E-Invoicing Under GST | e-Invoicing Route For MSMEs In India

e-Invoice generation activity has seen a sharp rise from 1st April 2021 after the government decided to lower the e-Invoicing eligibility to 5 Cr of annual aggregate turnover.

It’s evident that the government will soon implement e-Invoicing for all the businesses irrespective of your aggregate turnover.

Medium & small sized businesses are in a confused state about e-Invoicing under GST.

In this short article, we will discuss the impact of e-Invoicing on small & medium enterprises & also suggest some measures to ensure smooth transition to e-Invoicing under GST.

e-Invoicing Applicability

Is your business eligible for e-Invoice generation?

Let’s find out if your business fits in the criteria mentioned below:

e-Invoice generation is applicable to all the businesses whose annual aggregate turnover in any one of the FY between 2017-18 & 2019-20 exceeds Rs. 50 Crore.

So if a business has an annual aggregate turnover that exceeds 50 Cr then e-Invoice generation will be mandatory.

It is essential to note that e-Invoice generation is applicable only for the B2B invoices&export sales.

However, there are certain businesses that are exempted from e-Invoice generation:

Special Economic Zones (SEZ) Units
Goods Transportation Agency
Insurance company
Banking company
Non-Banking Financial Companies

These units are exempted from the e-Invoice generation mandate.

Positive impacts of e-Invoicing on MSMEs

e-Invoicing is the best alternative to curb malpractices like tax evasion and fake invoices.

e-Invoicing under GST will encourage more transparency in the taxation system by eliminating fake invoices.

Following are some of the key benefits; e-Invoicing shall have on Medium, Small & Medium enterprises:

Multi-purpose use of e-Invoicing – On creating an e-Invoice, it can be used for auto-population of the GSTR-1 return.

e-Invoice details will also be used for E-way Bill generation.

Digital trail of B2B invoices – tax authorities will have a complete digital trail of all the B2B invoices uploaded by the taxpayers that will help eliminate creation of fake invoices.
E-Invoicing will help avail the eligible Input Tax Credit under GST and also get the benefit of the automation facility of the GST system in India.

e-Invoicing myth busters for MSMEs

MYTH1: e-Invoice is an invoice generated directly from the GST portal.

FACT:In e-Invoicing under GST, a taxpayer has to submit an already generated B2B invoice to the government portal i.e. Invoice registration Portal (IRP).

To make it simpler, e-Invoicing is just the reporting of an already existing B2B invoice to the IRP portal and validate it with a unique Invoice ReferenceNumber (IRN)&QR code.

MYTH2: e-Invoicing under GST demands special expertise & training.

FACT: e-Invoice generation is a very simple process. Businesses just need to familiarize their clerical staff with the IRP portal or the e-Invoice generation software.

Businesses just need to follow the schema as prescribed by the government.

MYTH3: e-Invoicing setup will add extra load on my business expenses; especially for small businesses

FACT: e-Invoicing is introduced to ease the efforts of the taxpayers & you can directly report your invoices to the IRP portal.

However, when businesses require bulk generation of e-Invoices, it is going to be a time-consuming task if done manually.

Hence, for better benefits to the business, GST experts suggest using am automated e-Invoice generation software to that will automate e-Invoice generation process & also eliminate chances of errors.

MSMEs should be ready for e-Invoicing under GST

E Invoicing in GST is a relatively newer for the businesses recently added under GST e-Invoicing umbrella.

Hence, MSMEs are required to have a well-equipped infrastructure which will enable them for a smoother e-Invoice generation process.

Businesses need to adapt to the changing reporting requirements of their invoices to the government as per the GST laws.
Having automated software for e-Invoice generation will allow businesses to generate e-Invoices in bulk. This will save your time and will also allow you to generate e-Invoices directly from your ERP.
Businesses can use ERP connectors like GSTHero’s Tally connector will make your e-Invoice generation faster & accurate as compared to manually uploading the invoices to the Invoice Registration Portal (IRP).
It’s essential for small & medium businesses to stay 100% complaint with the changing GST laws. It’s necessary that they should be aware about the compliance requirements to stay up to date with the advancements in the GST laws.

To Conclude

MSMEs should not be worried if e-Invoicing is mandatory for them.

e-Invoicing under GST will benefit businesses in many ways& help stay away from fake invoices that may land businesses in trouble of fake ITC claims.

Small & medium sized businesses are expected to keep their IT infrastructure up-to-date so that they can stay 100% compliant with the GST laws.