How India's new 7-day time limit for e-invoice generation affect some taxpayers
The Indian Government’s new policy for mandatory generation of e-invoices, restricting them to a 7-day timeline, has significant implications for taxpayers. It affects businesses of varying sizes and sectors who operate in India and generate invoices. The enforcement of this policy has resulted in the simplification of filing and processing of GST returns by the tax authorities.
Who is this policy for?
- For Small & Medium-sized businesses that generate a turnover exceeding Rs 100 Cr
- For large businesses that generate a turnover exceeding 500 cr
How does it affect taxpayers?
Taxpayers must adhere to the new time frame, making it harder for them to generate and submit invoices. Since the time period for generating invoices has been reduced to 7 days, taxpayers need to plan and execute their billing process efficiently.
Positive Impacts
- Reduced time for tax return filing
- Enables better compliance measurement
Negative Impacts
- Increased administrative workload
- Limited time for invoice generation
Benefits of this new rule
Reduces Data Mismatch
The GST system is data-driven, and the new e-invoice generation policy reduces data discrepancies, enabling faster tax return filing and processing.
Increased Transparency
The e-invoicing system improves transparency by sharing invoices generated by the taxpayer with the GSTN (GST Network). It also allows the taxpayers to view the status of their returns and check up on the processing of their refunds.
Simplification of GST Returns
E-invoicing has made it easier for taxpayers to inhabit the GST return filing process by avoiding discrepancies and financial penalties.
The Challenges of E-Invoicing in India
E-Invoicing Execution
India has a large number of SMEs and an insufficient digital infrastructure. Most SMEs operate on manual modes, while larger companies lack sufficient technological capabilities.
Barcode Formatting
The new rules require that companies adopt a standardized barcode format for e-invoices. However, many taxpayers continue to use older formats, leading to extensive alterations and re-uploading the invoices.
Legal Department & documentation issues
The Future of E-Invoicing in India
The Government of India is striving to simplify tax revenue systems and promote digital transactions through increased investment in technology and infrastructure. With the growth in digitalization and technological advancements, it’s expected that taxpayers will no longer be required to upload invoices manually, and E-invoicing will eventually become more manageable and result in significant cost reductions for businesses.