If you are new to e-invoicing, there are certain things you must keep in mind in order to avoid common mistakes in e-invoicing that businesses need to avoid. IRN generation is a mandatory process if a business has crossed the e-invoicing turnover limit.
It was implemented in a phased manner, starting with organizations with an aggregate annual turnover of INR 500 crores in October 2020. Eventually, it also became applicable to businesses with an AATO of INR 10 crores. To know more about the e-invoicing mandate, its eligibility, exemptions, and documents covered read this blog on the E-invoice Mandate.
The Process of IRN Generation
After the mandate is applicable to a business, invoices will be considered valid only if they are digitally signed by IRP i.e. have Signed QR Code printed on them.
Steps for IRN generation
- Prepare your invoice in your ERP/ Accounting Software
- Send the Invoice Data to the GSTN Authorized IRP like IRIS IRP
- Obtain IRN and QR Code
- Print the invoice with the acquired IRN and QR Code
- Send the invoice to your customer
Read more about e-invoice generation here.
3 Common Mistakes in E-invoicing to Avoid
1. Not Being Updated with Latest E-invoicing Changes
The e-invoice mandate was implemented in a phased manner, as mentioned earlier. With each update, a new eligibility criteria was introduced. Organizations who were then above the threshold AATO were required to comply with the mandate. The ones who failed to do so had to face heavy penalties and other consequences.
Also, ever since the introduction of e-invoicing under GST, there have been several upgrades and updates in the mandate. The government is constantly trying to improve the system and is trying to make the mandate more efficient. Businesses need to keep up with changes including but not limited to - E-invoicing and E-way Bill, Introduction of Private Invoice Registration Portals like IRIS IRP, IRN Cancellation Rules, E-invoicing Rules for E-commerce Operators and even regularly reducing the threshold and so on. Not being updated with these changes can lead to severe issues and the consequences of non-compliance with e-invoicing are huge.
2. Sending B2C Invoice Data to IRP
E-invoicing under GST was introduced specifically for B2B invoices, export invoices and credit/debit notes. Invoices generated for consumers (B2C Invoices), should not to be registered in the Invoice Registration Portal (IRP). Sending B2C invoice data to IRP is erroneous. B2C invoices, as of now, have an exemption from e-invoicing under GST.
IRIS IRP is a GSTN-appointed IRP for businesses designed for efficiency and ease of use. To know how to generate an IRN using IRIS IRP, click the link.
3. Not Taking Care of Validations
Ensuring the e-invoice has the correct details and in the correct format is of utmost importance. The consequences of non-compliance include detention of goods, inability to claim Input Tax Credit, or a penalty of INR 25,000 per incorrect invoice. Oftentimes, the GSTIN of the supplier or the recipient is entered incorrectly. At times, the e-invoice schema format is not followed properly. Or a duplicate e-invoice is generated. These are the common errors while creating and submitting an e-invoice under GST to the IRP.
Also, the process of generating e-invoices is not a smooth ride for many. There have been several roadblocks and hurdles in generating IRN successfully. The reason can be many, however, one which is under your control is taking care of certain reporting aspects at the business level and at the ERP system level for correct e-invoice generation. Read all the validation errors in e-invoicing here.
Recent rumors suggested that the threshold limit of the AATO of a business might drop to INR 5 crores. However, the government recently confirmed that there is no proposal in play as such, as of now. So far, the impact of e-invoicing under GST has been evidently significant in the country.
If you are a business who is now registering their invoices on the IRP, make sure you avoid these common mistakes in e-invoicing.
IRIS IRP is the Govt. recognized Invoice Registration Portal (IRP) for businesses to prepare invoices
With IRIS IRP, you can prepare a single e-invoice via our tool or bulk generate IRN through the excel utility, pull IRN in your ERP via API Integration or custom print invoices using an awesome cloud platform!