Crackdown on frauds, lesser tax evasion & higher scalability: How e-Invoicing can help businesses boost their growth journey

While the government has made e-Invoicing mandatory for businesses with a turnover of Rs 50 crore, companies are often not too keen on complying with the guidelines. Their wariness is despite its various benefits such as making businesses more agile and weeding out regulatory delays in supply chain operations.

The system, which has been welcomed by industry experts, is expected to bring in more transparency in recording sales, reducing errors, and improving compliance. Once e-Invoicing becomes mandatory for smaller and medium-sized firms, it will help to rein in tax evasion as well.

However, the myths surrounding e-Invoicing are keeping businesses from leveraging its many benefits.

To know more about e-invoicing and its potential to boost ease of doing business and how enterprises could make its compliance easier, YourStory, in association with ClearTax and AWS organised an insightful webinar on ‘Simplifying e-Invoicing for businesses’ on March 25 and invited experts from different fields to express their views on the topic.

The webinar was divided into two panel discussions. The first discussion on ‘e-Invoicing Decoded - The journey so far’ featured Kanishka Agiwal - Head - Service Lines, India/South Asia, AWS; K Raghu, Senior partner of K Raghu & Co and Former President, Institute of Chartered Accountants of India and Archit Gupta, Founder & CEO, ClearTax.

The panellists for the second discussion on ‘Building the ultimate e-Invoicing strategy for your business’ were Amit Prabhu, Chief Financial Officer, Puma India; Sachin Punyani, Transformation Business Development, AWS and Rohit Razdan, Chief Business Officer, ClearTax.

Here’s a look at some of the key insights from the two panel discussions:

Doing away with paper invoices

The panellists delved into how e-Invoicing has accelerated digitisation and was doing away with paper invoices. “Over 10 million businesses will come under the ambit of e-Invoicing in India over time. This means that India will move to a completely digital format. We saw this for United Payments Interface (UPI) with payments and now with the exchange of information across businesses with e-Invoicing,” said Archit Gupta, Founder & CEO, ClearTax.

Ease of doing business

K Raghu, Senior partner of K Raghu & Co, and the former president of Institute of Chartered Accountants of India (ICAI), who was closely associated with the launch of the Goods and Services Tax (GST) regime in 2017 with the government, said that e-Invoicing is a step in the right direction and will promote ease of doing business, especially by checking fraudulent practices like fake invoices.

“GST frauds are being recorded across the country and around 10-12 frauds have been reported in the past two-three months. GST e-Invoicing will be able to eliminate these frauds. At the same time, all stakeholders will be able to use invoices seamlessly,” he added.

Benefits far outweigh adjustments

Talking about how e-Invoicing can help businesses scale, Kanishka Agiwal - Head - Service Lines, India/South Asia, AWS said, “E-Invoicing has several benefits. For starters, you are staying up-to-date on all regulatory changes on tax-based nuances that may come up, and have all details and e-Invoices pre-populated on the GSTN portal. So, the benefits far outweigh the adjustments businesses might have to make. The faster businesses adopt e-Invoicing, the quicker they would be able to see benefits like lower infrastructure, manpower and filing costs.”

The right e-Invoicing strategy

The panellists also highlighted that when an enterprise implements an e-Invoicing strategy, the business transformation accompanies a GST transformation. Explaining the IT requirements for such a transformation, Sachin Punyani, Transformation Business Development, AWS, said, “Apart from some standard integrations that must be in place, small-scale enterprises or new ventures that do not have an enterprise resource planning (ERP) software should be a part of the API economy. Lastly, the smooth sailing depends on how well the systems are integrated — be it financial systems, the IT systems or the systems on the GST portal.”

The panellists also spoke about how an IT scalable infrastructure was critical to an optimal e-Invoicing strategy, but functioning without cloud platforms won't be sustainable in the long run. “It is only our old perceptions that are keeping us away from cutting-edge cloud technology. Given how the government is rolling out notifications and updates fast, if you don't have a cloud infrastructure then you must have a robust IT team that is your core capability, else you are going to struggle,” said Rohit Razdan, Chief Business Officer, ClearTax.

Challenges SMBs and large businesses face in implementing e-invoicing

Amit Prabhu, CFO, Puma India said that SMBs planning to implement e-Invoicing should get on a digital platform, if they aren't on one already. “Next, they should ensure that their systems are integrated with the entire GST ecosystem.” Another big challenge was the lag on the part of the government. “I feel this is a challenge that the government needs to address because the impact is huge. If businesses aren’t able to connect to the system or aren't able to generate a QR code, then the entire process is being stalled. From a supply chain point of view, enterprises should ensure that their processes are very tight and that there are no lags,” Amit added.

Highlighting what he feels is an emerging problem, Rohit said that as the cap for e-Invoicing is lowered further from the current limit of companies with a turnover of Rs 50 crore, more businesses will come under its ambit in the future. “However, even if a large company is ready for compliance but their ecosystem isn't, then they are going to face a huge problem as they will be dealing with non-compliant partners which only adds to their challenges.”

Evolving demands

On evolving demands in e-Invoicing compliance, Sachin said that businesses need to leverage technology intelligently. “Most consumers are now demanding top-op services like how the reconciliation between their systems and the GSTN will happen automatically or how their input tax credit will be maximised or correctly computed. They have realised that e-Invoicing is here to stay, but want to know how it will benefit them. This is where technologies like machine learning and artificial intelligence will come into play.”

Less tax evasion

Businesses won't be dependent on paper invoices in the future, the panellists concurred, as the discussions drew to a close. “Five years from now, it will be much easier to compute input tax credit, reconciliation would be smoother and with more integration there would be less tax evasion,” said Amit.

“By 2025, paper invoices will be out. If you are trying to evade taxes or e-Invoicing, your counterparts will shrink every day,” summed up Rohit.

From helping millions of Indians file tax returns and invest their money to bringing them advice from experts, ClearTax has been on a mission to simplify financial management for people ever since it started operations. To know more about its gamut of services, visit the ClearTax website.

With over 200 fully featured services from data centers globally, Amazon Web Services (AWS) is all you need for adopting a cloud platform. Be it private enterprises, government institutions or individuals, AWS is helping millions of customers optimise their cost of operations, become more agile and innovate faster. To know more about AWS' offerings, head over to their website.