Some readers may be wondering about the caption of this article – as e-Invoicing does not apply for companies with Gross Annual Turnover (GTO) less than Rs 10 Crore!

Read on, and I will explain why your company too needs to plan in advance for this transition. And why, now is the good time to start!

From 01 Oct 2020, Government of India had made e-Invoicing for B2B sales mandatory for companies with GTO greater than Rs 500 crore. After this, this cut-off threshold was lowered in stages – to Rs 100 crore, Rs 50 crore, Rs 20 crore and now with effect from 01 Oct 2022, to Rs 10 crore.

What is more, the government is all set to make e-Invoicing mandatory for companies with GTO greater than Rs 5 crore, mostly with effect from 01 Jan 2023. Are you ready for this transition from PDF Invoices to Electronic Invoices? What can you do now?

The Government has already published “Sandbox APIs” that can be accessed by companies with GTO greater than Rs 5 crore. This is the facility where can you “rehearse” the correct submission of e-Invoices, well before you would mandatorily need to do this for all B2B sales transactions!

Fortunately, at the online platform provided by Innoval Digital Solutions Pvt Ltd, you can freely rehearse submission of e-Invoices to the Government’s Sandbox APIs.

To avail the above facility, you would need to first to “enable” each of your GSTINs at the Government Portal, and get “on-boarded” for submitting sample e-Invoices for testing your readiness. Innoval’s Portal, OptiE-Invoice Lite would hand-hold you with step by step instructions on how to on-board at the Govt Portal.

If you already generate normal invoices as PDF files, then you are ready!

OptiE-Invoice Lite can convert the invoice details within PDF files to the specified JSON format and get these “signed” by the Government using the Sandbox APIs.

On successful “registration” of your invoice, the Invoice Registration Portal (IRP) assigns a QR Code, Invoice Registration Number (IRN) and a “signature” confirmation in JSON format. OptiE-Invoice Lite reads the QR Code and IRN from this JSON format and embeds these at the top of your own PDF Invoice. What is more, your PDF invoice, now with QR Code and IRN printed on it, can be downloaded by you.

OptiE-Invoice can also accept Invoice details in Excel format, and offer the same functionality as above. In this case, we generate the PDF Invoices with standard layout and your company logo, and with QR Code and IRN printed on this. This would be convenient, in case your ERP or Accounting System has the facility to download Invoice details in Excel format.

Yes, whenever the government makes e-Invoicing mandatory for your company, all that you need to do is to pay the annual subscription at the OptiE-Invoice Portal (starting as low as Rs 3000/- per annum for the Basic Plan).

OptiE-Invoice will transparently transit to submission of your Invoice details through the Production APIs as provided by the IRP. What is more, OptiE-Invoice can automatically email your PDF Invoices with QR Code and IRN to the Buyers. (You can switch this feature off, if you prefer to manually send Invoices to Buyers).

E-invoicing got off to a great start in India on 01 Oct 2020. The threshold limit for submitting electronic invoices was progressively lowered from the initial Rs 500 crores to Rs 100 crores turnover since 01 Jan 2021, and then to Rs 50 crores with effect from 01 Apr 2021. Thus as of now, it is mandatory that B2B transactions of companies with an annual turnover greater than Rs 50 Crore are processed through electronic invoices.

One area that has not attracted sufficient attention till now is on how inbound e-Invoices are to be managed by the buyers. What are the concerns to be addressed by companies that receive e-Invoices from their vendors?

Firstly, we need to understand what has changed for the buyer since the introduction of e-Invoices. For one, this opens up the possibility to totally avoid the need for manual data entry, or even the need for tools like Optical Character Recognition (OCR) to enter the details of incoming vendor invoices into what ERP one may be using.

Secondly, the line-items in the PDF or printed invoices will need to be validated by GSTN. Indeed, GSTN approves adjustment of Input Tax Credit (ITC) for buyers only when invoices are authenticated as registered at the GSTN Portal, and electronically signed.

So, how do we validate the registration of e-Invoices by the IRP? One misconception is that an e-Invoice can be validated by scanning the QR Code. In fact, the only way to validate is to refer each e-Invoice to the GSTN. Moreover, the GSTN does not validate an e-Invoice on the basis of IRN/ QR Code. What the GSTN needs to validate an e-Invoice is the “Acknowledgement JSON” (Ack JSON) that the Sellers receive as response from the IRP, whenever they successfully get this is registered and signed. Here is what the Ack JSON looks like:-

As can be seen above, one of the components of the Ack JSON is the “SignedInvoice”. This encrypted component is used by the GSTN to validate the e-Invoice, and to retrieve line item details as registered in their database. Indeed, GSTN computes the ITC entitlement of the buyer based on the CGST/SGST/IGST as entered against registered line items.

IVL’s OptiVIVe product automatically picks up e-Invoices from mail inbox, validates, and retrieves the authenticated line items of e-Invoices direct from the GSTN, along with PDF copies that are digitally signed by NIC-IRP. The digitally signed e-Invoice details are made available to the ERP as JSON, Excel file or dropped in an SFTP folder accessible by the buyer.
Opti-VIVe also provides APIs which can be consumed at the ERP end to retrieve authenticated details of e-Invoices, including line-items and digitally signed PDF Invlices. In other words, the entire process of managing inbound e-Invoices by ERP can be 100% hands free.

OptiVIVe can also process PDF version of e-Invoices without the Ack JSON as above. But these will not be authenticated as accurate by the GSTN. Hence, there remains the risk that ITC may be denied by GSTN.

Thus, it is prudent to insist that vendors (who are mandated to generate e-Invoices) send the Ack JSON as above, along with the PDF copy of the e-Invoice, to a specified email id of the buyer.

Sending the Ack JSON & PDF Invoice to the email id of the buyer (available in the JSON schema) can be automated by the software product used to submit e-Invoice to the IRP. This is a feature built into OptiE-Invoice (On-prem/ Cloud) of Innoval Digital Solutions Pvt Ltd (IVL).

As a last chance, in the initial phase of implementation of e-invoice, it has been decided that the invoices issued by such taxpayers during October 2020 without following the manner prescribed under rule 48(4), shall be deemed to be valid and the penalty leviable under section 122of the CGST Act, 2017, for such non-adherence to provisions, shall stand waived if the Invoice Reference Number (IRN) for such invoices is obtained from the Invoice Reference Portal (IRP) within 30 days of date of invoice.

Read Press release from CBIC on E-invoicing

E-invoicing is a new reform which entails the generation of invoices in an electronic format, which facilitates machine readability across ERP and tax systems.

The government has mandated the applicability of e-invoicing to businesses having an annual turnover exceeding INR 500 crore with effect from.1^st Oct 2020.

Refer CBIC Notifications mentioned below:
68/2019  | 69/2019  | 70/2019 | 02/2020 | 13/2020 | 60/2020 | 61/2020

What is the best time to cancel an e-invoice for supply of goods?

There is a restriction that e-invoice cannot be cancelled beyond 24 hours of the e-invoice generation. So, the obvious answer is to cancel before the 24 hour limit from the time of e-invoice generation. However, there are a few other considerations relevant here:

• E-invoice cannot be cancelled if E-Waybill is already generated.
• E-invoice cannot be cancelled beyond 24 hours of the e-invoice generation

Best practices for e-invoice cancellation:

If the supply has not left the premises and the document needs to be amended/cancelled for any unforeseen reasons within 24 hours of the e-invoice generation:

• Cancel the E-waybill if it is generated, specify the reason code and remarks
• Cancel the E-Invoice, specify the reason code and remarks
• Cancel / Reverse the document in ERP
• Proceed with a new document in ERP and a new e-invoice for the supply when it is ready (different tax invoice number and different e-invoice)

If the supply has left the premises and the document needs to be cancelled for any unforeseen reasons within 24 hours of the e-invoice generation:

It is best handled as a credit note, even if it is technically possible to cancel the e-invoice. Remember to create IRN for the Credit Note as well. It is recommended to keep the customer informed as the customer would see both documents in their GSTR2A. There is no tax liability for the month if the Credit Note is generated within the same month

If the “posting period” is closed in the ERP, it is best handled as a credit note with the appropriate date in the next posting period, even if it is technically possible to cancel the e-invoice

If the business decision is to cancel e-invoice for such cases (within 24 hours), please follow the steps mentioned above (cancel EWB & e-invoice and then cancel/reverse the ERP document).

If the supply has not left the premises and the document needs to be cancelled for any unforeseen reasons after 24 hours of the e-invoice generation:

It is recommended to issue Credit Note. Remember to create IRN for the Credit Note as well. It is recommended to keep the customer informed as the customer would see both documents in their GSTR2A.

• If the business decision is to cancel the ERP document, please note that e-invoice cannot be cancelled after 24 hours. Technically, this can be handled by excluding the entry from GSTR1 (it will be auto-uploaded in GSTR1), before filing the GSTR 1. Please do maintain an audit trail for such changes – including justifications and approvals. Considering the audit/compliance hassles, it is not recommended – the credit note is the better option.

Recommended Customization in ERP / tool:

Customization at the time of Invoice Cancellation in ERP:

• – Validation to stop the cancellation of ERP document if e-invoice is in generated status
• – Automation to combine cancellation (cancel EWB, E-Invoice & ERP documents together).

What is the best time to generate an e-invoice for supply of goods?

The obvious answer would be “Before dispatch of goods”.

If this needs to be further qualified or linked to an event/trigger, these again depend on the business processes involved. So, what are the options?

• Option A: As soon as the Tax Invoice is created in ERP
• Option B: Latest before the end of the next calendar day of the Invoice date
• Option C: When the invoice is released to Accounting (“posted”) in ERP
• Option D: Any other?

In case of  supply of services, Rule 47 of CGST Rules 2017, Part A – Chapter VI is self-explanatory. In case of goods, however, there is a physical goods movement where the tax officials can do the scrutiny of the document/supply. With the revised Rule 48 (Manner of issuing invoice), the supply would be deemed to be invalid if e-invoicing is applicable but not yet done.

Coming back to the original question, there was indeed a stipulation earlier that Option B above was mandatory for e-invoice generation. This did cause concerns in the business community because there were genuine business scenarios that caused a difference between the date of invoice and the date of goods movement. Two such scenarios are listed below

• Back-dated invoicing & supplies (e.g.: month-end). Here, the physical dispatch happens a few days after the Invoice date
• Advance invoicing & Back-dated supplies
  • Tentative Invoicing subject to customer approvals prior to Dispatch (e.g.: Exports documents submitted for approvals prior to dispatch)
  • Physical Dispatch happens typically a few days after the Invoice date. There is a chance of the invoice getting cancelled or revised before the dispatch happens – based on approvals/rejections. But the original invoice number and date should not be changed once approved by the customer (effectively supplies are back-dated)

So, what is the best time to generate an e-invoice for supply of goods?

While the answer would vary based on business process, there is a consensus that e-invoice should be generated latest before the printing of the corresponding invoice.

If e-invoice is not generated, the corresponding print should not be allowed. Here again, there could be exceptions that the user may want to do the print of a cancelled document (for records purpose and not for dispatch) without e-invoicing done.

There are automated API-based e-invoice generation options available in the market. However, the decision to trigger the API calls for e-invoicing can still be based on a user action or can be automated.

In the initial days of e-invoicing, it is best triggered by the user for the selected documents after verifying the data for correctness and completeness. Ideally, this should have been done for Sep invoices before Oct 1.

In the steady state, the trigger should be automated, latest before the printing of invoice.

Note: E-invoice does not have any provision for amendment (or regeneration with the same invoice number). Also, there is a restriction that e-invoice cannot be cancelled beyond 24 hours of the e-invoice generation. Hence it is risky to prepare the e-invoice in advance (or in automated mode) for deferred supplies (dispatch done on a subsequent day).

Best practices for e-invoice generation:

• For business scenarios having invoices that do not undergo changes or cancellation between the time of invoice generation and physical dispatch, e-invoice generation can be triggered automatically as soon as the tax invoice is created
• For business scenarios having invoices that can undergo changes or cancellation before physical dispatch, e-invoice generation can be triggered just before printing of the invoice.

Recommended Customization in ERP / tool:

Suitable customization, automation and validation should be done to eliminate manual errors/omissions.
Read more about the cancellation of E-invoices

Letter of Credit (LC) is a document issued by Bank. We have Import LC (Requested by Home bank) and Export LC( Requested by Exporters bank).

Ideck is capable of handling both Import LC and export LC. This module is tightly integrated with our EXIM module. When a new LC document receives from the Bank( Copy of document from home back in case of Import LC and copy from customer’s bank on Export LC) we will use built-in algorithm and uploaded template information for extracting the details from the same. First of all, it will try to extract using PDF extractor ( works with PDF documents). If the system is not able to extract values( If the document is not PDF) then we will use OCR technology to extract data.
Once data extracted the system will do the following

1. Checks the bank details to identify the LC(Import LC or Export LC)
2. Checks if this LC is new or for amendment.
3. Checks with SAP(EXIM module) to identify this LC exists or not
4. If not exists it will create a new LC in EXIM and returns with reference document number and also save the document in Content server(If configured)
5. If LC already exists it will verify the data to make sure this request is for amendment and there is some difference in Quantity or value
6. If no difference found, system will throw an error stating-Duplicate LC

• No manual activity on LC creation
• Real time processing of documents
• Dashboards to track LC status
• Customer wise/Bank wise/date wise reports to track LC
• Custom user management for maintaining privilege’s over each documents.
• User can download required fields from LC into any file format like csv, excel etc…so that we can use this for any other internal software’s, auditing etc…
• Easily able to incorporate any type of custom workflows
• LC data extraction with globally accepted OCR engine.
• Automatic notification ,Email triggering for tracking each steps in LC creation.

AIM, or Accelerated Implementation Methodology is a framework for addressing organizational changes that will transform how your business operates. It takes the change process from planning all the way through installation, Implementation, training and an eventual Return on Investment. Its main objective is to remove any barriers between the planning phase and a successful implementation, which can include things like costs, Quality & Time frame as well as training and acclimatizing employees to these changes.

Being a statutory & time tested SAP Add on solution, IVL’s OptiEinvoice product facilitate complete compliance and quick business transformation by generating your e-invoice seamlessly thro automatic real time online integration by secured communication with Government portal (IRP).

The self-explanatory data templates in user friendly formats getting exchanged with the customer in the Pre-delivery phase enable the client business core team to get ready with their system and provide the correct data to configure and implement the solution.

Transparent and Quick responsive model adapted in the implementation enables the respective stakeholders from either sides to take prompt actions at right time involving management officials in needed cases as well.

Collaborative delivery model with vast experienced Business Analysts in taxation domain front ending the delivery with a high proficiency core team consisting of technical consultants and SMEs(Subject Matter Experts in taxation) supporting from backend assures a smooth implementation following best practices in an accelerated timeline

A fine-tuned proven training model of “Train the Trainer” by skilled business analysts empower the client core team to be self-equipped with the E-invoice solution features and usage hence enabling them to drive the business operations and derive the ROI through the solution. The reusable training manuals and videos help the core team to train the end users in short span of time.

IVL’s Crack team enabling the support for domain, technical & integration queries through a war-room model facilitates successful transformation & a smooth business go-live