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List of ERP changes to prepare for e-Invoicing

As a one-time task at the time of adoption, the ERP e-invoicing system necessitates changes to the accounting/billing/ERP software.As a result, business processes will be more efficient.

Who is eligible to use API?

In terms of the e-invoice system, APIs make it easier for taxpayers or GSPs (GST Suvidha Providers) to communicate and exchange data with the system.

Two software elements must interact with one another per the API specifications for the government to build a platform to offer GST services to taxpayers.

Various taxpayer operations, including submitting returns, registering, examining ledgers, making online payments, etc., are provided via the e-invoice system using RESTful web services.

Mandatory Fields as per e-Invoice Schema

ERP systems should include all relevant fields following the CBIC-notified schema to make it easy to check invoices before submitting them to the IRP portal. To put it another way, the billing/ERP software’s invoice must include all the information required by the GST law.

Separate treatment for B2B and B2C invoices

Taxpayers must produce an invoice reference number (IRN) on the invoice registration portal (IRP) for all B2B transactions beginning on October 1, 2020, if their combined revenue in any prior fiscal year was more than Rs. 500 crores.

Additionally, this was expanded to include a turnover of more than Rs. 100 crore as of January 1, 2021. As a result, the JSON file must be created by the ERP and uploaded separately to the IRP.

The IRP would also generate a QR code and print it on the invoice. Since April 1, 2022, companies with annual revenue of more than Rs. 20 crores will be required to use the ERP invoicing system.

Starting on October 1, 2022, the government has announced an extension to companies with yearly sales of more than Rs. 10 crores.

Additionally, beginning with the 2017–18 fiscal year, taxpayers with a combined turnover of more than Rs. 500 crores must include a dynamic QR code in their B2C invoices as of December 1, 2020.

Identifying Type of transaction

The following categories will need to be used by the ERP software to classify a specific transaction:

  • Business-to-Business (B2B)
  • Business-to-Government (B2G)
  • Exports
  • Supply via an online retailer
  • Supply subject to reversal of payment

The information needed for Part A of the e-way bill must only be entered once.

Invoice Reference Number

The IRP will produce an IRN for each ERP invoice using the SHA256 hash creation process.

The following criteria would be used to generate the hash:

  • GSTIN of the provider
  • Financial year
  • Document format (whether invoice, debit note or credit note)
  • Document number (assigned by the taxpayer)

After a specific invoice’s IRN has been successfully generated, the invoice’s hard copy should be printed with the same information.

Note: The zeroes in the document number parameter’s prefix will not be considered when generating hashes.

Supports QR Code feature

Taxpayers must print the QR code on their B2B invoices, as issued by the IRP, commencing on April 1, 2022, if their combined revenue in any prior fiscal year exceeded Rs. 20 crores (beginning with 2017–18).

Additionally, if their combined revenue in the most recent fiscal year was Rs. 500 crores or more, the same procedure must also be performed for B2C invoices. The IT systems must be updated with the necessary changes.

Supports Digital Signature

The JSON being uploaded into the IRP does not need to be digitally signed by the taxpayer; however, the IRP will digitally sign JSON and transmit it back to the taxpayer.

Various APIs

The following APIs should be available for data interchange by the ERP software to properly integrate with the e-invoicing system:

  • Authentication
  • Create an IRN
  • Cancel IRN
  • Create an electronic invoice with your IRN
  • Get GSTIN information
  • API Health Check
  • Get IRN By Doc Information

A built-in tool for GSTR-1 and Sales Register Reconciliation

The sales invoice information can now automatically fill up the GSTR-1 on the GST site using the ERP e-Invoicing system.

Due to the exclusion of B2C supply, not all information will be filled in automatically.

So, before filing GSTR-1 for a month or quarter, it is necessary to compare the auto-populated GSTR-1 or the IFF with the sales register and find any discrepancies to ensure no document is overlooked.

Linking to accounts payable and accounts receivable

The ERP software should provide a means to link the invoices created to the accounts payable and accounts receivable module to ensure good debtors management and quick invoice settlement.

In addition, if payment is not made within 180 days of the invoice date, ITC may be rejected. Therefore, in this aspect, ERP software might also provide payment reminders.

How to track cancelled ERP invoices and cancelled e-way bills

First and foremost, the ERP system must ensure that each invoice is given a unique document number.

Additionally, a different document number should not be used even when an invoice is cancelled.

A system should be in place to track cancelled invoices and cancelled e-way bills created from invoices.

There can be a 24-hour limit on when invoices can be cancelled on the IRP. If the taxpayer still wants to cancel the bills after 24 hours, the ERP software must direct them to the GST portal.

Tracking of amendments

Changes can be made by either cancelling outdated invoices, uploading updated invoices as JSON, creating a new IRN, or issuing the required credit notes/debit notes.

There must be a means to connect such credit and debit notes to the original invoices needing adjustment.

Storage of invoices

The IRP won’t keep track of bills. The ERP software must support the storage of invoices to facilitate future reference.

A different backup medium will also need to be used to archive far earlier invoices.

Sending and Receiving e-Invoices

Once the IRN has been created and the QR code for the generated invoice has been signed, the ERP system will be able to share an invoice with the recipient automatically.

The parties engaged in claiming the clear input tax credit (ITC) and filing the GST return would benefit from this. Additionally, there must be a capability to detect, maintain records of, and store the e-invoices received from the appropriate vendors.

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