How is e-invoicing simplifying compliances for small businesses in India?
E-invoicing has become a crucial step in India’s digital economy. In small businesses, it has contributed to reducing frauds and accounting hassles.
Digital revolution has changed the India’s financial system. Electronic transactions are now preferred over the conventional billing system.
Introduction of e-invoicing after GST adoption was indeed a strategic move by the government. Due to its contactless characteristic and tech-enabled approach, e-invoicing is a boon for specifically small businesses in the country.
E-invoicing simplifying compliances for small businesses in India
The government made e-invoicing mandatory for small businesses last year. Since April 1, 2021, it has been compulsory for businesses with a total annual turnover more than 50 crores for B2B (business-to-business) transactions and export sales. It has been helping small businesses significantly, and it has improved and simplified their compliance procedure by disrupting the tax ecosystem and curbing tax evasions.
Minimises the possibility of human errors and frauds
The invoice is uploaded automatically and directly on the e-invoice portal. This further streamlines e-way bill generation, TDS, TCS collection, etc. Post authentication, all invoices are transferred to the GST portal in real-time. This removes the need for manual data upload and decreases the delay in data upload and hence the possibility of errors reduces significantly!
With e-invoicing, fake invoices and/or duplicity, one of the significant issues in the tax compliance system is being effectively dealt with.
Since e-invoicing records every transaction made within the organisation digitally and cannot be modified or cancelled, the owners can keep track. Hence, the chances of committing fraud or errors reduce drastically. Created with the assistance of technology and the business' seal and certificate, the risk of document forging is also mitigated.
Smooth cash flow management
Another significant benefit of e-invoicing for small businesses is that e-invoicing automates the entire payment process. Right from invoice generation, tracking, routing, and approving, everything happens with the help of advanced tech solutions.
This further leads to timely payment by the supplier. Once the e-invoice is uploaded on the GST portal, the details are then shared with the buyer, and this helps the buyer in smooth cash management.
Automating the payment process
The electronic invoices can be accessed and used at any point in time, from any geographical location, and via any device. Hence, e-invoicing has made the accounting process of businesses cost-effective and time-saving. It has enabled small businesses to reduce their time spent on the routine admin-related tasks related to accounting manually.
Using e-invoicing, they automate the accounting process to focus their time and efforts on the more relevant tasks such as seamless operations and organisational growth.
Easy accessibility to loans
E-invoicing reduces the compliance procedure on the small businesses and empowers them to pre-input the returns basis the e-invoicing details. This further helps them to have access to loans easily and instantly.
E-invoicing benefitting the government
E-invoicing will reduce the compliance burden and enable the ease of doing business. It comes with a considerable amount of real-time data for analytics by the government to curb the issue of fake invoices. This leads to genuine input tax credit (ITC) claims by taxpayers.
The decline in fraudulent ITC being filed further helps plug revenue leaks. Adding to it, electronic invoicing will ensure the audits are targeted, accurate and precise. This major reform will bring the country one step closer to being a digital economy!
Accounting software ensuring e-invoicing and compliance
The accounting software steps in as a blessing in disguise, facilitating seamless e-invoicing. The solutions are helping to simplify and quicken the compliance process as businesses can pre-input the data based on the e-invoicing details.
These GST-compliant accounting software solutions are simple and easy to use, and they are highly flexible and scalable solutions that cope with the ever-evolving business needs. They ensure seamless e-invoicing and smooth operations of your business, along with managing all the financing, accounting, and invoicing requirements.
The bottom line
Small businesses are an essential pillar of our country. E-invoicing has been a vital step for the nation to embrace the digital economy.
Operating through the assistance of accounting software, it would be appropriate to say that e-invoicing has emerged to be the viable solution for all the compliance-related challenges and will play a significant role in boosting the government's revenue collections.
It has contributed to minimising frauds and helped inaccurate data accounting and seamless management of the cash flow process. It is thus a beneficial strategy for both small businesses and the government!
Edited by Affirunisa Kankudti
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
