Chennai: Electronic invoicing will lead to significant cost savings on GST billing and lower the occurrence of error. This in turn will speed up disposal of GST refunds.
From April 1, 2020 or by the beginning of next fiscal, e-invoicing will be mandatory for all companies with turnover of Rs 100 crore and above.
According to Prakash Kumar, chief executive officer, GSTN, e-invoicing will result in significant cost and time savings. It will also reduce incidence of errors in the filings.
“A study done in France found that e-invoicing improves efficiencies compared to paper filing. The cost came down in France from seven Euros per invoicing to 0.3 Euro, which is around 90 per cent reduction in cost. Further, a person who has been handling 6,000 invoices per month could now handle 90,000 invoices after it was done electronically,” he said.
E-invoicing also reduces errors. According to him, error is one of the main reasons why refunds get delayed as someone has to check the data and get them corrected. The new system will make refund procedure faster, he added.
The Goods and Services Tax Network (GSTN) is implementing a standard- Pan European Public Procurement Online (PEPPOL), which is interoperable across all the IT applications. Several countries have adopted the standard, latest being Singapore.
Currently, e-invoices generated by different businesses lack a standard. They use the format as provided by the ERP or billing software. Lack of a standard format leads to a scenario where e-invoice generated on one billing software can’t be read by another, requiring manual data entry from electronically generated invoice.
A standard e-invoicing system will ensure complete interoperability of e-invoices across the entire GST eco-system and will eliminate the need for manual data entry mitigating chances of errors, said Kumar.