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.

Benefits of E-invoicing:

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.

Let’s glance at some specific benefits of the E-invoicing system:

  • The Invoicing for all GST filings will need only one-time reporting.
  • A standard format for all invoices, even for invoices fetched from multiple softwares.
  • Scaling business on a global level can become more efficient.
  • Faster tax returns as all documents are government verified.
  • Reduction in errors caused by manual entries and mismatches.
  • Simplification in return filing as fields are automatically filled. This is even applicable to EWB (Part A).
  • E-invoice details are also helpful in auto generating E-way bills.
  • Timely, accurate, and simplified process of claiming Input Tax Credit.

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.

How automation can help this process?

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.

  • Paper invoices are prone to wrong entries being recorded. Identifying the error requires the reviewer to go through the loop of checking with all stakeholders. E-invoicing ensures that accurate data is filled in from the inception.
  • Reconciliation becomes simplified as matching of invoice and purchase order is smooth. If any unscrupulous activity has occurred like introduction of invoices intended towards some malpractice, it is highlighted.
  • Payment cycles are organized and accurate which results in better relationships with vendors.
  • As operational process is done within minutes, more time can be spent towards strategic activities like mapping purchases with business requirements.
  • As real-time data is visible to the finance team, it helps them in giving an overview of their cash flows leading to better forecasting decision making.
  • The audit process needs numerous documents to be submitted. A manual search in folders leads to delay in Audit process. E-invoicing helps in fetching documents as and when required, as all data is stored in an electronic master database.
  • As E-invoicing helps you prioritise invoices for settlement, it helps organization lure buyers towards early payment by offering discounts.
  • As cashflows will be improved with timely payments coming from buyers, this will enhance the sales cycle for suppliers too.

With E-invoicing automation, the invoice processing cycle becomes swift and smooth for all the concerned stakeholders.

How can Aliter help in E-invoicing?

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:

  • Auto-fetches invoice
  • Reads and extracts data
  • Sends it to GST portal
  • Fetches the invoice back and stamps the acknowledgement on the invoice.
  • Automatically signs a digital signature
  • Automatically emails the invoice to the customer.
  • Gets back the resultant invoice within 4-5 seconds.

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