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How Will The Digitization Of E-Invoicing Affect The Overall Growth Of Indian Economy?
Employing e-invoicing among all business transactions is bound to make GST an advanced IT-enabled indirect tax system within India.
In India, the government has introduced e-invoicing as a compulsory part of the GST landscape. This move has significantly improved compliance procedures and given a boost to GST collections. E-invoice has revolutionised the transactional landscape of Indian commercial economy and transformed it into a digitized and transparent system.
E-invoicing, or electronic invoicing, is a mechanism for electronic authentication under GST. Under this system, all B2B and export invoices which a business generates has to be registered with the government system – the Invoice Registration Portal (IRP) and further obtain a unique identification number for each invoice generated called the Invoice Reference Number (IRN). Alongside IRN, the IRP also creates a digitally signed QR code with certain details picked from the invoice and sign the uploaded invoice data digitally. Therefore, an e-invoice is a document that has an IRN associated with it and the digitally signed QR code imprinted on it. Subsequent to the generation of IRN and authentication of the invoice, its details will be made available on the GST portal in real-time.
How Online Invoicing Can Help the Economy Grow
E-invoicing offers manifold benefits for the development of an economy. A major benefit that it offers is creating transparency in the taxation system which in turn strengthens the automated process of filing GST return. Here are the major benefits that e-invoicing offers for the growth of economy:
1. Invoice Tracking
With the implementation of the e-invoicing mechanism in GST, it has become easier for the government and vendors to track invoices in real-time. This, in turn, has helped reduce instances of frauds and fake GST invoices, which have become a primary cause of concern for the government stakeholders. The archaic practice of producing paper bills and later the under-reporting of revenue generated by the company has also been effectively curtailed. Thus, it helps boost GST compliance among businesses.
2. Helps Automate & Formalize the Economy
E-invoicing helps improve the process of tax collection by curbing the malpractice of under-reporting of exact figures by businessmen. This automation of the entire process helps formalize the whole of economy and eliminates the problem of tax evasion, an issue rife in India.
3. Fast & Convenient GST Filing
E-invoice boosts automation and makes the process of filing GST return more efficient, fast and seamless. Currently, GSTR filing involves arduous manual work which is highly prone to calculation errors. Digital invoicing brings speed, ease and precision to this process. Once the Invoice Reference Number (IRN) is issued, it updates the annexure-1 of the supplier and issues an e-waybill which is automatically updated in the system. It further updates the annexure-2 of the recipient. With automated filing of GST returns, a lot of time, efforts and money is saved. Human errors and major reconciliation issues are also avoided.
However, the proper implementation of e-invoicing needs addressal of certain challenges. Employing e-invoicing among all business transactions is bound to make GST an advanced IT-enabled indirect tax system within India. But its true success relies on advancements in technological facilities across the whole nation, even in remote cities and towns.
The government in tandem with the concerned revenue authority must ensure that minimum technical glitches crop up when using the e-invoicing software. India lacks the adequate infrastructure, especially in far-off areas where there is poor connectivity and filing of e-invoice could be a serious challenge.
Also, to enable MSMEs to make provisions for e-invoicing, government must take care that tax administration isn’t made very stringent for e-invoicing. What is required is a healthy business environment which encourages more foreign investors to come in and invest in the Indian economy. This shall, in turn, help in job creation and increasing wealth.
E-invoicing is a step towards realizing the dream envisioned for a digital economy. It further underscores government’s efforts in that direction. By curbing tax evasion and streamlining the process of tax collection, e-invoicing will ensure that the government does not raise GST rates any more. It retains records in a cloud environment, making it an eco-friendly method supporting a clean environment as printed invoices waste paper. The overall result is a more efficient tax collection administration, minimization of data entry mistakes and greater transparency.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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