Insights into India e Invoicing Implementation
The India e Invoicing will be a dramatic change which will introduce a transparency on GST Tax Collection and also stream line revenue process. E Invoicing as a process is being introduced in many countries and India is a follower in this regard. With the opening of the economy lot of Multinationals operate in India and implementation of e Invoicing is a challenge for many organizations, since they have homogeneous global processes, which need to be adapted for local compliance in India. I have tried to answer some of the common questions related to based on project experience:
Q1) How will the e Invoicing model in India work?
A: Under the e Invoicing model for India, all B2B Customers would have to generate an invoice as was done in the past. An electronic file in JSON format, with the required schema would have to be sent to the IRP Portal. Once the file is sent via an asynchronous call, the IRP will generated an unique reference number (IRN Number) and digitally sign the e Invoice. It will also generate a QR Code, which will contain the vital details of the e Invoice and the same would be returned to the Tax Payer.
Q2) What are the types of documents, which are valid for e Invoicing?
A: The following type of Invoices will be covered under e Invoicing
- Invoices by Supplier
- Credit Note by Supplier
- Debit notes by recipient
Q3) In the SAP System, how to determine a customer, if it is valid for e Invoicing?
A: The e Invoicing is currently valid for B2B Customers. If your customer has a registered GSTIN Number, the standard solution determines the customer to be valid for e Invoicing
Q4) What are the various parties involved in an e Invoicing process?
A: The e Invoicing solution in SAP is built around e Document framework. Depending on the solution scope if you are using DCS or other ASP Solution, e Invoicing can be used. You need to have a tie up with a GSP. In my customer’s case, the solution was built around DCS and e Invoicing solution based on e Document. In addition an authorized GSP, one would also need the invoice outputs to be signed digitally. A digital signature of an authorized natural person in the organization is recommended. There are authorized service providers who provide Digital Signature facilities through API. The invoice meta data needs to be transferred by API Call to Cloud or an On Premise System on the network. This needs to be worked with the service provider based on volumes.
Q5) What will change in invoice outputs after e Invoicing is mandatory?
A: There would be potential changes in invoice output, once e Invoicing is mandatory. The invoice issued after e Invoicing should contain some of the key fields like:
- Invoice Type
- Invoice Type Code
- Invoice No
- Details of Receiver (GSTIN, State Code, Place, Pin Code)
- Details of Consignee (Ship to GSTIN, Shipping to Address, Supply Type)\
- Unique Identification Number (IRN)
- QR Code generated by IRP Portal
- Line Item Details for each HSN/SAC Code containing the item description, Qty, Rate, HSN/SAC Code, Tax Break up (Base Value and Tax Values like IGST, CGST & SGST) based on nature of transaction
These are some of the mandatory fields. However, the supplier also may include additional details as required for the business like payment terms, SEZ Declaration etc to name a few
The output should ideally be issued only when the IRN has been generated and received in the e Document cockpit in case you are using the standard e Invoicing solution from SAP
Q6) Till what time, the invoice cancellations can be done after e invoicing is implemented? What should be the criterion to consider for cancellation of invoice under e Invoicing?
A: The invoice can be cancelled only within 24 Hours from issuance on IRP Portal. Since the JSON file in e invoicing is issued only after the accounting document has been posted in the system, the recommended way is to consider the posting date of the accounting document for calculation of 24 hours. It is also possible to cancel invoices on GST Portal in 1 month. However, it is best to discourage the same and have the billing associates generate a debit note for such a case, rather than the user cancelling the invoice on the GST Portal. This will ensure, a system control for the business data
Q7) The same document type is used for generation of FI postings for both customers and vendors. In such a case and since the process is global in nature, how can we ensure that the right data is picked up for e Invoicing for Indian entities?
A: It is a common issue that lot of Global Companies who also have business in India, have stringent processes, where it is difficult to change and need enhancements or workarounds to meet the local requirements. In one of the cases, the same accounting document type was used for GL, Customer and Vendor postings. There is an BADI available where such a custom logic can be written. In this case, the document type for e Invoicing was ascertained based on a combination of company code, Posting key and accounting type to determine if an accounting document type is relevant for e invoicing or not.
Q8) The full suite of SAP Solution for e Invoicing and GSTR Reporting (DCS) is used. How to control, that the e invoicing is generated and approved first before it can be considered for GSTR reporting (GSTR 1)?
A: E Documents for both e Invoicing and GSTR reporting are generated as soon as the document is posted. However, there might be a delay in generation and approval of e Invoice. Ideally to better control the process, that invoice data which has not been approved by IRP Portal should not be reported for GSTR1, a BADI implementation would be involved to ensure that the GSTR 1 reporting related e Document is submitted only when the e Invoicing for the customer invoice is approved. This would reduce manual effort as well as reconcilliation effort
Q9)_How does e Invoicing impact the invoices from Vendors? Is any change required on the incoming invoices posting as well when the e Invoicing becomes mandatory?
A: E Invoicing would be mandatory for any one who has a turn over of INR 500 Crore ( INR 5 Billion). The supplier falling in this category need to make sure that they provide an invoice containing mandatory details such as:
- IRN No
- QR Code
All other details as were required prior to e Invoicing. However, the posting process for supplier invoices (Incoming AP Invoices) will not change. Customers who are using solutions like VIM etc, will have the invoices posted as earlier and the e Document will be generated for GSTR 2 as soon as the document is posted. However, these e documents will be sent to the DCS Cockpit and no change is expected in the process within the system. However, from a process point of view, controls would need to be built in to ensure that the essential details are available in the invoice before it is captured in SAP System to reduce reconcilliation efforts, since it is the responsibility of the supplier and the buyer to correct any incorrect data or data which has not been reported to GSTIN.
These are just some of the queries which are important from a project perspective for India e Invoicing.