of building a digital ecosystem for its processes, tax filing is the focus area for digitisation where E-invoicing is the next brick laid. It is a process in which every invoice generated in a B2B transaction shall be validated by the government electronically through a centralized portal. It makes a thorough check of invoices based on certain predetermined criteria and submits the invoice to the GSTN. A unique number is generated for each invoice which becomes its identity.
E-invoicing is mandatory from 1 st October 2020 for those with turnover more than INR 500 crore and voluntary for those with turnover more than INR 100 crore. Invoices will continue to be generated by existing ERP systems. E-invoicing will only replicate data from those invoices in a standard format and authenticate it. From the effective date, only e-invoices will be considered for tax filing purposes.
As this process might become cumbersome for small businesses, those with an annual turnover less than Rs.100 crore, banks, airlines, insurance companies, armed forces, and telecom service providers are likely to be exempt.
The phase-wise strategy of e-invoicing will help in testing the operational feasibility, standardised structure, reducing errors, and bringing ease, transparency, and agility in the tax system.
With the introduction of GST, government has tried to bring a revolution in the tax structure. However, GST also had some gaps to be filled which the government is trying to fill with the introduction of E-invoicing.
The thoughtfully crafted process of E-invoicing would bring a reduction in the operations of the finance team like physically receiving an invoice, recording the details manually in system, and verifying. Organizations had introduced the software Optical Character Recognition(OCR) which transcribed emails in the system from pdf’s however, the details again had to be verified for accuracy by a human. E-invoicing will make use of OCR as well but no human verification would be needed.
From a process perspective, let’s see how automation can help in modifying the process and achieving a positive outcome, with the right security measures.
With E-invoicing automation, the invoice processing cycle becomes swift and smooth for all the concerned stakeholders.
With E-invoicing being a much-awaited change in the tax system, Aliter’s ERP can make adapting to E-invoicing an even smoother process.
The sole action required on the user’s part is to click on ‘generate invoice’ button in ERP. As a result, Aliter’s solution performs the following functions automatically: